E.I.R.STRATEGIC ALERT-

E.I.R.STRATEGIC ALERT

WEEKLY NEWSLETTER

Volume 28, No. 45 - November 6, 2014

NATO Provocations around Ukraine

Threaten World War

In the immediate aftermath of the Oct. 26 Ukrainian parliamentary

elections, in which a pro-NATO bloc, including several

neo-Nazi political parties, won a majority, provocations against

Russia have escalated to the point that American statesman

Lyndon LaRouche has warned that we could be moments away

from world war. LaRouche made clear that such a global conflict,

which could lead to the use of thermonuclear weapons,

was not inevitable, but that all the pre-conditions were now in

place for that.

On Oct. 29, the Ukraine government announced that they

were pulling out of the delineation accord that was signed

in September as part of the Minsk Agreement between the

Kiev government and pro-Russian forces in the Donetsk and

Lugansk regions of the southeast. Under those agreements, a

30 km-wide demilitarized zone was established and provisions

were also made for local elections in the two regions, which

were then held on Nov. 2.

Russian leaders immediately expressed public concerns over

the growing danger. Deputy Foreign Minister Gennady Gatilov

called on the UN to launch a discussion on the revival of fascism

in Ukraine, pointing to an early October demonstration in

which thousands of activists commemorated the Ukraine Insurgent

Army (UPA), which was the armed wing of the Nazi

collaborationist Bandera movement of the 1930s and 40s. And

Russian President Putin again warned Oct. 28 that the world

must “resist any attempts at reviving Nazi ideology, fomenting

of inter-ethnic strife and falsifying our shared history.”

In addition to canceling the delineation plan, the Ukraine government,

along with the U.S. and some European governments

called for the cancellation of the Nov. 2 local elections in Donetsk

and Lugansk regions. UN Secretary General Ban Ki-moon

joined the call, despite the fact that the UN had supported the

original Minsk Agreements.

While there had been some signs of a de-escalation of the

Ukraine-Russia crisis, including the signing of a gas deal between

Russia, Ukraine and the EU on Oct. 31, the most radical

neo-Nazi factions in Ukraine began openly threatening President

Potor Poroshenko if he slowed the process of full Ukraine

integration into the EU -- and, implicitly, into NATO. The head

of the Dnipro-1 Batallion, a neo-Nazi formation under the

sponsorship of Ukrainian oligarch Igor Kolomoisky, announced

that his group was giving Poroshenko six months to meet their

demands or there would be a “military coup.” The same warning

was delivered by the Azov Batallion, the armed wing of the

Right Sector, one of the neo-Nazi parties which altogether won

some 12% of the vote in the Oct. 26 elections.

Russia Will Not “Drift” into a Confrontation

Russian leaders have responded sharply to the increased war

danger. Russian Defense Minister Sergei Shoigu has announced

an increase in joint maneuvers for 2015 in response to “new

threats.” He focused on Ukraine, in particular, where “the US

and EU instigated the overthrow of the legitimate Ukrainian

president.”

On Oct. 28-29, the Russian Air Force conducted large-scale

maneuvers over the Black Sea, the Baltic Sea and the North

Sea, involving 28 fighter planes including Tu-95 Bear bombers,

and Russia successfully test-fired a new submarine launched

ballistic missile, with a range of 10,000 kilometers, capable of

carrying 6-10 150 kiloton thermonuclear warheads.

On Oct. 31, Deputy Prime Minister Rogozin, who is in

charge of Russia’s vast military-industrial sector, announced

that the threats coming from NATO, particularly centered on

Ukraine, mean that Russia will maintain full defense spending –

i.e., without cuts -- through at least 2020. He assailed the US

and EU sanctions and announced that the first steps towards

import substitution had already begun... in the defense sector.

At the same time, the Polish Minister of Defense, Thomasz

Siemoniak, announced a redeployment of Polish armed forces

to three bases in the east of the country, bordering Belarus

and Ukraine, reflecting the first major repositioning of Polish

armed forces since the collapse of the Warsaw Pact. While Polish

armed forces are small, Poland has been a member of NATO

since 1999, so the implications are obvious.

On Oct. 31, President Putin delivered a clear statement that

Russia will not “drift” into a confrontation being provoked by

NATO, a confrontation which he said was being “persistently

forced on us.” He cited the “hotbed” of provocations across

the border in Ukraine, but emphasized that Russia’s military

doctrine “is defensive.”

The Drive Is On for a White House Purge!

Right after the Nov. 4 midterm elections in the United States,

it is expected that there will be a new round of media leaks,

accompanied by direct pressure on President Obama from leading

Democratic Party “elders”, and from top military leaders,

to clean house and bring in a new team to run the Presidency

for the rest of his term.

EIR STRATEGIC ALERT

2 WEEKLY NEWSLETTER n°45 / 2014

The recent leaks on Pentagon complaints about White House

incompetence in managing the war on the Islamic State (IS -

cf. below) were apparently sanctioned at the very top of the

Defense Department and Joint Chiefs of Staff, and are aimed

at forcing the removal of some of the most egregious White

House staffers. Among the top names on the list are Chief of

Staff Denis McDonough, National Security Advisor Susan Rice,

and her top deputies, Ben Rhodes and Tony Blinken.

According to one source, the Joint Chiefs of Staff had prepared

a complex but serious war-plan for defeating IS in Iraq

and Syria, but the implementation has been completely bungled

by the White House and National Security Council team, which

has repeatedly failed to even consult with the Pentagon before

making public statements or sending communications to

Congress. The top military planners belatedly realized that the

White House and NSC team did not comprehend the plan and

were therefore totally incapable of even explaining it, in particular

Susan Rice.

As some have pointed out, the White House did not issue any

strong denial of the reports of the rifts. That seems to indicate

that Barack Obama is ready to shake up his team. However,

the reason may not be to change policy, but to be able to put

the blame for his failed policies – including the Nov. 4 election

results – on his advisors and/or his cabinet – rather than admitting

his own responsibility.

Rift in Obama Administration

over Syria Policy Exposed

The New York Times revealed Oct. 29 that Defense Secretary

Chuck Hagel had written a two-page memo to Obama’s National

Security Adviser, Susan Rice, highly critical of the administration’s

Syria policy. The immediate point of conflict is between

Susan Rice and White House chief of staff Dennis McDonough,

on the one side, and Chuck Hagel, Secretary of State John

Kerry, and Joint Chiefs Chairman Gen. Martin Dempsey, on the

other. White House officials, according to the New York Times,

joke that Kerry is like the astronaut played by Sandra Bullock

in the movie Gravity, somersaulting through space, untethered

from the White House.

As of now, it is not clear which faction will win out in the

end, if any.

Although the full content of Hagel’s two-page memo has

not been released, sources report that he was not demanding

greater focus on removing Assad from power, but simply a

clear policy from the President on how to operate inside Syria,

where the U.S. has no authorization from the UN Security

Council or any other body for action.

The Joint Chiefs have insisted that the U.S. must focus on

destroying IS and not engage in any actions that would diminish

the efforts of the Syrian Army against the jihadists. Gen.

Dempsey in particular has reportedly told the President that

the U.S. cannot fight a three-front war against IS in Iraq, IS in

Syria, and the Assad government and the Syrian Army.

From a strategic standpoint, the only reasonable alternative

to the Obama policy is to work with Assad, Iran, and with Russia

to defeat ISIS. Nothing else will work.

Desperate QE Moves Won’t Save the Bubble

The European Central Bank, the Bank of Japan and the Swedish

Riksbank moved ahead with quantitative easing (QE) programs

last week. The ECB appointed the managers for the

ABS Purchase Programme, to be launched in November; the

Riksbank cut its rates from 0.25% to 0,00% and the Bank of

Japan outdid everyone by not only announcing the expansion

of its QE program, but putting much of it for the first time into

foreign, rather than domestic stocks and bonds.

All those measures are purportedly needed to fight “deflation”,

but the real aim is to expand the flood of liquidity for

speculation. These are desperate moves which will not prevent

the bubble from bursting, but will make for a much larger

crash.

Meanwhile, central banks are increasingly becoming hedge

funds as well as the sole creditors of governments, whose capacity

for sovereign credit expansion has been reduced to virtually

zero.

Take the case of the Federal Reserve, which ended QE – at

least in the current form – on Oct. 29, as there is nothing left

to buy. As of Oct. 15, 2014, the Fed owned $2.35 trillion, or

about half, of all the roughly $5 trillion of “publicly held” U.S.

Treasury debt of 3 years’ or greater maturity. (“Publicly held”

means not held by the Social Security, Medicare, or other trust

funds administered by the government). The central banks of

China, Japan, and a few other countries, along with some sovereign

wealth funds, held most of the other half of the Treasury’s

“medium-” and “long-term” publicly held debt. What was

left for the Fed to buy?

During these long years money-printing, this $2.3 trillion,

plus the $2 trillion or so used to buy mortgage-backed securities,

mainly from government sponsored enterprises, had

all been given to the largest trans-Atlantic banks. Those banks

used the money to build up their “excess reserves” and to speculate,

but not to lend to medium and small sized businesses

or to households. The economies have been starved of private

credit, while the derivatives bubble grew to $750 trillion-$1

quadrillion nominal value.

However, during most of the time the Fed has been “cornering”

U.S. long-term debt, Treasury issuance of that debt

has rapidly decreased because of the austerity (budget cuts)

counseled by the Federal Reserve. In other words, the single,

gigantic creditor of the United States government, i.e., the

Federal Reserve, wanted economic austerity, and got it, as the

condition for super-low interest rates.

Japan Opts for Gargantuan QE

The Bank of Japan is ready to outdo even the Federal Reserve.

On Oct. 31, BoJ Governor Haruhiko Kuroda announced that

his bank will:

*triple the pace of its buying of stock and property funds,

*extend the average maturity of its bond holdings by three

years to ten,

*raise the ceiling of its annual Japanese government bond

purchases by $267 billion to $714 billion (about $60 billion

per month), buying not just more government bonds, but also

stocks and real-estate funds.

On the same day, the government announced a plan to

radically change the $1.2 trillion investment portfolio for the

Government Pension Investment fund, pulling funds out of

Japanese government bonds and raising the share of its assets

in Japanese and foreign stocks by more than 10 percentage

points each. The pension fund, together with the Postal Bank,

both offer low but thoroughly dependable returns to savers

and pensioners by not speculating, but making the huge fund

available to government investments, which has been the backbone

of Japan’s historic growth without foreign indebtedness.

That is increasingly being dumped.

In a rare split decision of 5-4, the BOJ Board almost voted

down the new QE. Stock markets then skyrocketed, as the

expected Viagra response.

EIR STRATEGIC ALERT

n°45 / 2014 WEEKLY NEWSLETTER 3

Momentum for Glass-Steagall Bank

Separation Growing in Europe

The results of the “stress tests” of European banks were so farcical

that the ECB has become the laughing stock of informed

circles (cf. SAS 44/14). This can only fuel the drive for a real

reform of the banking system, beginning with a strict separation

between commercial and investment banks. We note recent

highlights on that front:

German Mittelstand Organization. The head of the Association

for Small and Medium-sized Businesses (BVMW) for North-

Rhine Westphalia, Herbert Schulte, denounced the ECB “stress

tests”, saying that “What is lacking is the analysis of hedge

funds and financial service agencies, which are still engaged in

risky tradings that can destabilize the financial system.”

“To stabilize the banking sector,” Schulte added, “we need the

systemic separation of commercial credit and investment banking.

Business with private customers and financing the Mittelstand

must again become the core mandate of the banks.”

Schulte also proposed to change the ECB’s method of weighing

risks to advantage loans to SME.

Parliamentary Initiative in Iceland: Alfheidur Ingadottir, a

substitute member of the Icelandic Parliament, reintroduced

a draft motion for a Glass-Steagall resolution in late October.

The resolution states: “The Parliament assigns the Minister of

Finance and Economic Affairs to present a bill that guarantees

the separation of commercial and investment banking activities,

with the aim of minimizing the risk to the national economy

due to banking activities and reducing the risk of financial

losses of the public caused by banking crises. The bill shall be

submitted to the Parliament in the 145th legislative session.”

This wording is stronger than a motion adopted during the

last session, which just called on the minister to establish a

committee to consider whether or not to enact bank separation,

looking at the developments in other countries.

The motion is co-sponsored by nine other MPs, from four

different parties, all but the governing Center and Independence

Parties.

Swedish Lawmakers Call for Investigation. Six Left Party

MPs in Sweden filed a motion Oct. 27, calling for a “parliamentary

investigation to put forward a bill on separating traditional

banking activities from so-called investment banking activities”.

The initiator is Ulla Andersson, vice chair of the Left Party and

spokesperson on economic issues, who is also in close contact

with the government on budgetary issues. The new government

coalition – Social Democratic Party and Environmental Party --

relies on the Left Party for support, even though the three parties

altogether do not hold a majority in the parliament.

The motion strongly criticizes the government bailout of private

banks at the expense of the taxpayers, stating that bank

separation can protect them against “speculative activities that

increase the instability of the financial system.”

Debate in Italy Reported in Xinhua: The Chinese press

agency Xinhua has published an article on the debate on bank

separation in Italy, presenting the numerous bills introduced

in the Parliament as an alternative to the ECB/EU approach

typified by the stress tests and the new capital requirements

for banks.

In addition to former Economy Minister Giulio Tremonti, the

article cites the campaign by Movisol, with a quote from Chairwoman

Liliana Gorini: “Every time that a bank fails, or has a

massive hole due to derivatives, the citizens are asked to pay

for it: with our savings, with ever higher taxes, and with budget

cuts that harshly damage our basic infrastructure, as we

saw with the recent floods in Genoa. And now they are preparing

a law to take money directly from our bank accounts (the

“bail-in” system, in which bondholders and depositors would

cover bank losses - ed.). It’s time to change the system to save

citizens and productive businesses, not speculative finance.”

German Hooligan Riots: a British Export

German political life was rocked on Oct. 26, when 4,500 soccer

hooligans, together with professed neo-nazis, took to the

streets of Cologne to protest against “salafists” and “Islamic

extremists.” At the end of the day, some 50 policemen had

been injured, in addition to material damages. A well-known

hooligan rock band from Bremen called “Kategorie C” was featured

at the demonstration.

The Economist of London went so far as to call the riot “reminiscent

of street fighting during the Weimar Republic of the

1920s” in an article headlined, “German hooligans -- Of riots

to come,” emphasizing that further street fights are planned

for November, including around the Nov. 9 celebrations of the

fall of the Berlin Wall.

The hooligans in Cologne may have been German, but they

are directly modeled on the English Defence League and their

use of extremist soccer fans against immigrant populations in

the United Kingdom. The “Kategorie-C” comes out the UKcreated

“Blood & Honour” (B&H) network of neo-nazi bands

on the continent. Lead singer Hannes Ostendorf’s brother, Henrik,

is an NPD hack. Although B&H was banned in Germany

in 2000, Kategorie-C appears at concerts throughout Europe

with bands associated with the B&H network.

While Western media were quick to identify the role of neonazis

in Germany, they almost all refuse, to this day, to admit

the role of the neo-nazis in Ukraine, in spite of the blatant

evidence. K-C, for example, played at a Nov. 24, 2012 concert

in Kiev sponsored by the combat sport label “Svastone”, which

markets Tshirts with the picture of the UK founder of B&H,

Ian Stuart of the Skrewdriver band, and others, with the text

“Hasta la vista separatista”. On Aug. 14, 2014, Svastone organized

a concert to raise money for the Azov Battalion for its

neo-nazi activities In Eastern Ukraine.

Soccer club hooligans were used on May 2, 2014 to “cleanse”

Odessa of anti-Kiev activists, herding them into a building which

was then set on fire killing up to 50. The operation was run

by Self Defense Units of the Maidan and militias of Dnepropetrovosk

oligarch Kolomoisky which were sent into Odessa in

coordination with soccer fans attending a match in the city.

One can only wonder whether the German intelligence services

were not informed by their British colleagues of the export

into Germany of the English Defence League and B&H

modus operandi, which is now erupting. Note that the June

2014 report of the Office to Protect the Constitution (BfV)

failed to mention the neo-nazi groups in Ukraine.

Ebola: Cuba is the Largest Single Provider

of Healthcare Workers in West Africa

While the Ebola epidemic has grabbed less headlines over the

past week, the danger for the entire world has not lessened.

Carribean countries, in particular, are concerned that should

the virus arrive there, it would spread like wildfire. That was

discussed during an emergency meeting Oct. 29-30 in Havana,

Cuba, which brought together medical technicians and specialists

from South America.

EIR STRATEGIC ALERT

4 WEEKLY NEWSLETTER n°45 / 2014

In fact, Cuba has so far provided the largest single contingent

of healthcare workers to West Africa to combat Ebola. According

to the World Health Organization (WHO), the island has

contributed more than the Red Cross, or any other wealthy nation.

“There are more human resources from Cuba than from

many, many NGOs put together,” reports Dr. Jose Luis DiFabio,

the WHO representative in Cuba. In late October, another 91

Cuban doctors and nurses arrived in Liberia and Guinea, in addition

to the 165 already in Sierra Leone.

The United States has imposed an embargo against Cuba for

over five decades now but, fortunately, that has not prevented

cooperation between the American and Cuban medical communities

on fighting Ebola. At the end of September, infectious

disease specialist Dr. George Risi from Montana and Kate Hurley,

director of intensive care nursing at a major hospital in Missoula,

were in Cuba to train some 200 nurses and doctors in

safe clinical procedures for treating Ebola patients. Both these

experts had just returned from serving in West Africa.

Moreover, at the United Nations General Assembly Oct. 28,

a resolution calling on the Obama Administration to drop the

embargo, was again adopted by 188 member countries, with

only the United States and Israel voting against, and three small

Pacific countries abstaining. The Chinese permanent representative

to the UN, Wang Min, made a special appeal to end the

embargo, which is “a violation of the purposes and principles

of the Charter of the United Nations and the relevant General

Assembly resolutions.”

The West Should Collaborate with the BRICS,

Ex Australian PM Tells SI Conference

The former Prime Minister of Australia Malcolm Fraser (1975-

1983) sent the following greetings to the Oct. 18-19 Schiller

Institute conference near Frankfurt, Germany (cf. SAS 44/14).

He presents a welcome alternative to the policy pursued by

the current PM Tony Abbott, who vowed to “shirtfront” Vladimir

Putin when he comes to Australia in for the G20 summit.

Fraser also has a much saner view of the real economy, as

he recently reiterated his call for a full Glass-Steagall banking

separation. His message:

“I wish you well in your deliberations. We desperately need a

more cooperative and more inclusive world. The West needs to

be prepared to recognise, and also to accept, the consequences

of past grievous errors. The move of NAT0 eastwards was giving

notice that the West did not want Russia as a collaborative

partner, but rather as a defeated foe still to be marginalised. It

is not surprising that NATO’s move has led to a cool or even to a

sour relationship between the United States, NATO and Russia.

They virtually made a cooperative relationship impossible.

“Other Western initiatives have generally ended in failure.

The Gulf war to free Kuwait was an overwhelming success,

but the possibilities that could have flowed from that war,

where 31 nations participated with troops on the ground,

were thrown aside by policies of the neo-conservatives and

their ideas of American exceptionalism and manifest destîny. In

that vision, whatever America did was right, because America

did it. The 2nd War in Iraq was an unmitigated disaster, predicably

unleashing sectarian violence which has engulfed, and still

plagues, the whole region.

“The west has begun a new war against Islamic State in

Iraq and Syria, without the means to complete that war or to

achieve peace. We need a new and more open inclusive society,

where others can participate in making the rules that affect

everyone. We have a Monetary Fund and a World Bank, dominated

by American and Western interests, it is not surprising

that there are now moves to sidestep these institutions and

Create alternatives.

“There is an option and that is for the most powerful western

nations to realise that there have been great changes în the

world, that the strategic context has altered, that other powers

such as the BRICS are emerging and that the West should collaborate

with them as partners to establish a more equal and a

more just world.”

Space Privatization, a Failed

and Dangerous Policy

The two dramatic launch failures last week of two U.S. private

space vehicles, while very different in character and intention,

highlight the risks inherent in space flight, and underline the

importance of national government experience, capability, and

responsibility for the success of space exploration. In contrast,

the hallmark of President Obama’s space policy has been to

turn over to the private sector (with heavy subsidies from

NASA’s budget) the delivery of cargo, and later, crew, to the

International Space Station. That policy is based on the highly

questionable assumption that private companies could provide

space transportation more cheaply than the government.

Under the extreme anti-Russian policy of Obama Administration,

suppported by most Republicans, there was an effort to

become less dependent upon Russia for transportation to the

ISS, and to accelerate the operation of U.S. vehicles, but that

also increased the risks.

Thus, on Oct. 27, Orbital Science’s Antares rocket, carrying

the Cygnus module loaded with supplies for the space station,

exploded. While that is a disappointment and a financial loss, it

does not endanger the six-man crew aboard the station. Three

other craft will shortly be delivering supplies and science experiments

to the station.

Orbital Science has been in the space business since 1982,

designing and manufacturing satellites and space hardware for

NASA, the Department of Defense, and commercial customers. In

addition to top-notch technical manpower, its vice president for

the Antares program is former Space Shuttle Commander, Frank

Culbertson, who also worked on the Shuttle/Mir program.

The Oct. 31 crash of Virgin Galactic’s SpaceShip 2, killing

one of the pilots, presents an entirely different picture. The

company is the creation of Virgin Atlantic multimillionaire and

airline mogul Sir Richard Branson, with backing from Microsoft

billionaire Paul Allen. This is strictly a money-making enterprise

to take tourists on a short, suborbital fight to the edge

of space, for the thrill of it. Branson brags that more than 700

people have signed up and paid $250,000 each to take a ride.

In this tragic accident, the rocket designed to take SpaceShip up

to suborbital altitude apparently failed.

If the purpose of the operation is not to carry out a space

exploration program for the benefit of mankind, but to fly as

soon and as frequently as possible, in order to make more profit,

corners will be cut, and, as seen, risk increased.

E.I.R. STRATEGIC ALERT www.eir.de

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Verantwortl. f. d. Inhalt: Dean Andromidas, Claudio Celani

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