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FTR #646 Georgia on Everybody’s Mind

[1]MP3: 30-Minute Seg­ment [2]
REALAUDIO [3] NB: This RealAu­dio stream con­tains FTRs 646 and 647 in sequence. Each is a 30 minute seg­ment.

Intro­duc­tion: With much of the world’s media atten­tion focused on the Bei­jing Olympics, war explod­ed in the Cau­ca­sus, with Russ­ian forces deliv­er­ing a pre­dictably deci­sive defeat to the Geor­gian mil­i­tary. Cold-War style rhetoric from the McCain cam­paign and the GOP eclipsed [to an extent] the fact that one of McCain’s top for­eign pol­i­cy advis­ers was a major lob­by­ist for the Geor­gian gov­ern­ment. After exam­in­ing that fas­ci­nat­ing and [pos­si­bly] sig­nif­i­cant rela­tion­ship between McCain and Randy Sche­une­mann, the pro­gram enter­tains colum­nist Robert Scheer’s view­point that the out­break of war may have been an “Octo­ber Sur­prise” deliv­ered ear­ly. Scheer sus­pects that the pro­fes­sion­al rela­tion­ship between the McCain cam­paign and the Geor­gian gov­ern­ment may have served as a vehi­cle for help­ing to pre­cip­i­tate the events lead­ing to war. It is a cer­tain­ty that the Geor­gian con­flict has been an occa­sion for the McCain cam­paign and the GOP to esca­late their mil­i­tarism and the venal­i­ty of their attacks on Barack Oba­ma’s nation­al secu­ri­ty cre­den­tials. (The term “Octo­ber Sur­prise” derives from a gam­bit exe­cut­ed between the Reagan/Bush cam­paign and the Islam­ic fun­da­men­tal­ist regime in Iran [4], in which even­tu­al CIA direc­tor William Casey and George H.W. Bush him­self seem to have been involved. Col­lud­ing with the Iran­ian mul­lahs to with­hold the U.S. hostages tak­en from the Amer­i­can Embassy until Jim­my Carter’s humil­i­a­tion and con­se­quent elec­tion defeat were assured, the Reagan/Bush cam­paign com­mit­ted trea­son.) At the fore­front of dis­cus­sion of the Cau­ca­sus and oth­er areas around the Caspi­an is the fos­sil fuel busi­ness. Just before the out­break of hos­til­i­ties, a key pipeline that trav­eled through Geor­gia was dis­abled by an explo­sion. Not sur­pris­ing­ly, the war in Geor­gia has served to dri­ve up the price of oil. The broad­cast con­cludes by exam­in­ing the appar­ent role of spec­u­la­tion by sov­er­eign wealth funds in the increase of oil prices.

Pro­gram High­lights Include: McCain advis­er (and for­mer Geor­gian lob­by­ist) Randy Sche­une­man­n’s efforts on behalf of the Project for a New Amer­i­can Cen­tu­ry and the Iraq war; the impact of war in oil pro­duc­ing areas on the price of petro­le­um; the dra­ma and blood­shed in the Cau­ca­sus ana­lyzed against the back­ground of a new “Great Game” involv­ing com­pe­ti­tion for fos­sil fuel resources in for­mer republics of the Sovi­et Union. (Record­ed on 8/24/2008.)

1. The Geor­gian war of August of 2008 became a cam­paign issue in the U.S. pres­i­den­tial elec­tion. One of John McCain’s top aides was a major lob­by­ist for the pro-West­ern Geor­gian gov­ern­ment. As seen below, ques­tions have been raised about this rela­tion­ship and its pos­si­ble effect on U.S. pol­i­cy.

“John McCain’s chief for­eign-pol­i­cy advis­er and his busi­ness part­ner lob­bied the sen­a­tor or his staff on 49 occa­sions in a 3 1/2‑year span while being paid hun­dreds of thou­sands of dol­lars by the gov­ern­ment of the for­mer Sovi­et repub­lic of Geor­gia.

The pay­ments raise eth­i­cal ques­tions about the inter­sec­tion of Randy Sche­une­man­n’s per­son­al finan­cial inter­ests and his advice to the Repub­li­can pres­i­den­tial can­di­date who is seiz­ing on Russ­ian aggres­sion in Geor­gia as a cam­paign issue.

McCain warned Russ­ian lead­ers Tues­day that their assault in Geor­gia risks “the ben­e­fits they enjoy from being part of the civ­i­lized world.”

On April 17, a month and a half after Sche­une­mann stopped work­ing for Geor­gia, his part­ner signed a $200,000 agree­ment with the Geor­gian gov­ern­ment. The deal added to an arrange­ment that brought in more than $800,000 to the two-man firm from 2004 to mid-2007. For the dura­tion of the cam­paign, Sche­une­mann is tak­ing a leave of absence from the firm.

‘Sche­une­man­n’s work as a lob­by­ist pos­es valid ques­tions about McCain’s judg­ment in choos­ing some­one who — and whose firm — are paid to pro­mote the inter­ests of oth­er nations,’ said New York Uni­ver­si­ty law pro­fes­sor Stephen Gillers. ‘So one must ask whether McCain is get­ting dis­in­ter­est­ed advice, at least when the issues con­cern those nations.’ . . .”

“McCain Aide Lob­bied for Geor­gia” by Pete Yost; San Fran­cis­co Chron­i­cle; 8/14/2008; p. A4. [5]

2. Syn­di­cat­ed colum­nist Robert Scheer has sug­gest­ed that the Geor­gian mil­i­tary ini­tia­tive may actu­al­ly have been a gam­bit, con­duct­ed in con­junc­tion with ele­ments of the GOP and McCain’s cam­paign. The advent of the war enabled McCain to effect a mus­cu­lar for­eign and nation­al secu­ri­ty pol­i­cy stance, con­trast­ed by his spin­meis­ters with Oba­ma’s sup­pos­ed­ly weak nation­al secu­ri­ty cre­den­tials.

“Is it pos­si­ble that this time the Octo­ber sur­prise was tried in August, and that the garbage issue of brave lit­tle Geor­gia strug­gling for its sur­vival from the grasp of the Russ­ian bear was stoked to influ­ence the U.S. pres­i­den­tial elec­tion?

Before you dis­miss that pos­si­bil­i­ty, con­sid­er the role of one Randy Sche­une­mann, for four years a paid lob­by­ist for the Geor­gian gov­ern­ment, end­ing his offi­cial lob­by­ing con­nec­tion only in March, months after he became Repub­li­can pres­i­den­tial can­di­date Sen. John McCain’s senior for­eign pol­i­cy advis­er.

Pre­vi­ous­ly, Sche­une­mann was best known as one of the neo­con­ser­v­a­tives who engi­neered the war in Iraq when he was a direc­tor of the Project for a New Amer­i­can Cen­tu­ry. It was Sche­une­mann who, after work­ing on the McCain 2000 pres­i­den­tial cam­paign, head­ed the Com­mit­tee for the Lib­er­a­tion of Iraq, which cham­pi­oned the U.S. Iraq inva­sion.

There are tell­tale signs that he played a sim­i­lar role in the recent Geor­gia flare-up. How else to explain the fol­ly of his close friend and for­mer employ­er, Geor­gian Pres­i­dent Mikhail Saakashvili, in order­ing an inva­sion of the break­away region of South Osse­tia, which clear­ly was expect­ed to pro­duce a Russ­ian counter-reac­tion. It is incon­ceiv­able that Saakashvili would have trig­gered this dan­ger­ous esca­la­tion with­out some assur­ance from influ­en­tial Amer­i­cans he trust­ed, like Sche­une­mann, that the Unit­ed States would have his back. Sche­une­mann long guid­ed McCain in these mat­ters, even before he was offi­cial­ly run­ning for­eign pol­i­cy for McCain’s pres­i­den­tial cam­paign. . . .”

“Geor­gia War is a Neo­con Elec­tion Ploy” by Robert Scheer; San Fran­cis­co Chron­i­cle; 8/13/08; p. B11. [6]

3. A pipeline running–in part–through Geor­gia looms large in the strate­gic sit­u­a­tion sur­round­ing the Geor­gian con­flict. Beyond that, one should nev­er lose sight of the para­mount impor­tance of fos­sil fuel pro­duc­tion and trans­porta­tion for the Caspi­an region.

“The war in Geor­gia and the inad­e­qua­cy of the West­’s response points again to the pow­er of the Russ­ian ener­gy monop­oly.

Europe fears protest­ing too much, as this might induce Rus­sia to reduce the flow of nat­ur­al gas to the con­ti­nent this com­ing win­ter (Rus­sia present­ly sup­plies 50 per­cent of Europe’s nat­ur­al gas).

Whether or not Rus­sia march­es on to Tibil­isi, its assault on Geor­gia has fur­ther strength­ened Rus­si­a’s hold on Europe: Financiers are unlike­ly to back new pro­posed pipeline sys­tems bring­ing Caspi­an oil and gas to the Unit­ed States and Europe via Geor­gia.

This sug­gests that grow­ing Caspi­an oil and gas pro­duc­tion would have to use the vast Russ­ian pipeline net­work to get to mar­ket. . . .”

“Fol­low the Pipeline” by Mark David Iden; San Fran­cis­co Chron­i­cle; 8/13/08; p. B11. [7]

4. Just before the war began, a mys­te­ri­ous explo­sion dam­aged the pipeline. The cause was alleged­ly accidental–in con­junc­tion with the war itself and resul­tant height­ened ten­sion with Rus­sia, oil prices moved sharply upward.

“A fire on the Baku-Tbil­isi-Cey­han (BTC) oil pipeline in Turkey was extin­guished on Mon­day, a senior source at BP, a major share­hold­er in the pipeline, told Reuters.

The pipeline car­ry­ing Azeri crude, which pass­es through Geor­gia, was hit by an explo­sion on Turk­ish ter­ri­to­ry two days before con­flict began over the South Osse­tia region.

Repairs may not be fin­ished for one to two weeks or longer, accord­ing to a source at Turkey’s state-owned pipeline com­pa­ny Botas. No oil is cur­rent­ly flow­ing through the pipeline.

World oil prices rose last week after the announce­ment of the blaze, and esti­mates that it could take up to two weeks to get the pipeline on stream again. . . .”

“Turkey’s BTC Pipeline Fire Extin­guished, BP Reports” (Reuters); Toron­to Globe and Mail; 8/12/2008. [8]

5. As not­ed above, the hos­til­i­ties in Geor­gia and dete­ri­o­ra­tion in U.S./Russian rela­tions have led to high­er oil prices.

“Oil prices shot up more than $5 a bar­rel Thurs­day, ris­ing to the high­est lev­el in over two weeks as esca­lat­ing ten­sions with Rus­sia stoked fears of sup­ply dis­rup­tions to the West.

Crude’s ral­ly mim­ic­ked the wild price swings seen last month and have at least tem­porar­i­ly halt­ed oil’s slide back toward $100 a bar­rel. A weak­er U.S. dol­lar and wor­ries about tight­en­ing out­put from OPEC coun­tries are also sup­port­ing prices.

After days of brush­ing off geopo­lit­i­cal flare-ups and a trop­i­cal storm, oil spiked above $122 a bar­rel as traders became rat­tled over increas­ing­ly hos­tile Russ­ian rhetoric toward a U.S.-Poland deal to install a mis­sile defense sys­tem in East­ern Europe — a move Moscow views as a threat.

The con­tin­ued pres­ence of Russ­ian troops in Geor­gia — a key con­duit for West­ern-bound oil ship­ments — inject­ed even more bull­ish sen­ti­ment into a mar­ket that had appeared to be los­ing momen­tum on the idea that high ener­gy prices were curb­ing demand. . . .”

“Oil Jumps $5 on US-Rus­sia Ten­sions, Slid­ing Dol­lar” by Steven­son Jacobs; Asso­ci­at­ed Press; 8/21/2008. [9]

6. Although not direct­ly relat­ed to the sub­ject of the Geor­gian war, the pro­gram con­cludes with exam­i­na­tion of the pos­si­ble role of sov­er­eign wealth funds in the rise of oil prices.

“Sov­er­eign wealth funds, the mas­sive invest­ment pools run by for­eign gov­ern­ments, are now among the biggest spec­u­la­tors in the trad­ing of oil and oth­er vital goods like corn and cot­ton in the Unit­ed States, accord­ing to inter­views with bro­kers who han­dle their invest­ments at lead­ing Wall Street banks, vet­er­an traders and con­gres­sion­al inves­ti­ga­tors.

Some law­mak­ers say the unreg­u­lat­ed activ­i­ty of sov­er­eign wealth funds and oth­er spec­u­la­tors such as hedge funds has con­tributed to the dra­mat­ic swing in oil prices in recent months.

The agency reg­u­lat­ing the mar­ket said it had not picked up on this activ­i­ty by sov­er­eign wealth funds. In a June let­ter, the Com­mod­i­ty Futures Trad­ing Com­mis­sion told law­mak­ers that its mon­i­tor­ing showed that these funds were not a sig­nif­i­cant fac­tor in com­mod­i­ty trad­ing.

But the CFTC is not detect­ing the grow­ing influ­ence of for­eign funds because they invest through Wall Street bro­kers known as “swap deal­ers” who often oper­ate on unreg­u­lat­ed mar­kets, sources famil­iar with the trans­ac­tions said. . . .”

“Sov­er­eign Funds Become Big Spec­u­la­tors” by David Cho; Wash­ing­ton Post; 8/12/2008; p. D01. [10]