ARAMCO: Son of De Beers, Grandson of the Honourable Company

ARAMCO: The New De Beers

-or-

Carbon Emissions and “Blood Diamonds”: Saving a Market (by Destroying It)




The Arab Spring tested Globalist resolve: what was the West going to do about a menacing collapse of her client states?

Expected Loss from an Arab Client Collapse

How could one measure the cost of a collapsed Arab client region?
Well, it would require simulations and models that I lack.
Fortunately for us, though, we can estimate the cost by the response to this expected loss.

“Refugees Welcome”: The Tyrant’s Barbell

Every smart tyrant quickly realizes that his power monopoly comes at a price: opposition naturally emerges, and while he must contain or crush it, it often proves far more destabilizing and costly to totally eliminate the opposition than to indulge a token perfunctory front or, preferably, simply allow the most ambitious, frustrated, and eager of the disaffected population to migrate abroad. Let us call this the strategy, “The Tyrant’s Barbell”.

Countries such as Cuba, Zimbabwe, and Eritrea have had great success with the Tyrant’s Barbell: Crush immediate local threats, but allow a viable albeit hazardous path for the disaffected to migrate out from the country and vitiate the basis for a mass-uprising.

While this results in the tyranny losing its best people, it enables the ruling junta to stay in power far longer than it could with these anxious and ambitious citizens still in the country.

Europe: The Great ISIS Toilet

The Arab regimes are alien species on a hostile substrate: they simply can not survive without active Western support, both financial and security. This means when facing a credible, popular mass-uprising, such as ISIS, the Arab regime must appeal to the West for a solution or else collapse.

The West didn’t have many options:

• Fight futile & costly 100 year war “against Islam”: disaster for everyone

• Ignore it: Lose all major capital inflows from client puppets and control of key supply chains: disaster for Western elite (hence, not happening)

• Convince ISIS to be nice: not happening in such a rough neighborhood

• Tyrant’s Barbell: Drain ISIS of future and existing supporters (young men) while also humiliating them in the battlefield to reduce its prestige and viability

The last option prevailed: Europe totally mobilized: media, bureaucracy, academia, NGO’s, and the “private” sector all embraced the new paradigm of, “Refugees Welcome”. Anyone who criticized this new policy was purged, jailed, fined, or otherwise punished. The State had decided that in order to protect her critical interests, the welfare, safety, and comfort of her own citizens would have to be sacrificed.

Tyrant’s Barbell: It Worked, Again… but Now Comes the Bill

With ISIS no longer existentially menacing Western Arab client states, the West could begin to profit from her newly indebted clients.

This means one thing:

The ARAMCO IPO.

ARAMCO: The De Beers of Energy

To try to understand where ARAMCO sits in the globalist system, consider De Beers as a model:

• Diamonds, like oil, have no inherent scarcity

• Both Diamonds and Oil have been subject to supply cartels, with varying degrees of success

• The vast reserves of diamonds and oil are narrowly controlled by fragile sovereign entities

• These fragile regimes depend on foreign patronage (the West, China, etc.) for their survival and hence are obligated to share the rent from their resource extraction industry.

This last point can prove at times tragically farcical, such as when Mugabe deployed North Korean commandos to help him slaughter his own people during the civil war of the 1980’s.

The Template: Carbon Emissions & the New Oil Cartel

The price of diamonds peaked in the later 1970’s, during the runaway inflation era of the US. A 1 carat D IF diamond could fetch up to $70,000 at that time. Today, the latest Rappaport sheet has a 1-D IF at around $20,000, and assuredly one could negotiate below that with enough chutzpah.

Diamonds crashed in value after Volker’s tightening cycle, never again to regain these high prices.

This scared the DeBeers cartel… especially with a dissolving Soviet Union and discoveries in Australia.

Join the CSO, or else...

The CSO, or, “Central Selling Organization”, is the DeBeers diamond marketing network and the essence of the DeBeers diamond cartel.
Sierra Leone has not participated in the CSO for decades. Without CSO participation, Western banks will not risk financing a diamond mining project – period.

Were Sierra Leone to achieve the politically stability of, say, Botswana, it is estimated (by the National Advocacy Coalition of Extractives) that Sierra Leone could export up to seven-times more minerals. What ratio of that would be diamonds is difficult to say, though.

To absorb another glut of diamonds in an already saturated market, facing threats from synthetics and questionable long-term demand, would break DeBeers, completely, and ruin a well-established patronage.

Retail Blacklist: “Blood Diamonds”

To further crush the West Africa rough stone market, in addition to the CSO ban, a marketing campaign aligned against the West African diamond miners, with a retail blacklisting of their stones on the fatuous “blood diamond” calumny.

This “blood diamond” label had its intended effect: it starved all capital-intensive projects of financing and insurance, making diamond mining in both Liberia and Sierra Leone hazardous and risky. Thus, the roughs stayed in the ground, and De Beers could maintain its prices.

Today: Carbon Emissions are the “Blood Diamonds” of the Oil Trade

Using the successful model employed in the diamond trade, one can quickly see how the oil industry also falls into this new template:

• Reward sovereign/global clients with commodity monopoly: GCC, Russia, key IOC’s, etc.

• Eliminate producers who are not members of the cartel: non-strategic IOC’s, “rogue states”, political adversaries, etc.

• Impose demand-side response whenever cartel faces intractable supply shock: e.g. EU banning Canadian oil sands oil imports

Already, many states within the EU plan on banning combustion-engines and even oil and gas extraction, itself. The EU is in full-swing, preparing for the new oil cartel!

Shrink Market… but Concentrate Control & Patronage

This means that the long-term plan entails shrinking the oil market and oil production in such a manner that key, politically-obedient cartel players continue to depend on global patrons for their survival and prosperity.

This results in continuously-compounding returns over decades: it is an absolute gold-mine.

It also entails the culling of superfluous players. The drop in oil prices has eliminated some of them, but policy, not market prices, will remove the producers who are not in the emerging new cartel.

ARAMCO IPO: A Buffett Cartel Play?

It is under this vision that ARAMCO can successfully IPO: in exchange for transferring the ARAMCO assets to global control, ARAMCO gains a guaranteed market for its product, reliable profits, and steady assurance and support from the West(whose pension funds own the stock) whenever the Saudi sovereign faces political or social unrest.

The ARAMCO IPO is the most significant transaction in the history of public markets, and clearly, the stakeholders are willing to sacrifice anything to complete it.

With such profitable prospects, perhaps Buffett is hoarding his cash to get a juicy allocation of the ARAMCO IPO for Berkshire?