Treaty for the Establishment of a BRICS Contingent Reserve Arrangement

Treaty for the Establishment of a BRICS Contingent Reserve Arrangement

    Wednesday, July 16, 2014   No comments

Treaty for the Establishment of a BRICS Contingent Reserve Arrangement – Fortaleza, July 15

This BRICS Contingent Reserve Arrangement ("CRA") is between the Federative Republic of Brazil (“Brazil”), the Russian Federation (“Russia”), the Republic of India (“India”), the People’s Republic of China (“China”) and the Republic of South Africa (“South Africa”) (henceforth referred to, individually, as “Party”, and collectively, as the "Parties").

 WHEREAS, the Parties agree to establish a self-managed contingent reserve arrangement to forestall short-term balance of payments pressures, provide mutual support and further strengthen financial stability.




WHEREAS, the Parties agree that this contingent reserve arrangement shall contribute to strengthening the global financial safety net and complement existing international monetary and financial arrangements.
THEREFORE, this Treaty sets out the terms and conditions of such contingent reserve arrangement, as follows:

Article 1 - Objective


The CRA is a framework for the provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.

Article 2 - Size and Individual Commitments

    The initial total committed resources of the CRA shall be one hundred billion dollars of the United States of America (USD 100 billion), with individual commitments as follows:



                    i.         China – USD 41 billion

                  ii.         Brazil – USD 18 billion

                iii.         Russia – USD 18 billion

                iv.         India – USD 18 billion

                  v.         South Africa – USD 5 billion

    The Parties shall be entitled to make a request to access committed resources at any time. Until such time as one of the Parties (the “Requesting Party”) makes such a request and that request is acceded to by the other Parties (the “Providing Parties”) and effected through a currency swap, each Party shall retain full ownership rights in and possession of the resources that it commits to the CRA. While commitments shall not involve outright transfers of funds, committed resources shall be made available for any eligible request.

Article 3 - Governance and Decision-Making

    Governance of the CRA shall be constituted by a Council of CRA Governors (the “Governing Council”) and a Standing Committee.
    The Governing Council shall comprise one Governor and one Alternate Governor appointed by each Party. Governors must be a Finance Minister, Central Bank Governor, or hold an equivalent post. The Governing Council shall take decisions by consensus and shall be responsible for high level and strategic decisions of the CRA. It is hereby authorized to:
                                    i.            Review and modify the size of the committed resources of the CRA as well as approve changes in the size of individual commitments;

                                  ii.            Approve the entry of new countries as Parties to the CRA;



                                iii.            Review and modify the CRA’s instruments;


                                iv.            Review and modify the framework for maturities, number of renewals, interest rates, spreads, and fees;


                                  v.            Review and modify the preconditions for drawings and renewals;


                                vi.            Review and modify the provisions concerning default and sanctions;

                              vii.            Review and modify the provisions concerning access limits and multipliers;

                            viii.            Review and modify the percentage of access de-linked from IMF arrangements;

                                ix.            Decide upon the creation of a permanent secretariat or the establishment of a dedicated surveillance unit;

                                  x.            Approve its own procedural rules;

                                xi.            Review and modify the rules pertaining to the appointment and functions of the coordinator for the Governing Council and the Standing Committee;

                              xii.            Review and modify voting power and decision rules of the Standing Committee;

                            xiii.            Review and modify the authority and functions of the Standing Committee;

                            xiv.            Approve the procedural rules concerning the functioning of the Standing Committee;

                              xv.            Decide upon any other issues not specifically attributed to the Standing Committee.

    The Standing Committee shall be responsible for the executive level and operational decisions of the CRA and shall comprise one Director and one Alternate Director appointed by each Party; these shall be appointed from central bank officials unless decided otherwise by the respective Party. It is hereby authorized to:

                                    i.            Prepare and submit to the Governing Council its own procedural rules;

                                  ii.            Approve requests for support through the liquidity or precautionary instruments;

                                iii.            Approve requests for renewals of support through the liquidity or precautionary instruments;

                                iv.            Approve operational procedures for the liquidity and precautionary instruments;

                                  v.            In exceptional circumstances, determine the waiver of conditions of approval, safeguards and required documents under this Treaty;

                                vi.            Approve a Party’s encashment request;



                              vii.            Decide whether to impose sanctions in case of a breach of this Treaty;



                            viii.            Carry out other functions attributed to it by the Governing Council.

    As a matter of principle, the Standing Committee shall strive for consensus on all matters. The decisions of the Standing Committee pertaining to items C.ii and C.iii shall be taken by simple majority of weighted voting of Providing Parties. The decisions pertaining to items C.v, C.vi and C.vii shall be taken by consensus of the Providing Parties. All other decisions of the Standing Committee shall be taken by consensus.

    Whenever a decision is taken by weighted voting, the weight attributed to each Party’s vote shall be determined as follows: (i) 5 percent of total voting power shall be equally distributed among the Parties; and (ii) the remainder shall be distributed among the Parties according to the relative size of individual commitments.

Article 4 - Instruments

The CRA shall include the following instruments:

                        i.            A liquidity instrument to provide support in response to short-term balance of payments pressures.

                      ii.            A precautionary instrument committing to provide support in light of potential short-term balance of payments pressures.

Article 5 - Access Limits and Multipliers

    The Parties shall be able to access resources subject to maximum access limits equal to a multiple of each Party’s individual commitment set forth as follows:

                                                              i.      China shall have a multiplier of 0.5

                                                            ii.      Brazil shall have a multiplier of 1

                                                          iii.      Russia shall have a multiplier of 1

                                                          iv.      India shall have a multiplier of 1

                                                            v.      South Africa shall have a multiplier of 2

    The total amount available under both the precautionary and the liquidity instruments shall not exceed the maximum access for each Party.

    A portion (the “De-linked portion”), equal to 30 percent of the maximum access for each Party, shall be available subject only to the agreement of the Providing Parties, which shall be granted whenever the Requesting Party meets the conditions stipulated in Article 14 of this Treaty.

    A portion (the “IMF-linked portion”), consisting of the remaining 70 percent of the maximum access, shall be available to the Requesting Party, subject to both:

                        i.            The agreement of the Providing Parties, which shall be granted whenever the Requesting Party meets the conditions stipulated in Article 14, and;

                      ii.            Evidence of the existence of an on-track arrangement between the IMF and the Requesting Party that involves a commitment of the IMF to provide financing to the Requesting Party based on conditionality, and the compliance of the Requesting Party with the terms and conditions of the arrangement.

    Both instruments defined in Article 4 shall have IMF-linked and De-linked portions.

    If a Requesting Party has an on-track arrangement with the IMF, it shall be able to access up to 100 percent of its maximum access limit, subject to the provisions under paragraph (d) above.

Article 6 - Inter-central Bank Agreement

In order to carry out the transactions under the liquidity and precautionary instruments mentioned in Article 1, the Central Bank of Brazil, the Central Bank of the Russian Federation, the Reserve Bank of India, the People’s Bank of China and the South African Reserve Bank shall enter into an inter-central bank agreement setting out the required operational procedures and guidelines.

Article 7 - Currency Swaps

A Party may request support through one of the instruments specified in Article 4 according to the procedures established by the Standing Committee in accordance with Article 13 of this Treaty. Provision of USD to the Requesting Party shall be effected through currency swaps carried out between the Parties’ central banks on the basis of common operational procedures to be defined by the Standing Committee in accordance with Article 3.C.iv and the inter-central bank agreement, entered into pursuant to Article 6.

Article 8 - Definitions

The following terms shall have the respective meanings specified in this Article:

“Requesting Party Currency” shall mean the currency of the Party that requests to draw funds through a currency swap;

“Swap Transaction” shall mean a transaction between the Requesting Party’s central bank and a Providing Party’s central bank by which the Requesting Party’s central bank purchases US dollars (USD) from the Providing Party’s central bank in exchange for the Requesting Party Currency, and repurchases on a later date the Requesting Party Currency in exchange for USD;

“Drawing” shall mean the purchase, at the Value Date (defined below), of USD by the Requesting Party’s central bank;

“De-linked Drawing” shall mean a Drawing by the central bank of a Party that is not engaged in an IMF arrangement;

“IMF-linked Drawing” shall mean a Drawing by the central bank of a Party that is engaged in an IMF arrangement;

“Business Day” shall mean any day on which markets are open for business in all financial centers needed for the swap transactions to take place;

“Trade Date” of a Drawing or renewal of Drawing shall mean the date in which the spot market exchange rate for the Drawing or renewal of Drawing is established;

“Value Date” of a Drawing or renewal of Drawing shall mean the date the Requesting and Providing Parties’ central banks credit each other’s accounts. The Value Date shall be the second Business Day after the Trade Date;

“Maturity Date” of a Drawing or renewal of Drawing shall mean the date on which the Requesting Party’s central bank shall repurchase the Requesting Party Currency in exchange for USD. If any such Maturity Date should fall on a day which is not a Business Day, the Maturity Date shall be the next Business Day.

Article 9 - Coordination

    The Party that chairs the BRICS shall act as coordinator for the Governing Council and for the Standing Committee.

    The coordinator shall: (i) convene and chair meetings of the Governing Council and the Standing Committee; (ii) coordinate voting as needed; (iii) provide secretariat services during its term; and (iv) inform the Parties of the activation or renewal of liquidity or precautionary instruments.

    Any Party requesting or receiving support through a liquidity or precautionary instrument – Article 4 – or opting out from participating as a Providing Party or asking for encashment of outstanding claims – Article 15(e) – shall not serve as coordinator. In this case, the next chair of the BRICS shall assume the role of coordinator.

Article 10 - Purchase and Repurchase under a Swap Transaction

    The exchange rate that shall apply to each purchase and repurchase under a Swap Transaction shall be based on the prevailing exchange rate (hereinafter referred to as “the Swap Exchange Rate”) between the Requesting Party Currency and the USD in the Requesting Party’s spot market on the Trade Date.
    The Requesting Party’s central bank shall sell the Requesting Party Currency to the Providing Parties’ central banks and purchase USD from them by means of a spot transaction, with a simultaneous agreement by the Requesting Party’s central bank to sell USD and to repurchase the Requesting Party Currency from the Providing Parties’ central banks on the maturity date. The same exchange rate (i.e., the rate of the spot leg) shall be applied to both the spot and the forward legs of the Swap Transaction.
    On the Maturity Date, the Requesting Party’s central bank shall transfer the USD plus interest back to the Providing Parties’ central banks in exchange for the Requesting Party Currency. No interest shall be accrued on the Requesting Party Currency.

Article 11 - Interest Rate Determination

    The interest rate to be paid by the Requesting Party on the USD purchased from the Providing Parties shall be an internationally accepted benchmark interest rate for the corresponding maturity of the swap transaction plus a spread. The spread shall increase periodically by a certain margin, up to a predetermined limit.

    In the case of the precautionary instrument, the amount committed but not drawn shall be subject to a commitment fee, to be specified in the inter-central bank agreement.


Article 12 - Maturities

    A De-linked Drawing under the liquidity instrument shall have a Maturity Date six months after the Value Date and may be renewed, in whole or in part, three times at most.

    An IMF-linked Drawing under the liquidity instrument shall have a Maturity Date one year after the Value Date and may be renewed, in whole or in part, two times at most.

    If the Requesting Party is not engaged in an IMF arrangement, access to the precautionary instrument shall have a tenure of six months and may be renewed, in whole or in part, three times at most.

    If the Requesting Party is engaged in an IMF arrangement, access to the precautionary instrument shall have a tenure of one year and may be renewed, in whole or in part, two times at most.

    The maturity of a De-linked Drawing under the precautionary instrument shall be of six months and that of an IMF-linked Drawing shall be of one year. The precautionary instrument, once drawn upon, shall not be renewed.

    The Requesting Party may repurchase the Requesting Party Currency in exchange for USD at the Swap Exchange Rate before the Maturity Date. In this case, the accrued interest rate shall be calculated on the basis of the actual number of days elapsed from (and including) the Value Date to (but not including) the early repurchase date.

Article 13 - Procedures for Requesting or Renewing Support through the Liquidity or Precautionary Instruments

    A Party that wishes to request support through the liquidity or precautionary instruments, or renewal of such support, shall notify the members of the Standing Committee of the type of instrument, the amount requested, and the envisaged starting date.

    The Requesting Party shall provide evidence that it complies with the safeguards specified in Article 14 below.

    Upon receiving the notification, the CRA coordinator shall convene a Standing Committee meeting to discuss and vote the Requesting Party’s request. The Standing Committee shall decide upon the request up to seven days after its submission.

    Once a request for support through the liquidity instrument is approved, the Requesting Party’s central bank and the Providing Parties’ central banks shall activate Swap Transactions promptly, in a timeframe to be specified in the inter-central bank agreement.

    Once a request for a Drawing under an approved precautionary instrument is made, the Requesting Party’s central bank and the Providing Parties’ central banks shall activate Swap Transactions promptly, in a timeframe to be specified in the inter-central bank agreement.

    If the Requesting Party wishes to renew support through the liquidity instrument, it shall notify the members of the Standing Committee at least fourteen days before the Maturity Date.

    If the Requesting Party wishes to renew support through the precautionary instrument, it shall notify the members of the Standing Committee at least seven days before the expiration of access under such instrument.

Article 14 - Conditions of Approval, Safeguards and Required Documents

    When submitting a request for support through the liquidity or precautionary instrument, or renewal of such support, the Requesting Party shall sign and deliver a letter of acknowledgement committing to comply with all obligations and safeguards under this Treaty.
    The Requesting Party shall also comply with the following conditions and safeguards:

(i)     Submit all required documents and economic and financial data, as specified by the Standing Committee, and provide clarification to comments;

(ii)    Ensure that its obligations under this Treaty at all times constitute direct, unsubordinated and unsecured obligations ranking at least pari passu in right of payment with all other present or future direct, unsubordinated and unsecured foreign currency-denominated external indebtedness of the Requesting Party;

(iii)  Have no arrears with the other Parties or their public financial institutions;

(iv)  Have no arrears with multilateral and regional financial institutions, including the New Development Bank (NDB);

(v)    Be in compliance with surveillance and provision of information obligations to the IMF as defined, respectively, in Articles IV, Sections 1 and 3, and VIII, Section 5, of the Articles of Agreement of said institution.

Article 15 - Burden Sharing, Opt-out and Encashment Provisions

    Providing Parties shall share the disbursement of drawings in proportion to their respective commitments to the CRA, subject to paragraphs (b) and (c) of this Article. In no event shall any Party be required to provide more resources than the amount that it has committed to provide in Article 2(a).

    The approval of a request for support through the liquidity or precautionary instruments under this Treaty suspends, for as long as such support is in place, the Requesting Party’s commitment to participate as a Providing Party in any subsequent request for support through the liquidity or precautionary instruments.

    When a request for support through the liquidity or precautionary instruments, or for renewal of such support is presented, a Party may opt-out from participating as a Providing Party, provided this is justified by its balance of payments and reserve position or by an event of force majeure, such as a war or natural disaster. The Party opting-out shall provide the necessary information to justify its decision. In this case, the other Providing Parties shall provide resources to allow opt-out in proportion to their commitments to the CRA, subject to paragraph (a) of this Article.

    A Providing Party may request encashment of outstanding claims provided this is justified by its balance of payments and reserve position or by an event of force majeure, such as a war or natural disaster. The Providing Party applying for encashment shall provide the necessary information to justify its request. If the request is approved, the other Providing Parties shall provide resources to allow encashment in proportion to their commitments to the CRA, subject to paragraph (a) of this Article.

    A Party that has opted-out or encashed from an outstanding currency swap or has opted out from an outstanding precautionary instrument shall not serve as a coordinator, as defined in Article 9, for the length of the transaction from which the party has opted-out or encashed.

Article 16 - Breaches of Obligations and Sanctions

    Failure by a Requesting Party to fulfill payment obligations on the Maturity Date of a Drawing or a renewal of Drawing, unless corrected within 7 days, shall result in the following:

(i)                 all outstanding obligations of the Requesting Party to repay the Providing Parties under this Treaty shall be immediately due and payable;

(ii)               the Requesting Party’s eligibility to further Drawings or renewals of Drawings under this Treaty shall be suspended;

(iii)             any undrawn portion of a  precautionary instrument of the Requesting Party shall be cancelled; and

(iv)             any payments by the Requesting Party of its overdue obligations to the Providing Parties must be made on the same date and in proportion to the amounts due to each Party.

    In case of an event of force majeure, the application of the measures above may be suspended.

    In case of a persistent and/or unjustified delay in settling overdue payment obligations, a Requesting Party’s right to participate in any decisions under this Treaty may be suspended. After 30 days of unfulfilled payment obligations, the Providing Parties should consider whether this action is appropriate.

    If, after the expiration of a reasonable period following the decision under paragraph (c), the Requesting Party persists in its failure to settle overdue payment obligations, the Governing Council may require the Requesting Party to withdraw from this Treaty.

    The Requesting Party in breach of a payment obligation should agree to take measures that preserve the net present value of its obligations if the Providing Parties collectively decide to exercise this option.

    In case the Providing Parties decide by consensus at the Governing Council level, the Requesting Party in breach of a payment obligation should agree to a novation of its obligations under this Treaty, including by issuing marketable debt securities that would not be subject to the Requesting Party’s jurisdiction. The Requesting Party should not unreasonably withhold consent to terms and conditions of such debt securities as shall be required by the Providing Parties.

    The Requesting Party would be liable to a late fee in addition to the interest rate applied to the swap transaction to which payment is overdue. This late fee should increase periodically by a certain margin, up to a predetermined limit.

    In case of a breach of any obligation under this Treaty, other than failure by a Requesting Party to fulfill payment obligations, the following sanctions may apply:

(i)                 all outstanding payment obligations under this Treaty shall be immediately due and payable;

(ii)               eligibility to further Drawings or renewals of Drawings under this Treaty shall be suspended;

(iii)             any undrawn portion of a precautionary instrument shall be cancelled;

(iv)             the right to participate in any decisions under this Treaty may be suspended;

(v)               after the expiration of a reasonable period following the decision under item (iv), the Governing Council may require the Party to withdraw from this Treaty.

    The sanctions applied should be commensurate with the severity of the breach.

Article 17 - Language and Communications

    The official language of the CRA shall be English. The English language versions of this Treaty and of any documentation under it shall be the official versions. All written and oral communication between the Parties shall be in English, unless the Parties otherwise agree in writing.

    Any notice, request, document or other communication submitted under this Treaty shall be in writing, shall refer to this Treaty, and shall be deemed fully given or sent when delivered in accordance with the contact details that shall be provided separately by each Party.

Article 18 - Representation and Warranties

Each of the Parties hereby warrants and represents that:

    It has the full power and authority to enter into and perform its obligations under this Treaty and shall provide evidence of such authority if requested by any other Party;

    This Treaty and the performance by it of its obligations under this Treaty do not contravene any law or other restriction binding upon it or any of its property, and there is no legal or regulatory hindrance which could affect the legality, validity or enforceability of this Treaty or of obligations hereunder or have a material adverse effect upon its ability to perform such obligations;

    All transactions under this Treaty shall be exempt from any administrative or legal obstacles to their completion;

    All payments by it under this Treaty shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of its country or any authority therein or thereof having power to tax. In the event that the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law, it shall pay such additional amounts as may be necessary in order that the net amounts received by the other Parties after such withholding or deduction shall equal the amounts which would have been received under this Treaty in the absence of such withholding or deduction; and

    It shall not assign, transfer, delegate, charge or otherwise deal in its obligations under this Treaty without prior written consent of the other Parties.

Article 19 - Legal Status of the CRA

The CRA does not possess independent international legal personality and cannot enter into agreements, sue or be sued.

Article 20 - Dispute Settlement

    Any disputes relating to the interpretation of this Treaty shall be solved by consultations in the Governing Council.

    If any dispute, controversy or claim relating to the performance, interpretation, construction, breach, termination or invalidity of any provision in this Treaty shall arise and not be resolved amicably by the Governing Council within a reasonable period, it shall be settled by arbitration in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (excluding Article 26 thereof) in effect on the date of this Treaty (the “UNCITRAL Arbitration Rules”). In case of resorting to arbitration, the language to be used in the proceedings shall be English and the number of arbitrators shall be three.

    The Parties agree that in any such arbitration and in any legal proceedings for the recognition of an award rendered in an arbitration conducted pursuant to this Article, including any proceeding required for the purposes of converting an arbitral award into a judgment, they shall not raise any defense which they could not raise but for the fact that they are sovereign state entities.
Article 21 - Withdrawal from and Termination of the Treaty

    A Party may withdraw from this Treaty by giving notice of such intention to the other Parties six months prior to the date of the envisaged withdrawal. However, withdrawal from the Treaty by any Party is not allowed for a period of five years from its entry into force.

    During this six-month period, the Party that has given notice of such intention shall provide the other Parties with an opportunity to express views on its intention but does not have the right to request or the obligation to provide resources.

    In the event that any obligation under this Treaty, including any obligation for the payment of money, remains outstanding at the time of termination of or withdrawal from this Treaty, all the terms and conditions of this Treaty (except for those entitling the Parties to any Drawing or renewal of a Drawing) shall continue to apply until such obligation has been fulfilled.

Article 22 - Acceptance, Depositary and Amendments

a.         This Treaty shall be subject to acceptance, ratification or approval, according to the respective domestic procedures of the Parties.

b.         The instruments of acceptance, ratification or approval shall be deposited with the Federative Republic of Brazil, which shall be the depositary of this Treaty.

c.         The depositary shall promptly inform all Parties of: (i) the date of deposit of each instrument of acceptance, ratification or approval (ii) the date of the entry into force of this Treaty and of any amendments and changes thereto, and (iii) the date of receipt of a withdrawal notice.

d.         If the Party that acts as depositary decides to withdraw from this Treaty, all the terms and conditions of Article 21 shall apply, with the exception that: (i) the depositary shall give notice of its intention to the other Parties; and (ii) as of the date of receipt of the depositary’s withdrawal notice, the role of depositary shall be assumed by one of the other Parties, as agreed upon by them.

e.         This Treaty shall not be subject to unilateral reservations.

f.         Any proposal to amend this Treaty shall be communicated to the Party that acts as coordinator for the Governing Council, which shall then bring the proposal before the Governing Council. If the proposed amendment is approved, the coordinator shall ask all Parties whether they accept the proposed amendment. If a Party, according to its domestic procedures, accepts the proposed amendment, it shall notify the depositary accordingly. The amendment shall become effective on the date of receipt of the last notification.  Any decision of the Governing Council related to modifying Article 2 shall be considered an amendment.

Article 23 - Entry into Force

This Treaty shall enter into force 30 (thirty) days after the deposit of the fifth instrument of acceptance, according to each Party’s legal requirements.

Done in Fortaleza on the 15th of July of 2014, in five originals in English, one for each Party.

Iran, Russia working to seal $20 billion oil-for-goods deal: sources

Iran, Russia working to seal $20 billion oil-for-goods deal: sources

    Thursday, April 03, 2014   No comments

Iran and Russia have made progress toward an oil-for-goods deal that sources said could be worth up to $20 billion and enable Tehran to boost vital energy exports in defiance of Western sanctions, people familiar with the negotiations told Reuters.

In January, Reuters reported that Moscow and Tehran were discussing a barter deal that would see Moscow buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods.

The United States has said such a deal would raise "serious concerns" and be inconsistent with the nuclear talks between world powers and Iran.


A Russian source said Moscow had "prepared all documents from its side", adding that completion of a deal was awaiting agreement on what oil price to lock in.

The source said the two sides were looking at a barter arrangement that would see Iranian oil exchanged for industrial goods including metals and food, but no military equipment was involved. The source added that the deal was expected to reach $15 to $20 billion in total and would be done in stages with an initial $6 billion to $8 billion tranche.

read more >>

'Chance of a Century': International Investors Flock to Tehran

'Chance of a Century': International Investors Flock to Tehran

    Saturday, January 04, 2014   No comments

By Susanne Koelbl
Since the West reached a landmark deal with Iran on its controversial nuclear program late last year, many Iranians are hoping for an end to sanctions. Western companies are also gearing up do big business.

Daniel Bernbeck has learned that in Tehran there's no point getting worked up about things like the gridlock between Gholhak, his neighborhood in the northern part of the city, and downtown, where his office is located. Here he is again, stuck in traffic, with everyone honking their horns. Tehran is a murderous city, says Bernbeck, even without international sanctions and threats of attack from Israel.

Bernbeck is sitting in a gray SUV. He's a wiry, tall blond man who wears lawyer-like glasses. The only departure from the standard business look is a narrow soul patch on his chin, which suggests a certain degree of individualism. His cell phone rings. Bernbeck's Iranian secretary is on the line. She's expecting him, and the deputy German ambassador has also arrived, along with two investment bankers from London and Hong Kong. They are asking about stock tips for Iran.

"Iranian stocks for Hong Kong?" Bernbeck exclaims with a grin, and then says in his best Farsi: "The same bankers would have said a year ago: You're crazy." Then he asks the driver to hurry up, although it doesn't do any good.

Bernbeck is the head of the German-Iranian Chamber of Industry and Commerce in Tehran. He paves the way for business ties in a country where Western politicians have been trying for decades to make such relationships impossible, especially since 2006.

At the time, the Islamic Republic started to rapidly expand its nuclear program. Intelligence agencies predicted that it would be only a matter of a few years before the Iranians had a nuclear bomb. Arab Gulf states in the region felt threatened, and Israel was determined to go to war with Tehran if a political solution could not be found quickly.

For over five years now, Bernbeck, 50, has been living between these two adversarial worlds, more specifically "on the dark side of Mars, where the cannibals and Holocaust deniers live." Bernbeck says that's how Iran is portrayed in the West.
read more >>

Iraqi Deputy PM Hussain al-Shahristani welcomes recent deals between Turkey and the KRG, but stresses that Baghdad 'shouldn’t be marginalized'

Iraqi Deputy PM Hussain al-Shahristani welcomes recent deals between Turkey and the KRG, but stresses that Baghdad 'shouldn’t be marginalized'

    Monday, December 16, 2013   No comments

Iraqi Deputy Prime Minister for Energy Hussain al-Shahristani has welcomed recent agreements between Turkey and the Iraqi Kurdish administration on oil and natural gas exports to Turkey, provided that the central government in Baghdad is not marginalized in any such agreements.

“We support and seek to increase our oil and future natural gas exports to Turkey,” al-Shahristani told Anadolu Agency in an interview. “This is something that we seek to achieve.”

However, al-Shahristani stressed that the quantities of Iraqi oil exported to Turkey must be known to the central government, oil must be sold at international market prices, and revenues from oil sales must be channeled to the account of the Iraq Development Fund in New York, in line with previous U.N. Security Council resolutions.

read more >>

Saudi Arabia migrant expulsions: 'They beat us. I want to warn others not to go'

Saudi Arabia migrant expulsions: 'They beat us. I want to warn others not to go'

    Wednesday, December 11, 2013   No comments

Abdulla Shahmola trudges up the road leading from Addis Ababa airport to the outskirts of the city, his battered black suitcase balanced precariously on his head. Weariness and relief are etched into his delicate features as he heaves his heavy bag to the floor. "I have so many possessions that I had to leave behind in Saudi Arabia – a television, a bed, a fridge," he laments, adding that he is thankful to be back in Ethiopia.

Abdulla is one of hundreds of men, women and children steadily streaming from the airport cargo terminal, where up to 20 flights have been arriving daily from Jeddah and Riyadh since 13 November. A kilometre's walk from the hastily erected transit centre, which has been processing some 7,000 returning migrants each day, a small crowd, held back by federal police officers in blue military fatigues, waits anxiously for a glimpse of a loved one.

As of 8 December, 115,465 Ethiopians – 72,780 men, 37,092 women and 5,593 children, 202 of whom were unaccompanied – had returned from Saudi Arabia, according to government figures. The migrants, most of whom were in Saudi Arabia without work permits, were expelled after a tightening of labour regulations in March and the expiration of an amnesty for illegal workers on 4 November.

More than a million migrant workers from across Asia have been expelled from the kingdom as part of the crackdown, which is designed to get more Saudis into jobs and reduce the high unemployment rate.

The crackdown has triggered clashes in the capital, Riyadh, in which three Ethiopians were reportedly killed, sparking outrage in Ethiopia.

"They beat us," alleges Abdulla. He reaches into his pocket, pulls out his mobile phone and opens images of badly beaten Ethiopians, singling out one man whose throat appears to have been slit. His friends do the same, thrusting forward their mobiles. "I saw people killed. They are murderers," he hisses.

read more >>

Obama faced growing pressure from world leaders on Thursday not to launch military strikes in Syria at a summit on the global economy that was hijacked by the conflict

Obama faced growing pressure from world leaders on Thursday not to launch military strikes in Syria at a summit on the global economy that was hijacked by the conflict

    Thursday, September 05, 2013   No comments

The Group of 20 (G20) developed and developing economies met in St. Petersburg to try and forge a united front on how to revive economic growth, but failed to heal divisions over a U.S. plan to wind down a program to stimulate the world economy.

The club that accounts for two thirds of the world's population and 90 percent of its output looked as divided over therapy for the economy as it is over possible military action following a chemical weapons attack in Syria.

Obama arrived in Russia's former imperial capital with a showdown looming at a dinner hosted by President Vladimir Putin, with a debate on Syria the main course on the menu.

Obama wore a stiff smile as he approached Putin and grasped his hand. Putin also wore a businesslike expression and it was only when they turned to pose for photographers that Obama broke into a broader grin. There was no clutching of arms or hugs.

The first round at the summit went to Putin, as China, the European Union, the BRICS emerging economies and Pope Francis - in a letter - warned of the dangers of military intervention without the approval of the U.N. Security Council.

"Military action would have a negative impact on the global economy, especially on the oil price - it will cause a hike in the oil price," Chinese Vice Finance Minister Zhu Guangyao said.

The BRICS - Brazil, Russia, India, China and South Africa - echoed that remark, and the Pope, who leads the world's 1.2 billion Roman Catholics, urged the G20 leaders to "lay aside the futile pursuit of a military solution".

European Union leaders described the August 21 attack near Damascus, which killed up to 1,400 people, as "abhorrent" but said: "There is no military solution to the Syrian conflict."

read more >>

 

G-20 debate on Syria: Putin knows clearly which side he wants to win in Syria and why; Obama can’t begin to explain why America should want jihadists to take control of Syria

G-20 debate on Syria: Putin knows clearly which side he wants to win in Syria and why; Obama can’t begin to explain why America should want jihadists to take control of Syria

    Tuesday, September 03, 2013   No comments

Putin has a clear policy on Syria, and he has pursued it with cold determination; Obama’s actions have been hesitant, and his policy objectives are general and obscure. Putin knows clearly which side he wants to win in Syria and why; Obama can’t begin to explain why America should want jihadists to take control of Syria.
Each man will justify his policy and actions at the G20 summit, and Obama, despite America’s enormous military power and vastly larger economy, will be at a disadvantage against Putin. If this is a staring contest, Obama has already blinked.
Obama’s problems this week are partly due to his August 7 decision to cancel the one-on-one summit he’d scheduled with Putin to precede the G20 gathering.

That was a deliberate snub following Putin’s decision to grant former NSA contractor Edward Snowden temporary sanctuary. But in snubbing Putin, Obama allowed his embarrassment over the Snowden affair to derail a yearlong effort to build a dialogue with Russia.
When it decided to snub Putin, the Obama Administration failed to see that Syria would be an important issue at the St. Petersburg summit, which Putin is hosting. At the least it threw away an opportunity to reduce public disagreements with Russia before the G20 gets underway, and perhaps even to defuse the situation in Syria.

 read more >>

'A Slow Death': How the War Is Destroying Syria's Economy

'A Slow Death': How the War Is Destroying Syria's Economy

    Tuesday, August 27, 2013   No comments

Food is scarce in Syria, the currency is collapsing and entire industries have come to a standstill. But not even economic suffering brought on by the civil war will likely help end it.

It's a sector that ought to be booming. Businessman Wissam* works in hospital supplies. He sells bandages, needles and disinfectants -- all products for which there is a great need in the increasingly bloody Syrian civil war. But unfortunately, Wissam has little opportunity to sell his wares.

"More than 50 percent of the Syrian healthcare system's infrastructure has been destroyed," says the man in his mid 40s. Of the 75 state-run hospitals, just 30 remain in operation. In the embattled city of Homs, just one of 20 hospitals remains open. The Al-Kindi Hospital in Aleppo, once the largest and most modern medical facility in the country, is now a pile of ash.

Wissam is matter-of-fact about the situation. The destruction of the hospitals is widespread, he says, and those who are injured or sick receive hardly any medical care. The business is "dying a slow death," he adds.

While the world debates what its reaction should be to what was likely a chemical weapons attack in Syria last week, and the United States positions its destroyers off the country's coast, much of the focus has been on the humanitarian crisis caused by two-and-a-half years of war. But the fighting has also crippled Syria's economy, which could potentially be a factor in ending the turmoil.

For this reason, facts and figures about the economic impact of the war are state secrets. There are, however, indications of how precarious the situation may be, and these reflect what Wissam says about the collapse of the health sector.

read more >>

industry sources: Iraq’s Kurdistan region is exporting crude oil by truck to an Iranian port for shipping to Asia

industry sources: Iraq’s Kurdistan region is exporting crude oil by truck to an Iranian port for shipping to Asia

    Wednesday, August 07, 2013   No comments

In a dispute largely over revenue sharing, Kurdistan’s crude exports through a pipeline controlled by the Iraqi central government dried up last year. However, it is transporting about 50,000 barrels per day (bpd) of crude and condensates by road from the landlocked region through Turkey. 

Now the Kurdistan Regional Government (KRG) has approved a second route for crude through Iran used previously only for petroleum products, the sources said. For the past two months, crude has been trucked from Kurdish fields over the border to Iran’s Bandar Imam Khomeini (BIK) terminal, 900 km (560 miles) to the south on the Gulf. Amounts are unclear but could be as much as 30,000 bpd, they said.

One industry source in Kurdistan said the regional government in Arbil was anxious not to put out either of the region’s powerful neighbors, Turkey and Iran, in transporting the crude. “It’s a political compromise,” said the source, who declined to be identified. “They cannot ignore the Iranians and go all the way ... with the Turks. They have to balance.”

read more >>

Britain’s Supreme Court has lifted sanctions against Iran’s Mellat Bank describing them "irrational" and "disproportionate".

Britain’s Supreme Court has lifted sanctions against Iran’s Mellat Bank describing them "irrational" and "disproportionate".

    Wednesday, June 19, 2013   No comments

The UK's highest court ruled that the government was wrong to have imposed sanctions on an Iranian bank in 2009 over alleged links to Iran's nuclear programme.
The Supreme Court decision on Wednesday mirrored a January ruling by the European Union's General Court, which overturned sanctions imposed in 2010, and could result in the bank suing Britain for damages.
In a majority judgment, Supreme Court Judge Jonathan Sumption said that the British government had been "arbitrary", "irrational" and "disproportionate" to single out Bank Mellat, Iran's largest private bank, for sanctions.
Bank Mellat has long denied allegations against its activities and argued that it had not been consulted before sanctions were imposed.

read more >>

Pro-Fracking Spin on Public Radio: Brought to you by Qatar

Pro-Fracking Spin on Public Radio: Brought to you by Qatar

    Friday, May 31, 2013   No comments

The April edition of the monthly public radio program America Abroad, "Global Energy and Innovations," sounded like an infomercial for the natural gas "fracking" industry. Which, in essence, is what it was.
The show, which is distributed by Public Radio International (PRI), began with host Madeleine Brand declaring:
Thanks to a breakthrough in the technology known as "fracking," the hydraulic fracturing of rock, the United States is enjoying a boom in cheap natural gas.
She went to say that "supporters argue that the new technology not only brings new jobs but also provides cleaner energy than coal."
And what do fracking opponents say? That's unclear; the counterpoint to fracking's boosters--"natural gas will do everything we want it to do," as one soundbite put it--is the observation that "some experts" think that cheap gas means "there’s less incentive to develop clean, renewable energy."

read more >>

Brazil, China, and India Are Fat, And Getting Fatter

Brazil, China, and India Are Fat, And Getting Fatter

    Monday, April 08, 2013   No comments

In China, the growth rate of new Kentucky Fried Chicken restaurants is 13 percent a year, compared with 2.9 percent in the U.S. And as the chain has expanded, so have Chinese citizens' waistlines. Recently, the aspiring BRICS nations (Brazil, Russia, India, China, and South Africa) met in sunny Durban, South Africa, for their fifth summit to discuss their plans for creating their proposed BRICS Development Bank (BDB). Despite ongoing doubts that these nations will be able to quickly come to an agreement over where and how the bank will function, there is hope that these differences can be overcome.

But there is one issue that the BRICS leaders seemed to have overlooked. That is, how will the BRICS bank address these nations' ongoing struggle to contain the spread of disease? Diseases commonly attributed to economic wealth and prosperity, such as obesity and diabetes, are on the rise and will inevitably threaten their bristling economies should the BDB fail to adequately invest in healthcare infrastructure.

The proposed BDB bank is mainly focused on providing loans and grants - approximately $4.5 trillion in total - to finance infrastructural development projects in the BRICS and other developing nations. This funding will be used to construct railroads, bridges, highways, and ports. Created as an alternative " Bretton Woods for the developing nations," loans will be provided at favorable lending terms. The bank will also provide a currency reserve of $100 billion dollars to be used in times of economic crisis. Another implicit goal through this banking endeavor is to decrease the BRICS and other developing nations' ongoing reliance on the World Bank and IMF for financial assistance while creating a lending facility that better understands developing nations' context and needs.

read more >>

The Emir of NYU: John Sexton's Abu Dhabi Debacle

The Emir of NYU: John Sexton's Abu Dhabi Debacle

    Monday, April 01, 2013   No comments

In February 2008, I attended an New York University faculty meeting about the school's plans to open a new campus in the tiny desert emirate of Abu Dhabi. I was there reporting for a New York magazine article about the first major U.S. research institution to open a complete liberal-arts university off American soil. Hoping to be a fly on the wall, I instead found myself seated at the head of the table, bombarded with rapid-fire questions by exasperated professors looking for any kernel of information about the new project:

"Who will do the hiring?" one professor asks.

"Will there be tenure? You can't have academic freedom without tenure, right?"

"Where will the students come from?"

"Why Abu Dhabi?"

"What exactly is the status of Abu Dhabi's relationship with Israel?"

"Will we become the next Guggenheim franchise?"

I quickly learned that the new initiative was being personally driven by NYU's larger-than-life president, John Sexton -- and that many faculty felt completely left out of a decision that had the potential to effect the university dramatically.

...

This mirrors the concerns I heard when I interviewed dozens of NYU's faculty about the Abu Dhabi project. Many expressed substantive concerns about academic freedom, diluting NYU's brand, human rights violations in Abu Dhabi, and discrimination against gay and Israeli students.

... read full article

                            read also,  UAE "Blacklisting" of Dr. Kristian Coates Ulrichsen

BRICS plan new 50bn bank to rival World Bank and IMF

BRICS plan new 50bn bank to rival World Bank and IMF

    Wednesday, March 27, 2013   No comments

BRICS leaders, 2013

The ‘big five’ of the developing world will discuss creating their own global World Bank as their 5th annual summit kicks off Tuesday in sunny Durban.

The move is linked to the developing world’s disillusionment with the status quo of world financial institutions. The World Bank and IMF continue to favor US and European presidents over BRICS nations, and in 2010, the US failed to ratify a 2010 agreement which would allow more IMF funds to be allocated to developing nations.

"Not long ago we discussed the formation of a developmental bank... Today we are ready to launch it," South African President Jacob Zuma said on Monday.

The ‘big five’- Brazil, Russia, India, China, and its newest addition, South Africa, come together for the annual conference this year in Durban, South Africa in hopes of establishing a new development bank which will fund infrastructure and development projects in the five member states, and will pool foreign currencies to fend off any impending financial crisis.

“We will discuss ways to revive global growth and ensure macroeconomic stability, as well as mechanisms and measures to promote investment in infrastructure and sustainable development,” Indian Prime Minister Manmohan Singh said on Monday, before heading to Durban.

The BRICS have called for a reconstruction of the World Bank and IMF, which were created in 1944, and want to put forth their own ‘Bretton Woods’ accord. And they are serious.

"Brics is not a talk show. It is a serious grouping," Zuma told reporters at the presidential guest house in Pretoria.

read more >>

Turkey’s Energy Challenges

Turkey’s Energy Challenges

    Friday, January 04, 2013   No comments

By Daniel Wagner and Giorgio Cafiero

Turkey has managed to maintain impressive growth rates over the past decade in spite of a lack of indigenous sources of energy. Ankara has pursued a foreign policy aimed at diversifying the country’s energy imports while simultaneously positioning itself as a major energy hub. Turkey’s geostrategic position makes achieving this dual objective challenging, but it has managed to strike a balance between being assertive and deferential in acquiring and managing its energy supply. While the Turkish government’s power to influence events in the region is of course limited, it will be compelled to make some difficult foreign policy decisions in the near term that could substantially impact its long-term energy interests.

Turkey

Turkey imports 91 percent of its oil and 98 percent of its natural gas. In 2011, approximately 51 percent of its oil came from Iran and 55 percent of its natural gas from Russia. Iraq’s resurrection as a major oil and gas exporter to the world offers Turkey an opportunity to become an increasingly influential energy hub between the Arabian Gulf and European markets. However, the tense triangular relationship between Turkey, Iraq and the Kurdish Regional Government has greatly complicated the energy trade with Iraq. This has also cast doubt about the long-term reliability of the Iraqi-Turkish pipeline that exports nearly 400,000 barrels per day to the important port of Ceyhan in southern Turkey. Turkey’s perennial battle with Kurdish separatists has served to ensure that the relationship with Iraq remains problematic and uncertain.

read more >> 

Erdoğan criticizing UNSC, IMF, OSCE, and OECD

Erdoğan criticizing UNSC, IMF, OSCE, and OECD

    Friday, November 09, 2012   No comments

Throwing diplomacy out the window, Prime Minister Recep Tayyip Erdoğan has criticized major world institutions, bashing both the United Nations and the International Monetary Fund (IMF) for their structures. He also argued that capital punishment “is legitimate in certain situations,” referring to the recent court ruling in the case against Norwegian-mass murder Breivik.

Speaking at the Bali Democracy Forum in Indonesia, Erdoğan criticized the U.N. for its inaction on certain issues, including Syria and the Israel-Palestine stalemate. He went on to issue harsh criticisms against the IMFfor what he called its “bitter” prescriptions.

In a stab at Norway, Erdoğan said the prison sentence handed to Norwegian-mass murderer Anders Breivik was insufficient and that he should have been given the death penalty instead to ensure peace for the families of the victims. “I asked them, I was curious. How can someone who has killed 77 people be sentenced to 21 years in prison? I was told that he [Breivik] would not be out again, that something would be found at the end of the 21 years to keep him in for another 21 years.”

read more >>

The Great Inequality

The Great Inequality

    Monday, March 19, 2012   No comments

by Michael D. Yates

Growing inequality of income and wealth have characterized the U.S. economy for at least the past thirty years. Today, this inequality has become a central feature of politics, both mainstream and within such radical uprisings as the Occupy Wall Street phenomenon. This essay attempts to uncover the roots of inequality, showing that the source of it is in the nature of the capitalist economy. The magnitude of inequality ebbs and flows with the balance of class forces, but great inequality is built into the system’s fundamental structures.… 

read more >>

Will Iran Kill the Petrodollar?

Will Iran Kill the Petrodollar?

    Monday, January 30, 2012   No comments

by Marin Katusa, Chief Energy Investment Strategist, Casey Research

The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran’s oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.

But that line doesn’t make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends – like India – will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.

The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar’s value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.

We know where that situation led – to a US government suffocating in debt while its citizens face stubbornly high unemployment (due in part to the high value of the dollar); a failed real estate market; record personal-debt burdens; a bloated banking system; and a teetering economy. That is not the picture of a world superpower worthy of the privileges gained from having its currency back global trade. Other countries are starting to see that and are slowly but surely moving away from US dollars in their transactions, starting with oil.

If the US dollar loses its position as the global reserve currency, the consequences for America are dire. A major portion of the dollar’s valuation stems from its lock on the oil industry – if that monopoly fades, so too will the value of the dollar. Such a major transition in global fiat currency relationships will bode well for some currencies and not so well for others, and the outcomes will be challenging to predict. But there is one outcome that we foresee with certainty: Gold will rise. Uncertainty around paper money always bodes well for gold, and these are uncertain days indeed.

The Petrodollar System

read more >>

Money, Politics, and Power: The Man Behind Gingrich’s Money

Money, Politics, and Power: The Man Behind Gingrich’s Money

    Sunday, January 29, 2012   No comments

By MIKE McINTIRE and MICHAEL LUO

The trip to Jordan by a group of United States congressmen was supposed to be a chance for them to meet the newly crowned King Abdullah II. But their tour guide had a more complicated agenda.

The guide was Sheldon Adelson, a Las Vegas casino magnate who helped underwrite trips to the Middle East to win support for Israel in Congress. On this occasion in 1999, as the lawmakers enjoyed a reception at the Royal Palace in Amman, Mr. Adelson and an aide retreated to a private room with the king.

There, the king listened politely as Mr. Adelson sat on a sofa and paged through his proposal for a gambling resort on the Jordan-Israel border to be called the Red Sea Kingdom.

“This was shortly after his father, King Hussein, died, and he was grateful to me,” Mr. Adelson explained later in court testimony, recalling that he had lent his plane when the ailing monarch sought treatment in the United States. “So they remembered.”

The proposal never went anywhere — Mr. Adelson later said he had feared that a Jewish-owned casino on Arab land “would have been blown to smithereens.” But his impromptu pitch to the Jordanian king highlights the boldness, if not audacity, that has propelled Mr. Adelson into the ranks of the world’s richest men and transformed him into a powerful behind-the-scenes player in American and international politics.

Those qualities may also help explain why Mr. Adelson, 78, has decided to throw his wealth behind what had once seemed to be the unlikely presidential aspirations of Newt Gingrich. Now, in no small measure because of Mr. Adelson’s deep pockets, Mr. Gingrich is locked in a struggle with Mitt Romney heading into Florida’s Republican primary on Tuesday.

read more >>