Sharon in Moscow to Line up with Bush-Putin Global Strategy

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Israeli prime minister Ariel Sharon holds talks in the Kremlin Monday, November 3, with Russian president Vladimir Putin. These talks, according to debkafile‘s intelligence, Moscow and Washington sources, focus on Israel’s place in the epochal global strategy Presidents George W. Bush and Putin are developing. As the new concept hammered out in person by the two presidents unfolds, it will bear vitally on the worldwide battle against terror, the Iraq War, the terrorist offensive instituted by Bashar Assad, Yasser Arafat and Hassan Nasrallah, and the international balance of military strength, with drastic changes in store for the Arab Middle East and Persian Gulf, in particular.
Bush and Putin agreed to co-opt the Israeli prime minister to their project, which will undoubtedly yield personal, political, intelligence and economic changes over the years ahead. The two leaders are aware they face some rough passages, but are determined to forge ahead toward their uniquely ambitious objective which is, in a nutshell, the establishment of a shared American-Russian world hegemony based on the twin foundations of US economic and military strength and Russian oil wealth.
Therefore, debkafile‘s analysts warn against lending too much importance to three outward manifestations:
A. Apparent American weakness in Iraq and the shocking upsurge of bloodshed, culminating in the shock of 19 American deaths in a single day on Sunday November 2.
B. Russia’s apparent economic and financial losses in the wake of Putin’s order to arrest the powerful Yukos magnate Mikhail Khodorkovsky. The Bush administration is behind the Russian president every step of the way.
C. Sharon’s silence amid severe domestic setbacks. He seems to have his back to the wall against the opposition on two key issues, economic cutbacks and never-ending Palestinian terror. The reasons for his apparent passivity he has confided only to three Likud ministers: defense minister Shaul Mofaz, finance minister Binyamin Netanyahu and trade minister Ehud Olmert.
The Israeli leader is pinning his prospects and Israel’s hopes for the future on two developments already in motion:
1. US-Russian military and intelligence collaboration in the Iraq and Chechen conflicts which is expected to have a negative effect on the Palestinian terror campaign and cut short its heavy dependence on Damascus-Hizballah input.
2. The structural economic reforms Netanyahu has begun to enact with the prime minister’s full backing. While highly unpopular and grist for the mills of the opposition and trade unions, those reforms are designed to bring Israel in line with the global economic revolution stemming from the Bush-Putin alliance. There are some indications that the new Chinese leader Hu Jintao may be want to jump aboard too.
Israel’s once omnipotent Histadrut trade unions federation is therefore battering futilely against the hard wall of government resistance – even when its leader Amir Peretz declares he has the power to shut the country down by a comprehensive general strike. The Sharon government has resolved not to be left trailing behind when new economic patterns take shape in the world order. Unless it joins now, Israel will find itself increasingly isolated in the Middle East arena with diminishing expectations of American economic and political backing.
The US and Russian presidents have been moving quietly ahead on a key joint project.
Bush-Putin Oil Deal
“The Murmansk Pipeline and Terminal” is a magical code in the relationship between Bush and Putin. Vladimir Putin. It was described by DEBKA-Net-Weekly‘s Washington and Moscow sources (in issue 125 on September 12, 2001) as a powerful keyword for a range of major international issues such as stability in Iraq and the guerrilla war waged against US forces there, the global war against al Qaeda now beginning its third year and the threat of North Korean and Iranian nuclear armament. Their first reciprocal pledges were made when they met on June 1 in St. Petersburg (as reported by DEBKA-Net-Weekly 111 on May 30, 2003), hinging on a promise by Bush of US financial and technological assistance for the Murmansk Project.
This colossal project entails the building of a major new pipeline to ship West Siberian crude through a deepwater terminal near Murmansk inside the Arctic Circle from Russia to North America. The pipeline would not only reduce American dependency on Middle East oil, but bring a major oil source significantly closer to the American market than the Persian Gulf.
Murmansk has two major advantages. It is a deepwater port, capable of handling the largest supertankers and, despite its location north of the Arctic Circle, isable to operate around the year.
Construction is projected to begin in 2004 with the pipeline being ready for operation in 2007. Preliminary estimates put the total cost at between $3.4 bn and $4.5 bn, depending on the route finally chosen.
According to the US-Russian program discussed at the St. Petersburg summit, some 13 percent of US oil imports will come from Russia by the year 2010, reducing the OPEC input from 51 percent of US consumption to 40-42 percent in 2010.
On the strength of this pledged partnership, the two presidents decided in St. Petersburg that while their policies might ostensibly differ on various key issues such as Iraq and Iran, their basic mutual commitment would be preserved. For instance, Washington would receive from Moscow tangible covert military and intelligence support for standing up to the guerrilla war in Iraq.
This cooperation intensified in recent weeks when Chechen separatist fighters were discovered to have joined the guerrillas fighting American forces in central Iraq.
Our military sources reveal that Moscow has secretly sent over to Iraq a group of its finest intelligence experts on Chechen warfare with information for the American command on their combat methods, their identities and the routes that brought them into Iraq.
Presidents Bush and Putin have also secretly agreed to prevent Iran from attaining the capability for building its own nuclear bomb.
DEBKA-Net-Weekly‘s Washington’s sources sum up the oil project’s origins and chances.
Russia’s largest oil producers, Lukoil, Yukos, Tyumen Oil, Surgut and Sibneft – which account for about half of Russia’s oil production and are rivals in other areas – agreed last year to join in the construction of the Murmansk pipeline, funding the project from private sources and financing a feasibility study to be carried out by the state company Transneft, which would also act as its operator.
Transneft agreed to carry out the feasibility study, indicating the state company will accept the role of operator. However, the company’s deputy director Sergei Grigoriev has denigrated the Murmansk project as expensive and, therefore, of a lower priority for Transneft than other projects, such as the expansion of the Baltic pipeline system to Primursk or the pipelines to China and Croatia. He estimated the feasibility study would be finished in two years. His lack of enthusiasm for the Murmkansk pipeline may arise from the fact it would it be the only Russian pipeline Transneft does not own.
Russia’s oil producers complain about Transneft’s slowness. They say if the project is not implemented soon, the acute capacity bottleneck in Russia’s oil export infrastructure could force transportation costs to skyrocket and a cut in production.
Yukos-Sibneft Merger
When the two companies finalize their merger, their combined production will reach 2.3 million bpd, making the new firm the sixth largest in the world and triggering further amalgamations. At present, while Russia is the second largest oil exporter in the world after Saudi Arabia, its dozen or so producers are too small to compete with the big international firms.
The goal of the joint Yukos-Sibneft company, approved by the Russian government, is to compete with the international giants like Exxon Mobil, BP and Royal Dutch/Shell for financing, reserves and markets. The formation of a Russian oil giant enables Putin to ward off domestic criticism of American domination of Russian oil resources, including the Murmansk project. The rationale for Putin’s order last week to arrest Mikhail Khdorkovksky, the Yukos tycoon, and initially impound 44 percent of the company’s shares, is his resolve not to allow a private individual to control the most important meeting-point of Moscow’s economic cooperation with Washington. The Russian president was not worried about the impact of this step on the Russian currency and economy. He moved with a promise from Bush in his pocket of US support on the world’s financial markets.
Advantages of Murmansk Terminal
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1. The Gulf Stream currents prevent the freezing of its waters, which means the terminal can be used the year round.
2. Its waters are deep enough for 300,000-ton super tankers, reducing costs and making it possible to export massive cargoes of up to 9 million barrels of crude per day (450 million per annum).
3. The pipeline will be privately owned instead of a government monopoly.
4. The tankers can head straight out of Barents Sea into the Atlantic and on to the US coast.
The Military Aspect
These assets also made Murmansk a favorite main base for the Russian Northern Fleet’s Atlantic operations. While the Russian fleet and air commanders refrain from speaking out openly against the Murmansk pipeline project, they are far from happy. They are worried about their main facilities against the US Navy being opened up to intelligence penetration. The construction of a deepwater terminal will enable the Americans to install electronic surveillance equipment that could jam Russian naval operations.
These objections are set aside firmly by Putin’s military advisers who say that, in any case, large sections of the Murmansk base have fallen into disuse and their installations and the warships and submarines moored there are rusting over. Turning the port over as an oil terminal, they say, will make it possible to move the Russian Northern Fleet to a smaller and more modern base.
Part II will appear Tuesday, November 4, 2003

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