Pompeo Testifies, Affirms No Crimea Recognition, Neocon Senators Push Sanctions on Russian Sovereign Debt

Pompeo Holds His Own, Asks Democrats Who Claim Trump is Weak on Russia About Obama's 'After the Election I'll Have More Flexibility' Comment to then President Dmitry Medvedev

Secretary of State Mike Pompeo testified to the Senate Foreign Relations Committee on Wednesday, July 25, 2018

Secretary of State Mike Pompeo testified to the Senate Foreign Relations Committee on Wednesday, July 25, 2018

The Graham-Menendez plan to target buyers of Russian sovereign bonds, like the previously passed CAASTA sanctions, involves extra-territoriality. That is to say, the legislation intends to not only bar American banks and investors from buying Russian sovereign debt, but punish foreign governments or banks that buy it too. The latter provision is not likely to be acceptable to the European banks such as Austria's Raiffeisen most active in the Russian market, and will expand the splits between Washington and Brussels that have developed over tariffs and the Trump White House reimposing Iran sanctions. Speaking of which, the unelected European Commission President Jean Claude Juncker was in Washington on Wednesday with Trump announcing a more conciliatory approach to the EU 'foe' in trade.

#MAGA Winning in EU Trade Talks?

In exchange for Trump not carrying out his threats to slap high tariffs on mostly German automobiles, the EU is supposed to buy the American soybeans that Chinese importers rejected. Subsidies to farmers to get them through the transition between markets have also been announced, to the tune of several billion dollars. Some Senators from the mostly red state farm caucus are shrinking from this proposal. The EU is also supposed to import American liquefied natural gas (LNG), with former Texas Governor and current Energy Secretary Rick Perry visiting the Cove Point terminal in Maryland. It's the second operational export facility for super-cooling natural gas into tankers in the United States, after the Sabine Pass terminal run by Cheniere Energy in Louisiana.

Face it America, Russian Gas is Cheaper for Europeans Than American LNG

The issue for Europeans is no longer availability, but price, including competition with Moscow's much cheaper piped gas to Europe and its own LNG exports from Ust Luga in the Baltic and Sakhalin II in the Far East -- the latter of which is capable of shipping to Europe in summertime via the northern route along Russia's Arctic coast line. Putin announced this week, following the successful completion of the Kerch Strait bridge to Crimea this summer that Moscow intends to build a 28-mile-long mega bridge from the Asian mainland to Sakhalin Island, a project certain to attract Japanese investment for a London to Tokyo railway while enhancing energy development on the territory.

As OilPrice.com analyst Tim Diass writes:

Geopolitical posturing and region politics aside, Trump’s comments that the U.S. can compete successfully with Russian gas needs further examination. First, in 2016 almost 90 percent of Russia’s 7.5 Tcf of natural gas exports were delivered to customers in Europe via pipeline, with Germany, Turkey, Italy, Belarus, and the UK receiving the bulk of these volumes, according to the EIA.

Second, Russia already has an extensive network of pipelines in place. Third, piped gas is always cheaper than imported LNG. While it's true that the initial cost to put gas pipeline infrastructure in place can run into the billions of dollars, LNG project development is usually even more capital extensive. Russian piped gas, according to some analysts, can be at least 25 percent cheaper than imported LNG, a market reality perhaps lost on President Trump.

Moreover, American LNG is simply at a cost disadvantage compared to Russian piped gas. Using a Henry Hub gas price of $2.85/MMBtu as a base, Gazprom recently estimated that adding processing and transportation costs, the price of U.S.-sourced LNG in Europe would reach $6/MMBtu or higher – a steep markup.

Henry Hub gas prices are currently trading at $2.770. Over the last 52-week period U.S. gas has traded between $2.64/MMBtu and $3.82/MMBtu. Russian gas sells for around $5/MMBtu in European markets and could even trade at lower prices in the future as Gazprom removes the commodity’s oil price indexation. Given both the cost advantage of Russian gas, and the push back from many EU members against U.S. LNG, Trump’s statements in Helsinki could just be just another one of the president’s pipe dreams.

Moscow Wasn't Surprised Trump Admin Did Not Appear to Budge on Crimea Non-Recognition, Which in the Big Scheme of Things Doesn't Matter

Russia's response to the Crimea declaration was, not surprisingly, dismissive. Foreign Ministry spokeswoman Maria Zakharova said on Facebook that Moscow understands U.S. policies change with presidents, pointing to Trump tearing up the JCPOA Obama forged with Iran as an example of U.S. unreliability. Elsewhere, Foreign Minister Sergey Lavrov and the much demonized in the US/UK media Russian chief of staff Gen. Valeriy Gerasimov met with German Chancellor Angela Merkel in Berlin -- with scarcely any details leaking about the negotiations except that they had something to do with settling Syrian refugees now in Germany back home.

MSM Downplay Merkel Talks with Lavrov and Gerasimov --
Need We Ask Why?

The Anglo-American press, which has championed saint Angela as mutti for refugees in Europe and staunch defender of the EU/NATO world order (regardless of how poorly maintained the German military is) predictably ignored Merkel's meeting with Lavrov/Gerasimov. As an old friend used to tell the Russian Analyst about the press, "Don't just look at what they're telling you, pay attention to what they're not telling you". In this case, the silence about German-Russian talks at the highest level speaks volumes as to whether they bode well for Washington or Trump's bullying the Germans into cancelling the Nordstream 2 pipeline.

Moscow also continues its hot streak of gold buying, which accelerated after massively dumping most of its U.S. Treasury holdings this spring. The Kremlin certainly hopes Trump can improve relations, but with the postponement of Putin's visit to Washington until 2019, it's clear the Russians aren't counting on a Trump victory over the deep state or the well entrenched, bipartisan (or more accurately, globalist uniparty) opposition in Congress.

Will AG Usurping Deputy AG Rosenstein Actually Be Impeached? 
Deep State Threats on Trump's Life?

A recent discussion on the First Channel's Evening With Vladimir Solovyov, in which a Russian film director announced Trump fears he could be assassinated like President John F. Kennedy because he is (wittingly or not) dismantling the (cabal's) American empire, went viral in subtitled YouTube format (video and English transcript here). Whether guests on Solovyov's popular program watched by millions in Russia are reading Q dispatches about how the Atlantic Council linked cyber security firm Crowdstrike framed the Russians with hacking the DNC, we cannot confirm. But the announced impeachment letters drafted by Trump's House Republican allies of Deputy Attorney General Rod Rosenstein threatens a critical firewall for the deep state against charges of Obama Administration illegal spying with Russiagate as a cover, plus sedition in cooperation with British intelligence.

With the hysterical cries of Trump committing a death penalty offense in 'treason' from former CIA director John Brennan, and the appearance of seditious presidential assassination 'betting markets' on Augur, hopefully the Secret Service is vigilantly asking NSA to track who has been placing pseudonymous bets on Trump losing his life.