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Iran To Join Shanghai Cooperation Organization

  1. Apr 24, 2006 #1
    :smile: Greetings to all. Don't know if this development has already caught your attention, if so please ignore it.

    http://www.cnsnews.com/ViewForeignBureaus.asp?Page=/ForeignBureaus/archive/200604/INT20060419b.html

    http://www.atimes.com/atimes/China/HD18Ad02.html

    Map: http://worldatlas.com/webimage/countrys/as.htm
     
  2. jcsd
  3. Apr 24, 2006 #2

    Astronuc

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    Well, if the US can arrange economic and military/security alliances, why not China. Of course, the Bush Administration believes it has sole (and probably God-given) right to make such arrangements and dominate the 'free' world. :rolleyes:

    Now even some of the political conservatives are expressing concern about the Imperial Bush presidency. I bit late they are, IMO. :rolleyes:
     
  4. Apr 25, 2006 #3

    SOS2008

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    I brought up the SCO some time ago. My largest concern has been currency related. China's devaluation of it's currency has already been hurtful to the U.S., and if Iran or other countries agree to go off the U.S. dollar (as Saddam did just before the invasion), this would be the beginning of something far more serious than useless NAFTA-type trade agreements. Already we have seen the strength of the Russia-China partnership, so the SCO could grow beyond that of NATO easily. And if more oil producing countries such as Iran join and agree to sell more percentage of oil to China and India, who cares about OPEC.

    The U.S. cannot be a unilateral cowboy in the world and succeed, nor can it allow multi-national greed to drive policy. Otherwise the U.S. will have only itself to blame for lack of intelligent strategy and preparation in the new global arena.
     
  5. Apr 26, 2006 #4
    :smile: Hi SOS, long time no see, how are you?

    It is funny how some of the most seismic political and economical development seldom receives commensurable coverage. Here is another little gem reported some time ago that absolutely seized my imagination:

    http://www.fin24.co.za/articles/com...?Nav=ns&lvl2=comp&ArticleID=1518-1783_1916479

    A clever way to help the Chinese to preserve the value of their hard earned RMB against the ever-inflating supply of USD no doubt, but also a painless and uneye-catching way to facilitate the transfer of American capital to the general public in the Mainland. I think if this mode of investment caught on, the effect could be biblical.
     
  6. Apr 26, 2006 #5
    What would happen if China decides to help Iran if the U.S. invades:bugeye: Will it become WWIII:surprised (I think that's highly unlikely).
    But if that did happen what could the U.S. do against China?Build alot of nukes or would we build an alliance with Japan and let them have a milltary again so we can have some other countries help us.
     
  7. Apr 27, 2006 #6
  8. Apr 27, 2006 #7

    Astronuc

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    China's Hu Signs Oil Deal With Nigeria
    http://abcnews.go.com/International/wireStory?id=1897509&CMP=OTC-RSSFeeds0312

    Certainly, if China helps develop Africa, then Chinese corporations will benefit from access to oil and minerals.
     
  9. Apr 27, 2006 #8

    Gokul43201

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    China has recently been developing very strong ties with Cuba and Venezuela. Right now, China is bidding on, and will likely win, rights to explore oil leases in the Gulf of Mexico, which are offered for development by Cuba. This particular region gets as close as 50 miles from the Florida Keys, greatly upsetting a lot of Americans.

    1. The US does not drill off the Florida keys for environmental reasons. Many right-wing commentators think this is a broken policy, especially now that China is going to be drilling right off their backyard (though not within eyeshot from the Keys, as I heard a couple of Fox News commentators claim*).

    2. The US is not one of Cuba's best friends and won't be allowed to bid on this particular stretch. But there are oil-rich areas nearby in US waters.

    * To be visible at 50 miles, the rig will have to be about 1600 ft high (above sea level); I think typical heights are about a couple of hundred feet or so. But it is more rousing if you say, "you'd be able to look out from the Florida Keys and see a Chinese oil rig".
     
  10. Apr 30, 2006 #9
    Open economy?

    Dow Chemicals is developing a coal-to-olefins pilot plant in Inner Mongolia, to use China's huge coal reserves as an alternative chemical feedstock. Why is this different from China erecting an oilrig near the US?
     
  11. Apr 30, 2006 #10
    :biggrin: Gottcha mite!

    To stay on topic...why?
     
  12. May 1, 2006 #11

    Astronuc

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    It isn't, of course. The US doesn't like competition.
     
  13. May 12, 2006 #12
    Don't know where else to put it, a bit of a breaking news.

    http://www.chinathetimes.com/

    Exchange rates at work:
    http://www.forexnews.com/
     
  14. May 26, 2006 #13
    Iran is not joining the SCO as a full member - not anytime soon at least.

    It may aspire to, but there is no plan in the works that has come from the top level SCO leadership. Some Russian politicians in the Duma have proposed that Iran be granted full membership status, but while Russia is a member, these politicians themselves play no direct role.

    Iran is a country with observer status like, I think, India, Pakistan and others.

    Currently, President Ahmedinejad is the only head of state of an observer nation slated to come (though there's been speculation that Pakistan's Musharraf might show as well).


    While it's true that several parties have proposed Iran being granted full-membership status, including Iran, the fact remains that this is just another lever being pulled by those interested in putting a little more pressure on and adding a little more ambiguity to Western diplomatic efforts. A lot of this is in response to the nuclear issue, sure, but a lot of it also has to with feinted reciprocations for western accession bids by former Soviet countries like Azerbaijan, Georgia, and the Ukraine. After all, Iran only became was granted observer status three years ago.


    Though I hate the cliche, it's all "posturing".
     
  15. May 26, 2006 #14

    SOS2008

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    So, this summer both Russia and Iran are slated to go off the US$ for petrol. Combined, that is about 20% production of oil, and in Russia's case, also gas. This will cause the Feds to raise rates higher than originally planned to maintain the value of the dollar and attempt to control inflation. I wonder if/how this may affect the November elections.

    What Iran really wants is direct talks, but Bush refuses, and continues to increase pressure on Iran.
     
  16. May 26, 2006 #15
    Sorry, but I'd really like someone to confirm (via better or multiple sources) that either Iran and/or Russia are really switching their pricing of a barrel of oil from the US $ to a basket or the Euro.

    I've heard the rumors from Iran as well, but I think these are musings only. I haven't even heard of Russia's proposals.

    These are incredibly major economic choices and, while I believe there's a lotta talk, I'd be really suprised that the mainstream media hasn't gotten all over this if it's more than rumor.

    Funny enough, the last country to voice an allegedly serious consideration for a switch away from USD was Iraq in early 2003...
     
  17. May 27, 2006 #16
  18. May 27, 2006 #17
    Very interesting. Thank you.

    For now it seems like only the Russian proposal is close to realization, correct? I didn't think that Iran had a stable enough currency to legitimately propose this in a credible way to foreign investors. I'm still not convinced that they do.

    I know I'm being stubborn, but I still don't think that any major international investors will buy this plan and therefore I'm really not sure that it's more than talk. By "it", I mean Russia trading it's oil and gas for export (which is the only real meaningful change for the dollar) in a currency other than the dollar.

    Not that I think that the US dollar is strong, but compared to the Ruble it's a godsend. Russia does not have the stable monetary policy controls needed for international investors to trade oil in. They control the price of oil (which is certainly their right, but also a confidence-busting market practice) due to foreign policy concerns and objectives generally far removed from energy issues. For countries they like or want to influence (including domestically), the oil and gas is enormously subsidized; for countries they are angry with or want to put pressure on, the oil and gas is sold market-price generally along with a slightly higher risk premium. Again, I've got no real beef with that, but if you're a dollar-denominated importer (which is almost every major importer including China since the yuan's pegged), then that business practice is sketchy at best.

    Yet any major export pricing system (like the one proposed for the fairly distant future) will have to rely on the Russian market system for oil and gas (sketchy) as well as the Russian central monetary policy (much sketchier). As several prominent Russian finance ministry officials have said, without a high price of energy, the Russian economy is stalled if not fast receeding. [Granted such an exchange program would drive oil WAY higher, by 10 to 20 dollars per BOE Russian.] But take away high energy prices, which this plan would ultimately do - because it would fuel any already prevalent global economic slowdown, including energy demand - and such a proposal could ultimately collapse the Russian economy.

    If you make the price of oil really high (which crude oil export-trading in Rubles [which is NOT the approaching new system, which is trading for petroleum products, domestically,], then you allow the exporting nation - in this case, Russia - to gain a lot of money in the short term. But what happens five or ten years after that is that the price of oil becomes so high that it spurs rapid inflation and ultimately a global economic recession (again, this is precisely what is happening now - in addition to a spending crunch from declining housing - in the global economy due to the natural revaluation of commodities from suppressed lows), is that the global recession that your high oil prices have helped create ends up making other nations unable to pay you for as much high priced oil, so that your primary source of income - while you gain more per unit - ends up actually declining and crippling your larger economy, because it is dependent on oil for money. Furthermore, having a high but not too high price of oil allows the government of Russia to procur enough funds to continue to heavily subsidize its own energy consumption AND make a huge profit; if folks stop buying as much energy cause they're broke or close to it, then they'll still have to subsidize energy nationally (which won't be difficult cause it's abundant) but they will suddenly have no source of income. The solution is to pump money into your economy by printing a hell of a lot, creating huge amounts of inflation. This would kill the Ruble in such a way that if the global economy ever did come back online and demand energy at those high prices, the Ruble would be incredibly devalued.

    Anyway, that's my thought at least.

    That said, I too see the trend of countries moving away from oil valuation in dollars (which has grown absurd) toward a larger basket of currencies or, better still, gold.

    Gold is the traditional hedge against high oil prices and dollar devaluations, so if anything I'd imagine we see more of this included in any basket.

    Still, that Russia would ever sell all its energy exports in Rubles seems unrealistic and unlikely. But that's just my opinion.

    (Remember, as long as China's pegged or close to the dollar, they wouldn't gain either.)
     
  19. May 27, 2006 #18
    As for Venezuela, if Chavez is serious about moving his oil export denomination from dollars to anything else, he is truly a fool - which I don't think he is. Lest he forget, Citgo - Venezuela's national oil company - refines a substantial portion of its heavy, sludgy crude (not a dis, lol) in Citgo refineries in the US. He then sells it to the US, by far his biggest market, who buys it because it's cheap because it's priced in dollars and because the tankers which take it the relatively short distance from venezuela to the us themselves run on cheap oil caused it's priced in dollars. So to recap, his plan is to fight the US by pricing his oil in non-dollars, killing his only market, cutting off his only source of income, and then paying for his new air force, a Russian one, (since he forced the US to discontinue fixing his old one, f-16s) with money that he doesn't have. Great plan.

    When the price of oil, cyclically, goes up internationally, for some reason every nutjob with a beret thinks that they can keep taking a larger and larger cut, until they nationalize their oil industry, de jure or de facto. Then they look around in 5 years when the price declines and realize that their only source of income is gone, because they took the machinery but kicked out the people who knew how to run and fix it. Now their oil industry can't be competitive when it needs to be, and the only people who will be in charge to see that change are the ones who are open to the west coming to fix their rigs and run em in exchange for an open market. Nationalization to privatization to nationalization to privatization - you'd think they'd see a pattern.

    If they were really smart, like the US, they'd print money and carry it around in big cases with soldiers next to it and tell the world it's worth something.

    Hooray for Antarctica!
     
  20. May 27, 2006 #19

    SOS2008

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    I agree that Russia's plan to move off the US$ to the Ruble for petrol (and/or creating their own stock exchange) is precarious because of lack of economic stability in their country. Cooperation between Russia and China has greatly increased, particularly in regard to petrol, which China desperately needs. But is China desperate enough to be supportive of Russia's plans? Nonetheless, it does not mean Russia isn't serious and won't move forward with these plans.

    China has also looked at going off the US$ to the Yuan, but since they are one of the major holders of U.S. debt (buying $ to counter the demand for the Yuan), they must be careful about undercutting the US$ too much. (http://www.epinet.org/content.cfm/webfeatures_snapshots_archive_10302003se)

    Venezuela produces heavy crude that must be refined in the U.S., so they are not really in a position to go off the US$ for their petrol, at least not right now. If they are smart, they would invest in refineries first.

    However, Iran's plans to move off the US$ to the Euro for petrol is much more viable, and Iran actually has a more diverse and stable economic base than Russia--even with sanctions. And even 5% of the world's petrol can have an impact on the value of the US$. This is the most likely scenario, especially if the U.S. continues to refuse direct talks.

    Who knows what might come from the SCO, specifically between the three countries, Russia, China and Iran. If they all moved to one common currency, such as the Euro or maybe the Yuan, then there could be more to all this.
     
  21. May 27, 2006 #20
    :biggrin: I have always liked pictures, so I find this picture of the modest Russian bourse very interesting.

    http://en.rian.ru/russia/20060522/48434383.html

    This article on why Iran and other observer countries will not be joining SCO any time soon is also a worthwhile read.

    http://en.rian.ru/analysis/20060517/48259958.html

    PS. I just discovered from the Chinese language version of the same site that "given the good relationship between the observer states and the SCO and that some of the observer countries have openly requested membership status, there is reason for the issue of membership to be discussed in the meeting of 15th June."

    http://rusnews.cn/guojiyaowen/guoji_sco/20060526/41459669.html

    PPS Also of interest from the site, M1 supply of Russia has increased by 40.3 billion rubles in the past week from 2.3367 trillion to 2.377 trillion rubles.

    http://rusnews.cn/eluosi_caijing/20060526/41459455.html
     
    Last edited: May 27, 2006
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