Pipelineistan — the Iran-Pak-China connection

Pipelineistan — the Iran-Pak-China connection

By Pepe Escobar
Asia Times
August 14, 2015

Iranian Foreign Minister Javad Zarif has just been to Islamabad to talk serious business with Pakistani Prime Minister Nawaz Sharif. And the serious business had to be Pipelineistan – as in what next for the Iran-Pakistan (IP) gas pipeline.

Zarif essentially said that IP is a go – again – as soon as sanctions against Iran start to melt, by late 2015 or early 2016. Iran has already invested $2 billion in the Iranian stretch of IP, and China will finance the Pakistani stretch.

This is a major Pipelinestan gambit, as Asia Times has previously reported. And as a side note, as soon as IP goes online, all those years of incessant harassing by successive Bush and Obama administrations will finally come down to nought.

Even before Zarif hit Pakistan something serious was going on in … Karamay. You may have not heard of Karamay, but this town in Xinjiang is right at the center of the Eurasian action; it has just hosted the 2015 China-Pakistan Economic Corridor Forum.

As we all know, the China-Pakistan Economic Corridor (CPEC) is an absolutely key component, worth $46 billion, of the China-driven New Silk Roads. CPEC will link Kashgar in Xinjiang to the Arabian Sea port of Gwadar via highways (essentially an upgrade of the fabled Karakoram Highway), railways, industrial parks, fiber optic networks and – eventually – a pipeline.

And that pipeline will be no less than an extension up north of IP.

As part of CPEC, for instance, last month TBEA Xinjiang SunOasis — a Chinese company — finished the biggest solar power plant in Pakistan, for $215 million, in only three months.

At Karamay, China and Pakistan signed 20 CPEC-related cooperation agreements. They even issued a Karamay manifesto, stressing the political/economic importance of the Silk Road Economic Belt and the 21st-Century Maritime Silk Road. CPEC is the largest China-Pakistan joint project since the construction of the Karakoram highway in 1979. And CPEC is only one among six economic corridors to be developed as part of the New Silk Roads.

Yet the full impact of CPEC will only be noted by the next decade. That’s when the New Silk Road for the bulk of China’s energy imports from the Middle East will be cut short by no less than 12,000 kilometers.

Ashgabat wakes up

Meanwhile, Turkmengaz — Turkmenistan’s national gas company — has taken a 51% stake in a consortium still seeking to build the perennially troubled TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline, a serious competitor to IP if it ever gets built.

That’s a game-changer because the Turkmen will now be in charge of the construction and operation of TAPI Ltd. The cost is a whopping $10 billion (IP will cost three times less); investment to the tune of $4 billion and $6 billion in debt.

Still it all comes back to the same problem; who wants to invest in a steel umbilical cord prone to all sorts of sabotage traversing a war zone — western Afghanistan all the way to Kandahar? In theory, “host countries” should be responsible for TAPI’s security; in the case of Afghanistan, that qualifies as black humor.

For the moment, Turkmengaz can only count on the Manila-based but Japan/US-controlled Asian Development Bank (ADB). That’s not much. The notoriously opaque regime in Ashgabat says it’s seeking other backers — but no one knows where and how.

TAPI is still a pipe dream. Pakistan and India are not seriously considering it viable even in the medium term. So it’s back to IP.

Even after sanctions are lifted, Iran will need to find an ocean of investment — at least $180 billion — to upgrade its energy infrastructure and be able to start exporting natural gas to Europe, in competition with Gazprom.

So Iran’s privileged Pipelineistan play for the near future will be Asia – from Southwest Asia (Iraq and Oman) to South Asia (Pakistan). With China ready to instantly capitalize on every surge of Iran’s natural gas production.



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Where the TPP Could Lose

Where the TPP Could Lose

By Julia Paley

After years of secret negotiations and silence in the media, the Trans Pacific Partnership (TPP) has risen to headline news. Now that Congress has voted to give President Obama “fast-track” trade promotion authority to push the deal through the House and Senate with limited debate and no amendments, efforts to finalize the agreement among member countries are proceeding in earnest.

But even if negotiators can reach a final accord, which is far from certain, the pact must still be approved by other national legislatures. And here, the United States is not the only country we should be watching. In Chile, where the administration of President Michelle Bachelet has moved forward with the TPP negotiation process, opposition is strong in the legislature. Even Bachelet’s minister of foreign affairs has indicated that Chile won’t sign the agreement if the TPP doesn’t meet certain criteria.

The Chilean controversy over the TPP highlights some of the biggest problems with the agreement — for working people in Chile, the United States, and around the world — and it makes plain the false promises the Obama administration used to push Democrats to support fast track.

That a no vote from Chile might unravel the agreement as a whole — or inspire other legislatures to follow suit — may be wishful thinking. But growing opposition in that country is a reminder of what’s at stake and why it’s so important for national legislators — in the United States and abroad — to take a stand against bad trade deals. And it highlights the power that organized citizens have to hold politicians accountable and make the TPP vulnerable.

Corporate Boondoggle

The TPP would unite 12 Pacific Rim countries — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam — in an agreement so big it would account for 40 percent of the global economy. The deal extends far beyond conventional areas of trade policy to encompass issues normally decided by national legislatures, such as intellectual property rights and access to affordable prescription drugs.

And it would be a landslide victory for large corporations.

Transnational corporations in the pharmaceutical, entertainment, and banking industries, among others, are shaping rules that apply to copyrights, medicinal patents, food labeling, and financial regulation. Over 600 advisers, mainly from corporations, have direct access to the text — unlike national legislatures and civil society organizations around the world, from whom the document has been kept secret. What information is known publicly has largely come from leaks.

If their influence over the scope of the treaty weren’t enough, the TPP has provisions that allow corporations to sue national governments in unaccountable tribunals if a regulation passed after the treaty goes into effect cuts into their future profits. In many cases these “investor-state dispute settlement” (ISDS) mechanisms are enough to prevent countries from passing such regulations in the first place.

Undermining Democracy

Under ordinary circumstances, signing on to a free trade agreement would be a no brainer for Chile. It has agreements with more countries than any other nation, and additional ones are on the way. In fact, Chile already has trade agreements with all the other countries involved in the TPP.

And yet this specific agreement is raising alarm in Chile.

Many of the concerns — concerning ISDS and the secrecy of the text — are shared across countries, with critics organized into international and regional networks. But what’s interesting to note is the different foci of criticisms in the United States and elsewhere. While the U.S. Congress highlighted issues such as currency manipulation and potential job loss as its members deliberated about whether to approve fast track, Chilean organizations have pointed to a set of issues that affect everyone, and yet have an especially hard impact on countries outside the United States, especially developing countries.

A primary concern is the dominance of U.S. corporate interests. Although the agreement is billed as a trade pact among 12 nations, in reality the United States and its large corporations play a primary role.

As Marcela Ortiz from the Santiago office of Consumers International points out, as a condition for each country signing on to the pact, the United States can require changes in any one of the participating countries’ laws. Through the process called legislative certification, explains an anti-TPP group’s website, “U.S. officials can define another country’s obligations; become directly involved in drafting that country’s relevant law and regulations; demand to review and approve proposed laws before they are presented to the other country’s legislature; and delay certification until the U.S. is satisfied the new laws meet its requirements.” This is a direct assault on representative democracy, one to which a number of TPP countries have explicitly objected.

And the text of the treaty can override national law. For example, in 2010, Chile went through an extensive process of public consultation and congressional debate, which eventually resulted in its 2010 intellectual property law. Provisions in the TPP, an agreement written in secret by non-elected authors, would supersede aspects of that law, which had been created through a participatory democratic process.

A Chilling Effect

The TPP not only challenges prior laws. It impedes countries’ abilities to set future policy.

For instance, provisions under consideration limit the functioning of state-owned companies. That could deter a country like Chile from creating government-run businesses in areas such as clean energy, health, development banking, and pensions. It would also limit regulation of genetically modified ingredients, additives, and pesticides in food products. A recent report by the U.S. Trade Representative — the very office representing the United States in TPP negotiations — shows that it classifies many policies that member countries are trying to institute at home to protect the public interest as “barriers to trade.”

Of particular concern in Latin America is the ability to regulate the flow of capital.

It’s widely acknowledged that deregulation of the banking sector in the United States and Europe contributed to the international financial crisis of 2008. “In contrast,” Carlos Furche, a former Chilean trade official, wrote in 2013, “regulations in emerging countries, such as Chile, have allowed them to stay out of the financial crisis.” Given that, he continued, “it is not reasonable or acceptable to allow for amendments” aimed at “further liberalizing capital flow control, as it seems to be the intention of the U.S. negotiators.”

In its own free trade deal with the United States, Furche continued, “Chile managed to retain powers of its Central Bank” that enable it to “regulate the entry and exit of capital in situations of crisis in the balance of payments.” Agreeing to more lax standards for the flow of capital under TPP could have potentially devastating consequences for the future. This is one area in which Chile has aimed to make progress in negotiations.

The treaty also potentially affects Chile’s international relations. In making the case domestically for the TPP, the Obama administration has framed the agreement as a way to counter China’s influence in Asia. Yet China is already Chile’s largest trading partner. Moreover, other neighboring countries in Latin America are involved in trade blocs — the BRICS (Brazil, Russia, India, China and South Africa), for example — that are intended to counterbalance U.S. and European global economic predominance. Not only does Chile not have a direct stake in advancing U.S. foreign policy goals, but doing so might cause tensions with some of its regional allies in Latin America.

Rewriting the Rules

Chileans have joined others in objecting to the curtailing of rights and social benefits in three other major areas: health, culture, and the Internet.

As critics in many countries agree, the TPP is expected to harm health by extending the duration of patents for medicines and medical procedures, making them unaffordable for millions of people and increasing the cost of implementing public health measures. The TPP is predicted to limit culture and education by increasing the time before movies, music, and books enter the public domain — thereby keeping the price too high for low-income people as well as schools and libraries. And the TPP could curtail Internet freedoms by impeding innovation and criminalizing popular forms of sharing. All of these, which could impact people in the United States as well, hit other countries especially hard.

What’s particularly thorny for Chile is that standards for these issues were already hammered out in bilateral agreements with the United States and other countries. The concern is that joining the TPP will be tantamount to renegotiating the terms of trade — and coming out with less favorable results than before.

Taking a Stand

Opposition in Chile first began to grow during the presidency of Sebastián Piñera, Bachelet’s right-wing predecessor.

At that time, major figures in the country’s trade sector voiced intense skepticism of the TPP. They were joined by 34 congressional representatives and 15 senators, who in concert with civic leaders submitted a declaration to the government demanding that the TPP be opened to public scrutiny and debate.

They echoed a host of civil society organizations, including Derechos Digitales and Consumers International, who — along with international allies and regional counterparts — launched forceful critiques of the deal. The outcry among lawmakers extended internationally, with representatives launching the site “TPP Legislators for Transparency“ to rally critics of the deal across borders.

Bringing their resistance to art, Chilean organizations invited hip hop artist Ana Tijoux to create a song about the TPP. Her 2013 music video “No to the TPP“ shows photos of protests around the world. The lyrics say, in part,

Tell me, tell me who is the thief
If you steal everything out of control …
A treaty is not democratic if it is made behind the people
And your deal is not a deal if it is made secretly and without consensus …
Who is behind the darkness and who benefits?
Large multinational companies full of greed
We all have the right and we all want to decide
The future and present of our children and how they want to live

Glimmers of Hope

Michelle Bachelet incorporated many of these political, civic, and cultural concerns about the TPP into her 2013 presidential campaign. She wrote in her political program that it was time to slow down the TPP process, conduct an “exhaustive” review of the treaty to examine the impacts it might have on Chile, and make sure that joining the TPP didn’t amount to losing gains Chile had already secured in its trade deal with the United States.

On becoming president in 2014, Bachelet established a cuarto adjunto — a “room next door” — to share select information and conduct discussions with businesses and non-governmental organizations. And she aimed to influence the TPP’s provisions during negotiations.

Although the cuarto adjunto increased the flow of information about the negotiation process and created additional space for organizations to express their concerns, it didn’t change the underlying problem: The text remained unavailable for public view, and civil society groups have not been part of the decision-making process. In the words of Claudio Ruiz, executive director of Derechos Digitales, “Has the cuarto adjunto served to decelerate the negotiation? Has the cuarto adjunto been useful in making an exhaustive review of the benefits of the treaty for Chile? Substantively, has anything in the scenario changed de fondo in these months? The answer to all of these questions is a resounding no.”

Meanwhile, many of the provisions in the TPP would actually undercut other policy goals of Bachelet’s progressive government. These include her plan to make medicine more affordable and available, her proposals for making art and culture accessible through school and public libraries, and her promise to promote greater protection of the environment. More broadly, the pact puts a damper on any effort to create public policy, since any change can be subject to restriction and challenge under the rules of the TPP.

Leverage in Congress?

The fact that Chile already has free trade agreements with all the other countries in the pact means it has no particularly strong incentive to sign on. Unlike countries such as Malaysia and Vietnam, whose access to investment and export markets are likely to increase substantially under the TPP, the agreement won’t bring major trade benefits to Chile. Meanwhile, the costs to the country — in terms of its own ability to create laws in the future and extensions of intellectual property protections — could be high.

As the negotiation process nears a close, congressional representatives in Chile have renewed their opposition. On May 19, the Chilean House of Deputies held a special session regarding the TPP. Four deputies wore t-shirts bearing the words #NoTPP and yet more voiced their disagreement with the pact. In the words of former student leader and current deputy Camila Vallejo, “I raise my voice making a formal request to President Bachelet that she make use of her leadership and stop the private negotiations of the TPP, begun under the previous government. We do not want more submitting of our people to international corporate interest. We demand sovereignty and emancipation for the people of Chile.”

Some deputies put forward a proposal that would require the president to demonstrate that signing on to the TPP would bring concrete economic benefits to Chile. This did not pass.

However, Minister of Foreign Affairs Heraldo Muñoz made declarations about how far the Bachelet government was — and was not — willing to go. In response to deputies’ concerns, he declared that in the area of intellectual property, patents, and services, Chile would not accept any terms worse than those already negotiated in its existing free trade agreements. Specifically, in relation to patent protection for pharmaceuticals, he said that Chile would insist on the five years allowed for in existing treaties and not agree to the 12 years proposed for the TPP. “If there isn’t an agreement that’s acceptable, we won’t sign it,” he declared. Moreover, with regard to the U.S. certification process, he affirmed, “we will not accept any interference in our sovereignty, and if that were the case, the agreement would not go into effect.”

In Washington, DC on July 17, Muñoz expressed these concerns directly to U.S. Vice President Joe Biden and U.S. Trade Representative Michael Froman. And he indicated at a press conference that although Chile will “continue negotiating constructively… we don’t want TPP at any cost.”

These were strong declarations. They mean that, even while moving ahead with negotiations, the Chilean government is standing firm on certain provisions that still have not been resolved to its satisfaction.

Like their Chilean counterparts members of the U.S. Congress — particularly Democrats — face a fundamental choice between the interests of their constituents, who would lose out in the TPP, and the pressure they’re getting to go along with “free trade.” That’s what makes citizen pressure to defeat this legislation so important. Legislators — in the United States and abroad — need to use the power they still have to vote no on this treaty.

If members of Congress don’t do that now, down the road they’ll find they don’t have much power at all.

Julia Paley is a contributor to Foreign Policy In Focus.


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What the Latest Currency ‘War’ is All About

What the Latest Currency ‘War’ is All About

By Pepe Escobar
Sputnik International
August 12, 2015

When the US embarks on perennial quantitative easing, that’s OK. When the EU does QE as well, that’s OK. But when the Bank of China decides it’s in the best interest of the nation to let the yuan go down a bit instead of infinitely up, that’s Armageddon.

It took the Bank of China to devaluate the yuan on two consecutive days — moving within the 2 percent band that it’s allowed to — for the proverbial global financial banshees to go completely bonkers.

Forget the hysteria. The heart of the matter is that Beijing has stepped on the gas in a quite complex long game:  to liberalize the yuan exchange rate, allow it to free float against the US dollar, and establish the yuan as a global reserve currency.

So this is essentially exchange rate policy liberalization — not a currency “war”, as the frenetic spin goes from Washington/Wall Street to Tokyo via London and Brussels.

Let’s check some expert reaction

Former Morgan Stanley non-executive chairman in Asia, Stephen Roach, delivers the predictable Goddess of the Market orthodoxy, warning about the “distinct possibility of a new and increasingly destabilizing skirmish in the ever-widening global currency war. The race to the bottom just became a good deal more treacherous.”

A note written by a group of HSBC analysts is more realistic; “The depreciation pressure on Asian currencies from China’s action should fade as the nation isn’t aiming at engineering a much weaker yuan. Doing so would contradict the goal of promoting greater global use of the yuan.”

But it’s Chantavarn Sucharitakul, the Bank of Thailand’s assistant governor, who hits the nail on the head Asia-wide; “The long-term impact must be assessed as to whether greater flexibility of the yuan could benefit China’s economic reform, while the depreciating yuan could be positive for China’s economic growth, which would benefit regional trade as well.”

The Bank of China itself, in a statement, stresses it will allow the markets to have more influence over the yuan exchange rate.

And crucially, it also stresses there is no economic basis for the devaluation, pointing to China’s enormous current account surplus and humongous foreign exchange reserves.

As Beijing interprets it, keeping a strong link to the US dollar has interfered with China’s being competitive with its top trading partners  — Japan and Europe.

So now it’s time to rock the (wobbly) boat. Thus the “currency war” hysteria — because the practical result, in the medium term, will be a new boost to Chinese exports.

When the US embarks on perennial quantitative easing (QE), that’s OK. When the EU does QE as well, that’s OK. But when the Bank of China decides it’s in the best interest of the nation to let the yuan go down a bit instead of infinitely up, that’s Armageddon.

Just do the math

Having the yuan track close to the US dollar served China very well — until now. QEs in the EU and Japan led to a weaker euro and a weaker yen — while the yuan remained stable against the US dollar.

Translation; since over a year ago, in June 2014, the yuan’s real exchange rate has been the world’s strongest, increasing by 13.5 percent. That was more than that of the US dollar (12.8 percent).

It was not hard for Beijing to do the math; the strong link with the US dollar was eroding China’s competitiveness with top trading partners Japan and Europe.

Yet a simple 2 per cent devaluation may not be enough to boost China’s exports. After all the yuan appreciated more than 10 percent over the past year relative to China’s top trading partners.

Thus the inside word in Beijing about “powerful voices inside the government” pushing for the Bank of China towards an overall 10 per cent devaluation of the yuan. Now that would certainly boost exports.So the devaluation this week — which has generated so much hysteria — seems to point towards a few more devaluations further on down the road.

This being China, where planning ahead is a matter of years, not a day-to-day frenzy as in Goddess of the Market territory, the whole game is about turning the yuan into an official global reserve currency.

A team of IMF experts has recently been to Shanghai, talking to officials at the Chinese central bank and China Foreign Exchange Trading System, which oversees currency trading in China, to establish whether the yuan can be part of the special drawing rights (SDR) basket.

Not surprisingly, the IMF itself praised the recent devaluation; “China can, and should, aim to achieve an effectively floating exchange rate system within two to three years.”

And the IMF also admits that, “a more market-determined exchange rate would facilitate SDR operations in case the Renminbi were included in the currency basket going forward.”

So this is what it’s all about; Chinese adjustments with an eye to get the yuan ready to qualify for reserve currency status. The IMF’s final decision is expected to be made by the end of 2015 or by the fall of 2016.

An internationalized yuan established as a global reserve currency implies a “market-determined” exchange rate policy. That’s what the Bank of China is ultimately aiming at. The rest is a tempest in a (US dollar) teacup.


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Hillary Clinton State Department Emails, Mexico Energy Reform and the Revolving Door

Hillary Clinton State Department Emails, Mexico Energy Reform and the Revolving Door

By Steve Horn
The DeSmogBlog Project
August 7, 2015

Emails released on July 31 by the U.S. State Department reveal more about the origins of energy reform efforts in Mexico. The State Department released them as part of the once-a-month rolling release schedule for emails generated by former U.S. Secretary of State Hillary Clinton, now a Democratic presidential candidate.

Originally stored on a private server, with Clinton and her closest advisors using the server and private accounts, the emails confirm Clinton’s State Department helped to break state-owned company Pemex‘s (Petroleos Mexicanos) oil and gas industry monopoly in Mexico, opening up the country to international oil and gas companies. And two of the Coordinators helping to make it happen, both of whom worked for Clinton, now work in the private sector and stand to gain financially from the energy reforms they helped create.

The appearance of the emails also offers a chance to tell the deeper story of the role the Clinton-led State Department and other powerful actors played in opening up Mexico for international business in the oil and gas sphere. That story begins with a trio.

The Trio

David Goldwyn, who was the first International Energy Coordinator named by Secretary of State Hillary Clinton in 2009, sits at the center of the story. As revealed by DeSmog, the State Department redacted the entire job description document for the Coordinator role.

Goldwyn now runs an oil and gas industry consulting firm called Goldwyn Global Strategies, works of counsel as an industry attorney at the law firm Sutherland Asbill & Brennan, and works as a fellow at the industryfunded think tanks Atlantic Council and Brookings Institution.

David Goldwyn; Photo Credit: U.S. Department of State

The emails show that, on at least one instance, Goldwyn also used his private “dgoldwyn@goldwyn.org ” (Goldwyn Global Strategies) email address for State Department business.

It remains unclear if he used his private or State Department email address on other instances, as only his name appears on the other emails. But Cheryl Mills, a top aide to Secretary Clinton at the time, initiated the email that he responded to on his private account.

David Goldwyn Private Email Address
Image Credit: U.S Department of State

Carlos Pascual, Goldwyn’s successor as International Energy Coordinator, who oversaw the creation of the State Department’s Bureau of Energy Resources as mandated by the Department’s 2010 Quadrennial Diplomacy and Development Review, serves as another key character.

Carlos Pascual announcing the creation of the Bureau of Energy Resources; Photo Credit: U.S. Department of State

So too does Neil Brown, a former top-level staffer for Sen. Richard Lugar (R-IN) who now works at the private equity firm Kohlberg Kravis Roberts (KKR).

Brown now works with former CIA Director David Petraeus at the KKR Global Institute, where he serves as Director of Policy and Research, and formerly served as senior-level staff for the U.S. Senate Committee on Foreign Relations. He also still serves as a senior advisor for Goldwyn Global Strategies, according to the firm’s website.

Energy Dipomacy and Security Act

A May 2009 email written by top Clinton advisor Cheryl Mills, in which she shared an early draft of the job description for International Energy Coordinator (redacted in the email), points to the origins of the idea behind the job. That is, it actually came from Lugar and Mills wrote that it would continue to “fulfill the mission outlined by the legislation” he introduced.

Mills was referring to the Energy Diplomacy and Security Act of 2006 and 2007, bills introduced by Lugar and co-sponsored by then-Senators Barack Obama, Joe Biden and Chuck Hagel, among others. Defense Secretary Hagel formerly served as Chairman for the Atlantic Council and sat on the Board for Chevron, one of Atlantic Council’s top funders.

That bill called for the creation of the International Energy Coordinator position.

Image Credit: U.S. Government Printing Office

Neither of those bills passed. Instead, the measure was inserted into the broader Energy Independence and Security Act of 2007 as Section 931. Lobbying records show Marathon Oil, ExxonMobil and Goldman Sachs all lobbied for both the original bill and the omnibus bill, with scores of other oil and gas companies also lobbying for the latter.

Lugar announced the bill for the first time at a Brookings Institution event in March 2006 at an convening moderated by Carlos Pascual, then Vice President and Director of Foreign Policy Studies for Brookings.

In October 2006, Gregory Manuel — who now works at MNL Partners, a clean energy project development and finance shop focused on China — became the first ever International Energy Coordinator for the Bush Administration State Department. The Manuel announcement occurred the same month as the powerful Council on Foreign Relations (CFR), heavily funded by the oil and gas industry, published a report advocating for the creation of a similar position within the White House’s National Security Council.

David Goldwyn, future International Energy Coordinator, sat on the task force (with current Secreatry of Energy Ernest Moniz) that authored the report and called for creation of the job.

Goldwyn also co-wrote a two-page “Additional View” section, which reads “We subscribe to the report’s analysis and recommendations, but the report understates the gravity of the threat that energy dependence poses to U.S. national security…All told, an incremental approach to the challenge—as advocated in this report—will not be adequate.”

At her 2009 confirmation hearing in front of the Senate Committee on Foreign Relations, then-Committee Chair Lugar asked Clinton if she intended to continue funding the position. She confirmed she did, and not long thereafter followed through on the promise — by hiring Goldwyn.

Both Clinton and Goldwyn did not respond to repeated requests for comment for this story.

“Mexico Rising”

An October 2009 email written by Mills mentions “engaging with…Mexico” as among Goldwyn’s top “energy security priorities.” Congressional testimony he delivered in April 2013 confirmed Goldwyn initiated energy reform efforts in Mexico while at the State Department, as did a story published a couple weeks later by Reuters.

A State Department diplomatic cable unearthed by Wikileaks sheds further light on Goldwyn’s efforts in Mexico.

“Mexico officials remain extremely sensitive about any public – especially US – comments regarding energy reform and production,” reads a February 2010 “scenesetter” cable written by the U.S. Embassy in Mexico for Goldwyn’s upcoming trip to Mexico. “We should retain the [U.S. government’s] long-standing policy of not commenting publicly on these issues while quietly offering to provide assistance in areas of interest to the [Mexican government].”

At the time that cable was published, Carlos Pascual served as U.S. Ambassador to Mexico, a job he would eventually leave to become Goldwyn’s successor as International Energy Coordinator. After leaving the State Department, Goldwyn continued that effort “to provide assistance” for energy reform alongside Neil Brown in the private sector.

Carlos Pascual. Photo Credit: U.S. Department of State

One of the last things Brown did in the Senate before getting a job with Goldwyn was to co-author a December 21, 2012 U.S. Senate Committee on Foreign Relations report on the then-proposed and since-passed U.S. Mexico Transboundary Hydrocarbon Agreement.

That agreement served as the first step of Mexico’s energy reform efforts, which opened up offshore oil in the Gulf of Mexico to international oil and gas companies, and was lobbied for by the likes of ExxonMobil, Chevron, BP, the American Petroleum Institute, Independent Petroleum Producers of America and others.

Brown “worked on the [Mexico energy reform] issue…as lead Republican international energy aide in the Senate,” according to Reuters and also went on a taxpayer-funded trip to Mexico during his last few months as a Foreign Relations Committee staffer.

Pascual also worked on the Transboundary issue when he was Ambassador, another Wikileaks cable reveals.

“Publicly, the [government of Mexico] will emphasize that the negotiations allow Mexico to defend its natural resources,” reads the Pascual-authored cable titled, “Transboundary Reservoirs – A Window of Opportunity.” “[M]any Mexicans consider oil a part of the country’s DNA. A treaty would address these concerns and avoid any unnecessary irritants between the two countries.”

Pascual then stated that, while the government of Mexico would posture one way to the people of Mexico, it intends to act in an entirely different way in terms of the policy it would push.

“[While the government of Mexico] will portray negotiations on trans-boundary reservoirs to the Mexican public as an effort to defend the country’s natural resources, the government sees a treaty as an important opportunity for PEMEX to work with IOCs and gain expertise in deepwater drilling,” he wrote. “For the first time in decades, the door to the USG‘s constructive engagement with Mexico on oil has opened a crack. It would be in our interests to take advantage of this opportunity.”

Not long after Brown left his Foreign Relations Committee job, Goldwyn and Brown co-authored a report for the Brookings Institution in August 2013, “Time to Implement the U.S.-Mexico Transboundary Hydrocarbons Agreement — Congress: Drop the Poison Pill.” The bill would pass months later and be signed into law by President Obama.

They also co-authored a report a year later for the Atlantic Council, “Mexico’s Energy Reforms: Ready to Launch.” Goldwyn also published a December 2013 Atlantic Council report, “Mexico Rising: Comprehensive Energy Reform At Last?,” which came out just one week after Mexico’s legislature passed constitutional reforms opening up its oil and gas spigot to international drillers.

Cashing In

Goldwyn, Pascual and Brown now stand to gain financially from the Mexico energy reform architecture they helped envision and construct.


Goldwyn works of-counsel for Sutherland Asbill & Brennan, a firm that helped the Enterprise Product Partners become the first company to get a permit to export processed oil condensate from the U.S. Department of Commerce in June 2014. In a biography appearing at the end of a September 2014 presentation he delivered to the U.S. Energy Information Administration, Sutherland partner Jacob Dweck disclosed he is presently “assisting clients” looking to export crude oil “as part of an exchange or swap.”

Doing a “swap” means exporting U.S.-produced crude oil to Mexico and trading it with Mexican-produced oil, serving as a way to wedge open the door on the current ban on U.S. oil exports.

Dweck and his Sutherland colleague Shelley Wong both sat on the Brookings Institution Crude Oil Task Force co-chaired by Goldwyn. All three of them contributed to a September 2014 Brookings report calling for increased exports of U.S.-produced crude oil, which was written in reaction to another report they funded and released simultaneously written by National Economic Research Associates (NERA).

Just months later, Columbia University’s Adrián Lajous released a 13-page white paper calling for U.S. crude oil exchanges with Mexico. In the acknowledgements for the paper, he thanked Dweck for “comments and suggestions that helped improve” it.


Pascual now sits as a Fellow at an outfit many believe is industry-funded, but which does not disclose its funding on its website: Columbia University’s Center on Global Energy Policy. The Center does, however, disclose it “welcomes support” from corporations. Both officials at Columbia and its spokesperson at BerlinRosin did not respond to repeated requests for comment on funding sent by DeSmog.

Besides Columbia, Pascual also works as Senior Vice President of Global Energy Affairs at IHS Inc., a for-profit consultancy business that provides analysis on behalf of corporate clients.

IHS has a unit devoted to “evaluating future options in Mexico with a scenarios-based approach built on quantitative and qualitative data to help shape a successful upstream entry strategy for Mexico that centers on the client’s specific needs,” its website explains. “A variety of foreign companies – ranging from the Majors to Independents to service sector firms – are expressing interest in capitalizing on Mexico’s largely untapped resource potential in six major plays, including: deepwater, offshore gas, shale and marginal PUDs in conventional areas.”

The Center on Global Energy Policy has also proven a friendly forum to promote energy reform efforts, which has both published pro-reform reports and also housed panels on the topic. Adrián Lajous, another Fellow at the center, formerly served as CEO for Pemex and wrote his own pro-reform paper in June 2014 bankrolled by none other than Goldman Sachs.

Pascual recently testified in front of the U.S. House Foreign Affairs Committee in support of energy reform efforts in Mexico wearing his IHS Inc. hat, with his placard referring to him as “Ambassador Pascual.”

Carlos Pascual IHS Inc.
Carlos Pascual; Photo Credit: U.S. House Foreign Relations Committee

He had previously done the same thing on multiple occasions as head of the State Department’s Bureau of Energy Resources when he was officially serving as an Ambassador.

Pascual denied comment for this story. But Jeff Marn, energy and natural resources spokesman for IHS, told DeSmog “We do research on several topics around the world, energy among them. But we don’t have a ‘stake’ in any development or outcome.”

IHS, though, does take huge batches of industry funding for its reports. A case in point: its two recent studies on U.S. oil exports, both of which were funded by companies ranging from ExxonMobil, Chesapeake Energy, ConocoPhillips, Chevron, Halliburton and many other companies.


KKR, where Brown now works, has already put its feet on the ground to profit from energy reform efforts in Mexico. This may explain why Brown and Petraeus co-wrote a July 2014 opinion piece published by the Houston Chronicle titled, “Mexico’s miracle: Political productivity.”

Neil Brown; Photo Credit: Twitter

In December 2014, Petraeus and colleagues from KKR took a trip to Mexico and expressed excitement over the “promise that the financial community sees in this country.”

Obviously we’re looking very closely at the energy space, upstream and downstream production, the entire gamut of that,” Petraeus told Bloomberg at the time.

His trip to Mexico came just two months after he co-authored a CFR report with Robert Zoellick (former head of the World Bank, now a chairman of international advisors at Goldman Sachs) calling for the “integration” of North America’s energy markets.

Just months later, KKR announced the launch of a joint venture with Monterra Energy, a new start-up created in the aftermath of Mexico’s energy reforms. KKR will serve as financier for the development of midstream oil and gas assets (like pipelines and related delivery infrastructure) owned by Monterra in Mexico.

Brown and KKR did not respond to repeated requests for comment.


“Integration” is where the story comes full circle. In March 2009, Lugar introduced legislation that would create a “Western Hemisphere Energy Cooperation Forum,” a concept recycled from section six of the initial Energy Diplomacy and Security Act.

That Forum, had the bill passed, would have served to “strengthen integration among countries in the Western Hemisphere through closer cooperation.” It was lobbied for by Marathon Oil, one of only 26 companies approved to bid for shallow water oil and gas reserves in Mexico during its recent July auction.

Lugar introduced the concept of the Forum, like the International Energy Coordinator idea, during his 2006 Brookings address moderated by Pascual.

North America Energy Integration

Image Credit: U.S. Department of Energy

Although it never became a piece of congressional legislation, it did become the de facto law of the land as a chapter in the U.S. Department of Energy’s recently-released Quadrenial Energy Review (QER).

Most recently, Goldwyn, Pascual and Brown all sat on Atlantic Council’s Task Force on the U.S. Energy Boom and National Security. That Task Force, co-directed by Godlwyn, released a report pointing to the QER to advocate for “infrastructure and policy integration” with Mexico.

Climate of Profit


view this map on LittleSis

Hillary Clinton recently released her energy and climate plans for her presidential campaign, lauded by some.

But to date, she has not commented on the energy reform efforts in Mexico her State Department helped spearhead, which will usher in more deepwater offshore drilling in the Gulf of Mexico and onshore fracking in Mexico’s portion of the Eagle Ford Shale basin. It will also flood the electricity grid with fracked gas emanating from the U.S., a fact proudly proclaimed by Goldwyn and the U.S. Department of Energy.

“[A]s secretary of state, we know that there was quite a revolving door between the oil and gas lobby and her people at State and on her previous campaign staff,” Naomi Klein, author of the book “This Changes Everything: Capitalism vs. the Climate,” said in a recent appearance on Democracy Now! “And I think there’s real reason for concern about whether or not she would be willing to stand up to the oil and gas lobby on Keystone, on Arctic drilling, [or] on any…other issues.”

One thing appears certain: those who laid the groundwork for energy reforms in Mexico have created a perfect climate to profit from the fruits of their labor.

Photo Credit: Wikimedia Commons


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Reshuffling Eurasia’s energy deck — Iran, China and Pipelineistan

Reshuffling Eurasia’s energy deck — Iran, China and Pipelineistan

By Pepe Escobar
Asia Times
July 31, 2015

Pipelineistan – the prime Eurasian energy chessboard — never sleeps. Recently, it’s Russia that has scored big on all fronts; two monster gas deals sealed with China last year; the launch of Turk Stream replacing South Stream; and the doubling of Nord Stream to Germany.

Now, with the possibility of sanctions on Iran finally vanishing by late 2015/early 2016, all elements will be in place for the revival of one of Pipelineistan’s most spectacular soap operas, which I have been following for years; the competition between the IP (Iran-Pakistan) and TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipelines.

The $7.5-billion IP had hit a wall for years now – a casualty of hardcore geopolitical power play. IP was initially IPI – connected to India; both India and Pakistan badly need Iranian energy. And yet relentless pressure from successive Bush and Obama administrations scared India out of the project. And then sanctions stalled it for good.

Now, Pakistan’s Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi swears IP is a go. The Iranian stretch of the 1,800-kilometer pipeline has already been built. IP originates in the massive South Pars gas fields – the largest in the world – and ends in the Pakistani city of Nawabshah, close to Karachi. The geopolitical significance of this steel umbilical cord linking Iran and Pakistan couldn’t be more graphic.

Enter – who else? – China. Chinese construction companies already started working on the stretch between Nawabshah and the key strategic port of Gwadar, close to the Iranian border.

China is financing the Pakistani stretch of IP. And for a very serious reason; IP, for which Gwadar is a key hub, is essential in a much larger long game; the $46 billion China-Pakistan economic corridor, which will ultimately link Xinjiang to the Persian Gulf via Pakistan. Yes, once again, we’re right into New Silk Road(s) territory.

And the next step regarding Gwadar will be essential for China’s energy strategy; an IP extension all the way to Xinjiang. That’s a huge logistical challenge, implying the construction of a pipeline parallel to the geology — defying Karakoram highway.

IP will continue to be swayed by geopolitics. The Japan-based and heavily US-influenced Asian Development Bank (ADB) committed a $30 million loan to help Islamabad build its first LNG terminal. The ADB knows that Iranian natural gas is a much cheaper option for Pakistan compared to LNG imports. And yet the ADB’s agenda is essentially an American agenda; out with IP, and full support to TAPI.

This implies, in the near future, the strong possibility of Pakistan increasingly relying on the China-driven Asian Infrastructure Development Bank (AIIB) for infrastructure development, and not the ADB.

Recently, the IP field got even more crowded with the arrival of Gazprom. Gazprom also wants to invest in IP – which means Moscow getting closer to Islamabad. That’s part of another key geopolitical gambit; Pakistan being admitted as a full member, alongside India, of the Shanghai Cooperation Organization (SCO), something that will happen, soon, with  Iran as well. For the moment, Russia-Pakistan collaboration is already evident in an agreement to build a gas pipeline from Karachi to Lahore.

Talk to the (new) Mullah

So where do all these movements leave TAPI?

The $10 billion TAPI is a soap opera that stretches all the way back to the first Clinton administration. This is what the US government always wanted from the Taliban; a deal to build a gas pipeline to Pakistan and India bypassing Iran. We all know how it all went horribly downhill.

The death of Mullah Omar – whenever that happened – may be a game changer. Not for the moment, tough, because there is an actual Taliban summer offensive going on, and “reconciliation” talks in Afghanistan have been suspended.

Whatever happens next, all the problems plaguing TAPI remain. Turkmenistan – adept of self-isolation, idiosyncratic and unreliable as long as it’s not dealing with China – is a mystery concerning how much natural gas it really holds (the sixth largest or third largest reserves in the world?)

And the idea of committing billions of dollars to build a pipeline traversing a war zone – from Western Afghanistan to Kandahar, not to mention crossing a Balochistan prone to separatist attacks — is nothing short of sheer lunacy.

Energy majors though, remain in the game. France’s Total seems to be in the lead, with Russian and Chinese companies not far behind. Gazprom’s interest in TAPI is key – because the pipeline, if built, would certainly be connected in the future to others which are part of the massive, former Soviet Union energy grid.

To complicate matters further, there is the fractious relationship between Gazprom and Turkmenistan. Until the recent, spectacular Chinese entrance, Ashgabat depended mostly on Russia to market Turkmen gas, and to a lesser extent, Iran.

As part of a nasty ongoing dispute, Turkmengaz accuses Gazprom of economic exploitation. So what is Plan B? Once again, China. Beijing already buys more than half of all Turkmen gas exports. That flows through the Central Asia-China pipeline; full capacity of 55 billion cubic meters (bcm) a year, only used by half at the moment.

China is already helping Turkmenistan to develop Galkynysh, the second largest gas field in the world after South Pars.

And needless to add, China is as much interested in buying more gas from Turkmenistan – the Pipelineistan way – as from Iran. Pipelineistan fits right into China’s privileged “escape from Malacca” strategy; to buy a maximum of energy as far away from the U.S. Navy as possible.

So Turkmenistan is bound to get closer and closer, energy-wise, to Beijing. That leaves the Turkmen option of supplying the EU in the dust – as much as Brussels has been courting Ashgabat for years.

The EU pipe dream is a Pipelineistan stretch across the Caspian Sea. It won’t happen, because of a number of reasons; the long-running dispute over the Caspian legal status – Is it a lake? Is it a sea? – won’t be solved anytime soon; Russia does not want it; and Turkmenistan does not have enough Pipelineistan infrastructure to ship all that gas from Galkynysh to the Caspian.

Considering all of the above, it’s not hard to identify the real winner of all these interlocking Pipelineistan power plays – way beyond individual countries; deeper Eurasia integration. And so far away from Western interference.




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“Bomb Iran” plan simply won’t go away

“Bomb Iran” plan simply won’t go away

By Pepe Escobar
RT – Russia Today
July 30, 2015

Even before the upcoming August recess on Capitol Hill, the dogs of war, unleashed by remote control from Tel Aviv, predictably are trying to tear the Iran-P5+1 nuclear deal to shreds from all sides.

It does not matter that the National Iranian American Council – which happens to be widely respected in Washington itself – has forcefully come out in defense of the deal.

It does not matter that the Obama administration can count on the combined efforts of the so-called E3 ambassadors (Britain, France and Germany) in Washington, who are exhausting themselves to explain the obvious: This is an international treaty, already approved by the United Nations, and not a parochial squabble decided in Idaho.

On the other hand, it does matter that the Obama administration has not been forceful enough to defend its strategy as well as the result of such a long and treacherous negotiation.

So there are now two narratives shaping the battle ahead in Washington.

1) Iran is a rogue nation, an existential threat to Israel, and it cannot be trusted. It will breach the deal, so the deal must be rejected to the benefit of… perpetual sanctions, or war.

2) Iran is a rogue nation, it cannot be trusted, but we have all the verification mechanisms in place and as soon as Iran “cheats” – as it will – we launch immediate “snap back” sanctions.

No wonder, under these circumstances, Washington simply cannot be trusted by Tehran.

Who’s really trustworthy?

Now for the other side of the narrative.

On July 18, four days after the deal was signed in Vienna, Supreme Leader Ayatollah Khamenei – foreseeing which way the D.C. wind would be blowing – went straight to the point; his intervention delineated the parameters according to which Iran would work to actively debunk a massive propaganda machine that continues to demonize the Islamic Republic even as it touts a victory for Western diplomacy.

The victory in Vienna was in fact for diplomacy tout court – East and West working together.

Even before his speech, Khamenei had already touched upon the key point when he sent a short message to President Hassan Rouhani a day after the deal.

This is the money quote:
“…it is necessary to very carefully study the text that has been prepared, so that it can then move in the legal direction that has been determined for it. Then, in the case of ratification, it is necessary to be on the alert for possible breaches of agreements by the other side and the blocking of its path. You know very well that some of the six governments in the opposite camp are not trustworthy in any way.”

The E3 may not be entirely “trustworthy,” but here, it’s all about business; there’s nothing Britain, France, Germany – and the rest of the EU, for that matter – want more than restarting business with Iran in the energy front and beyond.

The battle in Washington, on the other hand, will be gruesome, even as the Obama administration remains confident the dogs of war don’t have the necessary votes to block the implementation of the deal, as Iranian diplomats confirmed to me in Vienna during the negotiations.

In Tehran, on the other hand, the deal should be approved by the Consultative Assembly with no problems.

The bottom realpolitik line, as defined by Khamenei himself, is that the US/Iran Wall of Mistrust seems destined to remain in place – far beyond the nuclear agreement. Multiple Washington factions, not to mention the Pentagon, continue to regard Iran as a “threat”, a rogue nation, or evil incarnate, while Tehran sees Washington as “the heart of global arrogance”.

So the geopolitical path ahead for Iran – whatever happens after the deal is ratified in both capitals and the package of sanctions starts to unravel by late 2015/early 2016 – is Eurasia integration, as I outlined more here.

That implies closer cooperation – and a three-way strategic partnership – between Iran, Russia and China. And that further implies the “Bomb Iran” dogs of war getting even more bloodthirsty.

Pepe Escobar is the roving correspondent for Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a frequent contributor to websites and radio shows ranging from the US to East Asia. Born in Brazil, he’s been a foreign correspondent since 1985, and has lived in London, Paris, Milan, Los Angeles, Washington, Bangkok and Hong Kong. Even before 9/11 he specialized in covering the arc from the Middle East to Central and East Asia, with an emphasis on Big Power geopolitics and energy wars. He is the author of ‘Globalistan’ (Nimble Books, 2007), ‘Red Zone Blues’ (Nimble Books, 2007), ‘Obama does Globalistan’ (Nimble Books, 2009) and a contributing editor for a number of other books, including the upcoming ‘Crossroads of Leadership: Globalization and the New American Century in the Obama Presidency’ (Routledge). When not on the road, he alternates between Sao Paulo, New York, London, Bangkok and Hong Kong.


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Navajo Nation vows to sue EPA after toxic mine spill

Navajo Nation vows to sue EPA after toxic mine spill

By Amy R. Connolly
UPI – United Press International
August 13, 2015

Jerry McBride/Durango Herald 08/06/15-Durango - Mine waste from the Gold King Mine north of Silverton fills the Animas River at Bakers Bridge on Thursday morning.

Jerry McBride/Durango Herald
08/06/15-Durango – Mine waste from the Gold King Mine north of Silverton fills the Animas River at Bakers Bridge on Thursday morning.

SHIPROCK, N.M., Aug. 13 (UPI) — The Navajo Nation vowed to sue the U.S. Environmental Protection Agency over a toxic wastewater spill into waterways throughout the Southwest and warned tribal residents to avoid signing the EPA’s compensation form because it will effectively sever their legal and financial rights.

Navajo Nation President Russell Begaye ordered the nation’s Department of Justice to take action against the EPA and signed a directive banning the agency from distributing information about the federal compensation regarding the spill from the Gold King mine, north of Silverton, Colo., into the Animas and San Juan rivers and its tributaries throughout Colorado, New Mexico and Utah.

Navajo Nation Attorney General Ethel Branch said the federal form “contains offending language that will waive future claims for individuals that sign the form and preclude our people from seeking full compensation for injuries” suffered as a result of the release of some three million gallons of toxic mine waste on Aug. 5.

“The spill has impacted us religiously, emotionally, financially,” Begaye said, adding it has affected more than 100,000 Navajo residents, cutting off drinking water and water for irrigation and farming.

“Relocated farmers now need to buy hay and haul water; others living along the river are forced to drive up to 200 miles to find bottled water. People with an average salary of $12,000 are expending dollars on things that they wouldn’t have,” Begaye said.

Wednesday, EPA Administrator Gina McCarthy ordered a halt to the agency’s clean-up work at the Gold King mine and other sites, pledging a thorough investigation into the accident cause in part by the agency’s own contractors, Environmental Restoration LLC, a St. Louis-based firm.

“It is a heartbreaking situation,” McCarthy said in a news conference in Durango, Colo., about 48 miles downstream from the spill site. “We are going to be transparent and collaborative in making sure people have the information they need.”

The EPA has come under harsh criticism from the Navajo Nation, state governments and other environmental organizations for its response to the spill, which happened as an earthen barrier gave way at the gold mine, sending orange-colored sludge containing high levels of arsenic and lead into the waterways. Initially, officials said the spill was some one million gallons but later tripled the number.

During her tour of the area, McCarthy said the river “seems to be restoring itself,” but Navajo Nation officials scoff at the idea. They said the area needs to be declared a Superfund cleanup site, which provides larger amounts of federal funding.

“They are not going to get away with this,” Begaye said. “The EPA was right in the middle of the disaster, and we intend to make sure the Navajo Nation recovers every dollar it spends cleaning up this mess and every dollar it loses as a result of injuries to our precious Navajo natural resources.”


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