E.I.R.STRATEGIC ALERT

E.I.R.STRATEGIC ALERT

WEEKLY NEWSLETTER

Volume 28, No. 47 - November 20, 2014

The Center of the World Shifts

out of the Transatlantic Region

The fundamental change in the world order that was consolidated

at the July summit of the BRICS (Brazil, Russia, India,

China, South Africa) in Brazil was taken to a much higher stage

at and around the Nov. 9-10 Asia Pacific Economic Cooperation

(APEC) summit in Beijing. Just one week later, at the summit of

the G20 in Brisbane, Australia, although Western countries did

their best to pretend they were still calling the shots, it became

clear that they and their policies are thoroughly discredited (cf.

below). They are all lame ducks, and not just Barack Obama.

The dominant dynamic in the world today is being driven

by the Chinese programs for a New Silk Road Economic Belt

and the Maritime Silk Road which, as President Xi Jinping has

stressed repeatedly, are open to any country that wants to join.

That perspective, which is endorsed by countries representing

over half of the world’s population, represents the future.

While President Obama hoped to foist his explicitly anti-China

Trans-Pacific free-trade agreement (TPP) on the 21 member

countries of APEC, the latter were clearly more interested in

the alternative proposed by China, i.e., a inclusive Free Trade

Agreement for Asia and the Pacific (FTAAP – cf. below).

Just prior to the G20 meeting, the five heads of government

of the BRICS met to coordinate their positions, with all of them

agreeing on the need to move forward quickly on creating the

New Development Bank and the Contingency Reserve Arrangement,

both of which are designed to finance economic growth

and better protect against speculative attacks, sanctions, and

overall international political pressures.

Below is an overview of the breathtaking pace of developments

on that front.

While President Obama in particular has tried to sabotage

the different infrastructure and economic development projects,

President Xi Jinping went out of his way, at their joint

press conference in Beijing, to invite the United States and all

other countries to join in the Asian Infrastructure Infrastructure

Bank and the New Silk Road Fund (cf. SAS 46/14).

Much was made of the Western leaders’ threats to and insults

of Vladimir Putin during the G20 summit, but the fact

of the matter is that Russia’s relations with China and India,

just to name those two, have dramatically improved over the

past months, and that’s where the future lies, not in the trans-

Atlantic world under the present, dying system.

European countries should opt for such optimism, give up

their current suicidal course and accept China’s invitation to

develop mankind.

The Anatomy of a Global Sea Change

A partial rundown of developments over just the past two

weeks gives an idea of why we can say that a fundamental shift

is underway. Unfortunately, the established media in Europe

have given very little coverage to these events.

*At the Asia-Pacific Economic Cooperation meeting in Beijing

and other meetings just prior to it, China announced a new

$40 billion New Silk Road Fund, available to all participating

countries.

* The Chinese intend to triple their direct foreign investment

abroad, up through the year 2020, to bring the total to $1.25

trillion.

* At the ASEAN meeting just after the APEC meeting, it was

made known that the Chinese would provide another $20 billion

for the New Silk Road, this time for ASEAN and related

nations.

* China and Russia announced at the APEC meeting a second

major gas pipeline deal, as well as a a hydroelectric project

related to flood control, and cooperation on space travel. the

Chinese invited the Russian cosmonauts to visit the space station

which the Chinese are in the process of developing, and

the Russians in turn invited the Chinese taikonauts up to the

International Space Station.

* Discussion of a Glass-Steagall reform of the banking system

in Russia is becoming more prominent, as indicated by

economist Mikhail Delyagin (cf. below).

* South Korea, traditionally a mainstay of Washington’s policy

in Asia, signed a comprehensive trade agreement with China,

which is its largest trading partner, accounting for 26% of the

country’s exports as against 11% to the United States.

*Progress has been made on reducing tensions between

China and Japan, leading to a meeting in Beijing between President

Xi and Japanese Prime Minister Abe.

*Thailand is backing China’s Free Trade Agreement for the

Asia-Pacific, while Indonesia is anxious to join the AIIB, as is

New Zealand, although it’s part of the British Commonwealth.

*India, a major pillar of the BRICS, intends under Prime Minister

Modi’s plan to create one million new jobs per month, for

the next ten years, and to to build 100 new modern cities.

*Latin America is very much interested in the BRICS, of which

Brazil is already part. Both Chile and Peru, as Pacific countries,

were at the APEC event. Chilean President Bachelet is totally

on board for the FTAAP, China being their number-one trading

partner. Peruvian President Humala was in Moscow, on his

way to Beijing, where he signed important deals, including in

railroad construction.

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Looking forward, Vladimir Putin is to visit India in early

December to consolidate the long-standing good relations between

the two countries. Cooperation in high technology is

high on the agenda, including in space travel, nuclear energy,

and defense projects.

When Free Trade Is Not Synonymous

with Free Trade

President Obama took the occasion of the APEC event to try

and push through the economic side of Washington’s anti-China

“Asia pivot”, in the form of the Trans-Pacific Partnership (TPP)

based on free trade. He even invited traditional allies of America

to the U.S. Embassy in Beijing to discuss it.

Although the names may sound much the same, this should

not be confused with the Free Trade Agreement of Asia Pacific

(FTAAP) proposed by China.

As Dennis Small of LaRouche PAC recently described it, the

TPP is a classical British free-trade system, using and wielding

the power of London and Wall Street over a speculative financial

system, to destroy countries.

The FTAAP is an entirely contrary policy. It’s a policy designed

around a credit system, such as the original system

set up in the newly founded United States under Alexander

Hamilton, “where huge volumes of credit are issued -- not for

speculation, not for legalizing drugs, not for the purpose of

gambling casinos, not for derivatives, not for all of this insanity

-- but rather for actual infrastructure development.”

Most importantly, Small went on, the idea of a science-driver,

such as the Chinese lunar project, is the most essential and

crucial thing for actually driving an economy forward.” This,

he pointed out, is the classical American System of economics,

which is now espoused by China – and resolutely rejected by

the Obama White House.

In fact, the purpose of the TPP was stated very clearly in

a recent conference in Washington by Tom Donilon, the former

National Security Advisor of Barack Obama. He said: “The

TPP would allow the United States to write the rules that will

govern the global economy for the next century.” Even the

Peterson Institute, an American think-tank which is generally

not friendly to China, acknowledged that the FTAAP would be

beneficial for all countries that join it, whereas the TPP would

reduce trade between China and the member countries.

The Modi Plan Presented in Berlin:

One Million New Jobs a Month!

The ambitious investment and development program of Indian

Prime Minister Nayendra Modi was presented for the first time

to a broader audience in Germany in Berlin on Nov.12 by a

high-ranking delegation from India. Among them, 14 leading

officials of federal ministries and state organizations, 12 CEOs

of leading companies (most of them with functions in the Federation

of Indian Chambers of Commerce and Industry, FICCI)

as well as another 20 representatives of Indian companies.

The Modi crash program envisages, as outlined by speakers

such as Sidarth Birla and Harsh Pati Singhania, respectively

President and past President of FICCI, the creation of one

million new jobs every single month over the next 10 years.

Greater emphasis than in the past programs will be given to

securing employment for the young generation and increasing

the number of high-skilled jobs, along with the development of

several industrial corridors linking the big coastal cities such as

Mumbai and Calicut with Delhi.

Moreover, to stop migration from the countryside to the

main urban centers, 100 “smart cities” are to be built in the

inland, with an urban population of between several hundred

thousand to 2-3 million. This will be done in close consultation

and cooperation with the population of villages around the

envisaged new cities, to ensure quick progress from primarily

agrarian to agro-industrial and industrial production, and integration

of the rural population into the new industrial workforce.

Infrastructure development, from roads to railroads,

pipelines, fresh water and energy supply, is an integral component

of the smart-cities program. The Indian government

is also intent on developing its space program, and involving

young people in research.

While official German attendance at this “3rd Indo-German

Investment Forum” was weak, Dr A Didar Singh, Secretary

General of FICCI, called on German industry directly to invest

in India and in the Modi program, asking pointedly: “The

American economy is in a slowdown, the European economy

is in a slowdown, so where do you want to invest now, if not

in India?”

Indeed, in the context where German industrial exports to

the other Eurozone member countries declined severely, and

GDP growth was close to zero in Q3 of this year. the prospect

of getting part of the several hundred billion dollars of planned

Indian investments is certainly attractive.

Two World Views Face off in Brisbane

Never was the contrast clearer: in the same place and within

24 hours, you had the gloomy prospect of misery and war offered

by the transatlantic dominated G20 versus the optimistic

growth and peace oriented deliberations of the BRICS.

Meeting in Brisbane on Nov. 15, the BRICS leaders discussed

ratifying the newly formed $100 billion BRICS New Development

Bank (NDB) and the $100 billion Contingency Reserve

Arrangement (CRA) by parliaments in the five countries. In

his speech, Chinese President Xi Jinping stressed the connection

between development and world peace: “The cooperation

between the BRICS countries should be driven by the two

‘wheels’ of economy and politics so that the BRICS can act as

not only the world’s economic engine, but also a shield for

world peace.’’

Russian President Vladimir Putin, who will host the next

BRICS summit in 2015, highlighted the importance of the credit

facilities founded in Fortaleza, Brazil: “They have a significant

total capital of $200 billion. This will provide us with common

mechanisms capable of stabilizing national capital markets in

case of crisis situations in the global economy. Meanwhile, new

joint lending opportunities will make it possible to expand our

trade and economic ties.”

On the other hand, the G20 issued a statement promising the

continuation of austerity policies and other “reforms” aimed

at keeping the bankrupt financial system alive. In particular,

the leaders adopted the new proposal by the Financial Stability

Board to increase banks’ capital requirements to 16-20%. This

means, as we already reported, that so-called “bail-in-bonds”,

aimed at absorbing losses in case of bank insolvency, will be

sold to pension and insurance funds.

On growth, the G20 statement contains empty words. A

“Global Infrastructure Hub” and a “Global Infrastructure Facility”

are announced, but no figures are given, only the vague

idea that they will be financed with private capital.

Just What Economy Is Contracting?

Our readers may have noticed the headlines announcing a severe

slowdown in the Chinese economy, after figures given Nov. 13

by Chinese authorities. Let’s take a look behind the headlines:

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n°47 / 2014 WEEKLY NEWSLETTER 3

Factory production in China rose 7.7% from October 2013

to October 2014. Contrast that to U.S. where industrial production

had risen 3.3% in the year through September, while

that same figure was only 0.5% for the EU.

Note that we are using official statistics for the United States

here, although they are notoriously overstated.

Fixed capital investment in China, the media told us, grew

from January to October by only a “disappointing” 15.9%,

rather than the expected 16.0%. In the U.S. economy, the corresponding

capital expenditures rose by 3.4% in the year to

September. In the EU, it was only 1.0%.

GDP in China is growing at about a 7.4% annual rate in

2014, with some gloomy forecasts putting it at only 7.0% in

2015. U.S. GDP, by contrast, might make it above 3% growth

in 2014 for the first time in four years, while the EU GDP

was only up by 0.3% in Q3, but nonetheless up from 0.2% in

Q2. But the improvement is only cosmetic, since the EU now

includes in GDP calculations, “transactions” such as prostitution

and drug smuggling.

An even more telling figure is given by economic infrastructure

investment. China’s domestic infrastructure investment

will be roughly the equivalent of $1.1 trillion this year, and over

$1.2 trillion when “outbound” foreign infrastructure projects

are included.

Figures for Europe are not readily available, but Germany,

for example, has had a total net infrastructure investment below

zero for a decade.

G20: How the Western Ship of Fools

Played War

Whereas the Chinese President highlighted the intimate connection

between development and world peace, transatlantic

leaders at the G20 flouted their provocations of Russia, in particular

in the infantile way they treated President Putin. First,

speaking to students prior to the summit, Barack Obama called

“Russia’s aggression against Ukraine” a “threat to the world, as

we saw in the appalling shoot down of MH17.” (By the way, no

evidence at all of who shot down that plane and in what conditions

has ever been given.) At the meeting, Obama refused to

meet his Russian counterpart, and only “granted” him a few

minutes of standing talk.

It went no better with Angela Merkel, although the German

Chancellor did meet Putin... for nearly four hours. However,

no progress was made in the talks, which means that Merkel

did not move one inch from her one-sided approach dictated

by Washington.

In a discussion with collaborators Nov. 16, Lyndon LaRouche

commented that “the crazy woman in Germany who is the

Chancellor, created a new level of warfare in Europe and beyond.

She’s the one who was used by the British to organize

the extended war inside Europe, especially dealing with Russia.

She should be thrown out of office.”

Meanwhile, in Ukraine itself, the Kiev government continues

to shell its population in the Donbass, and has now moved

to kill them by other means as well, by cutting off all payments,

including pensions, and suspending all human rights

protections.

Despite the fact that the G7’s anti-Russian policy is a major

cause of growing unpopularity at home, and yet they insisted

on that policy.

No wonder that Putin left the summit before the working

breakfast, without signing the final statement. However, the

consequences could turn out to dramatic in terms of the danger

for world peace.

Opposition to Russian Sanctions

Growing in Europe

Pressure on European nations to break with the suicidal course

dictated by the financial oligarchy of London and Wall Street

is reaching a breaking point. The ceremonies for the 25th anniversary

of the fall of the Berlin Wall prompted some healthy

reactions from those who realize that, 25 years after that historical

occasion, the world has become far less stable and incomparably

more dangerous.

Attending ceremonies in Berlin, former Soviet President Gorbachov

warned that we are “on the brink of a new Cold War,”

calling the expansion of NATO to the East a “big mistake”, and

otherwise supporting Vladimir Putin’s policy.

And former German Foreign Minister Hans-Dietrich Genscher

blasted Western leaders for isolating Russia after the fall

of the wall, instead of integrating “the great Russian people”

into Europe. Instead, some think Washington alone “rules the

world”. When a U.S. President denigrates Russia as a regional

power [President Obama, March 2014], then one shouldn’t be

surprised, when it [Russia] shows what a regional power can

actually do.”

Nonetheless, EU leaders – such as Angela Merkel, François

Hollande, David Cameron, and Matteo Renzi -- continue to provoke

Russia and to support the neonazis in Ukraine. And the

EU again decided on Nov. 17 to maintain a hard line on sanctions

against Russia, in spite of the opposition among industrial

layers.

The head of Banca Intesa Russia, Antonio Fallico, was very

clear on that point in an interview with RT. He warned that

European losses from the sanctions policy are going to be much

higher than officially reported. And while, the business community

universally disagrees with policymakers, he went on,

they do not have the courage to go to the frontlines and fight

against them.

Fallico also noted that German policy turned dramatically

anti-Russian after Chancellor Merkel’s last meeting with Barack

Obama.

In France, a huge controversy has broken out over the decision

to halt delivery of the Mistral class helicopter carrier to

Russia. As many political figures from across the spectrum have

pointed out, including former President Nicolas Sarkozy, who

is still trying to succeed his political comeback, non delivery will

do nothing to change Putin’s policy in Ukraine or elsewhere. Le

Figaro stated openly that François Hollande’s hesitation is due

to direct pressure from Washington.

Former French PM Jean-Pierre Raffarin is looking in the

right direction for a solution to the problem. After spending a

week in China, Raffarin, who is now the major coordinator of

Franco-Chinese economic relations, wrote on his blog that “we

would be wrong not to take part in the great Chinese project

which concerns us directly: the Economic Belt of the New Silk

Road.”

Attack on Ruble Prompts Debate

on Capital Controls, Glass-Steagall Principle

Intensified financial warfare against Russia has prompted a debate

about changes in the country’s banking and credit policy.

Academician Sergei Glazyev, an adviser to President Vladimir

Putin on Eurasian integration, continues to criticize Central

Bank actions and to call for capital controls. And the influential

economist Mikhail Delyagin said in an interview Nov. 13 with

Govorit Moskva radio, that Russia would be better off, if the

Bank of Russia implemented Glass-Steagall separation of speculative

from real economic activity in the banking sector.

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4 WEEKLY NEWSLETTER n°47 / 2014

In early November, the ruble, which had hovered around 30

to the dollar for several years, fell from 32 in January, to 46

or 47. Earlier, it crashed by 10% in the space of two days. In

addition to Western sanctions, the drop of oil prices has pressured

the ruble. While the Russian federal budget assumes an

oil price of $100 in 2014 and $104 in 2015-2017, it is now

down to around $80. It is widely acknowledged that Saudi Arabia,

under pressure from Washington and London, is deliberately

pushing the price down in order to hit Russia in particular,

but also Brazil and Iran.

After spending $30 billion to defend the ruble, Central Bank

chairman Elvira Nabiullina announced Nov. 10 a ceiling on such

interventions, and said the Bank of Russia would let the ruble

float, with no attempt to maintain its peg to a dollar-euro basket.

She also slapped a ceiling on Central Bank lending to Russian

commercial banks.

Former government adviser Delyagin charged in his interview

that Nabiullina had played into the hands of speculators,

and discussed her shortcomings in terms of a possible alternative

policy, one featuring Glass-Steagall banking separation.

“If Mrs. Nabiullina had changed the rules a little, as is completely

within her duties to do, by increasing reserve requirements

and introducing differentiated requirements for speculative

operations and ordinary ones, ultimately she would have

been able to get something analogous to ‘the Glass-Steagall law’

passed (that wouldn’t be difficult, in our State Duma), where

[real] investment money and speculative money are kept separate.”

Instead, she announced what the Bank of Russia would

do, thus giving the speculators advance notice.

Another Setback for Obama’s War in Syria

At an appearance in Australia, President Obama again listed

the three greatest threats facing the world, which the United

States (“the world’s only superpower”, dixit Obama), is committed

to fighting. But this time, he put the threat coming from

the Islamic State (IS) before Russia, which went from second to

third place after Ebola.

But the reality is that Obama’s strategy for fighting jihadist

extremists while increasing funding and weapons to the socalled

“moderate” opposition in Syria is not working, to say

the least.

One more indication of that is the news that back on Nov.2-

3, during an overnight meeting in a Syrian farmhouse, seven

delegates from four or more Syrian Wahhabite terror groups

agreed to stop fighting each other (at least for now), and to

unite their forces to “totally eliminate” two of the most prominent

Washington-supported Syrian rebel groups, as reported

by Associated Press. They also agreed to cooperate in opening

up multiple battlefronts against the Kurds of northern Syria.

The meeting included representatives of Islamic State, Jabhat

al-Nusra, Ahrar al-Sham, and also Jund al-Aqsa, which latter

has pledged allegiance to “caliph” al-Baghdadi of IS. They all

agreed to “totally eliminate” Jamal Maarouf’s “Syrian Revolutionaries’

Front,” as well as the Hazm movement, both heavily

supported by Washington.

Maarouf had already been humiliated when Nusra ran him

out of his hometown fortress a few weeks ago, and seized

masses of his American arms. At the conclusion of the Nov. 2-3

meeting, IS sent 100 troops to help al-Nusra in a battle against

the Hazm movement. Hazm avoided battle, but 65 of their

troops defected to al-Nusra, according to one report.

On the more serious side, Russia and Egypt are working on

preparing a conference involving officials from the current government

and from the opposition, with a view to forming a

transitional government that fights terrorism,” as reported in

the Lebanese newspaper, Al Akhbar, Nov. 11. If all goes according

to plan, the talks will take place in Moscow.

Philae: the Plucky Lander

Has Completed Its Primary Science Mission

Executing an extremely difficult mission, the European Space

Agency’s Rosetta mission has given mankind its first in situ look

at one of the most primitive bodies in the Solar System. After a

ten year journey, the 220-pound lander Philae floated down to

the surface of the Comet 67P/C-G (Churyumov-Gerasimenko)

to start its scientific campaign.

Fully recognizing the high risk of the mission, Philae had

been programmed to begin collecting data immediately upon

landing (and also take photographs during descent). Project

manager Stephan Ulamec proudly announced the evening of

Nov. 14 that during its 57 active hours on the surface, the

lander had collected 80% of the data scientists had hoped

for. They are now poring over the information that Philae

transmitted back to Earth, which included a stunning series of

360-degree panoramic images. The data will include the first

detailed measurements of the body’s magnetic field, chemical

composition, and topography. Results from the mission will be

presented by the scientists at the prestigious annual meeting of

the American Geophysical Union in December.

Unfortunately, the lander was not able to be secured to the

comet, and from where it eventually landed is not able to gather

enough sunlight to recharge its batteries. Although engineers

were able to slightly rotate and lift the lander, to try to point it

more toward the Sun, Philae has powered down, and is in hibernation.

In August, when the relative positions of the comet

and Sun change, it is possible that the lander will reawaken and

resume its investigations.

The Rosetta mission orbiter and lander have already reshaped

our understanding of comets. The irregular shape, dusty surface,

boulders, cliffs, and craters on the nucleus are unlike anything

that was expected on such a small, 2.5-mile long body.

About a dozen different metals have been distinguished in the

comet. Why is this important?

Scientists have a detailed picture of what the Solar System

looks like today, particularly through the myriad planetary missions

that have been carried since the dawn of the space age.

But how it formed, how it evolved, the processes that led to

its increasing complexity, where it is heading—these are all

unknowns. Missions such as Rosetta are critical for mankind

to be able to organize and manage the Solar System in the

future.

For the next year, Rosetta will carry out its unique mission,

to accompany the comet on its travels toward the Sun, from

the outer to the inner Solar System. It will be the first time

scientists have been able to trace the evolution of a comet as

it leaves the cold and distant outer reaches, and is heated and

changes in its interaction with the Sun.

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

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