E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 30, No.37 - September 15, 2016
Tremendous Opportunities Opening  with the New Silk Road Dynamic Building on the series of top-level international gatherings since the beginning of September, from Vladivostok to Hangzhou and the G20 summit (cf. SAS 36/16), followed by key meetings of the ASEAN in Laos (cf. below), the momentum worldwide is clearly moving in the direction of the China-Russia-led group of nations, seeking a new paradigm in international relations, built on cooperation around major infrastructure programs. Thus, unknown to most people in Europe, as Helga Zepp-LaRouche quipped on Sept. 10, “the world has changed in recent days for the better.” At the end of the G20 summit, President Xi Jinping presented what he called the “Hangzhou Consensus”, with which to transform the group of 20 countries into an instrument that can provide a “new path of economic development” for the world based on the promotion of scientific and technological innovation. “We can no longer rely on fiscal and monetary policy alone” to deal with the crisis, he said, “we envision an all-dimensional, multi-tiered and wide-ranging approach to innovation which is driven by innovation in science and technology, but goes beyond it to cover development philosophy, institutional mechanisms and business models, so that the benefits of innovation will be shared by all.” Indeed, Xi has stressed that the development of Africa is a priority for China, and his intention to help develop the poorest countries was reflected in the record number of leaders from developing countries who were invited to the summit this year by the Chinese. Major diplomatic actions, furthering the results of those Asia summits, will now shift to New York City, where the United Nations General Assembly begins on Sept. 13, followed by the BRICS heads of state summit in mid-October and the APEC Asia-Pacific economic summit in Peru in mid-November. Clearly the world is moving away from the historic “Washington Consensus” of trans-Atlantic monetarist domination over world economic affairs, through the power of the IMF, the World Bank, and subservient central banks of the major developing nations. The Asian Infrastructure Investment Bank, the BRICS New Development Bank, the Silk Road Fund and other new institutions are putting new options on the table. While the paradigm shift in world affairs is not yet fully consolidated, it does hold
out the great opportunity and hope that the United States and Europe will also move into the new era. ASEAN Summits Consolidate Unity  for Economic Development The ASEAN nations held their annual summit in Laos from Sept. 6-8, together with ASEAN + 3 (China, Japan and South Korea) and several ASEAN + 1 meetings, with China, the U.S., India, the UN, and others. The overwhelming sentiment in all the meetings was full support for the new paradigm presented and adopted at the G20 Summit in Hangzhou, based on universal cooperation in the New Silk Road policies and with the new global financial institutions also initiated by China. The ten Southeast Asian Nations recognized that this is the path to real development, despite President Obama’s best efforts to defend his own “Asia pivot”, as Washington continues to ignore infrastructure investments in favor of raw material extraction and cheap labor services. The U.S. President also took the opportunity to insist that the Hague Arbitration Court ruling against China’s sovereign claims in the South China Sea is “binding” and must be followed by China. The irony here is that even the country which brought the claim, the Philippines, under a previous government which was largely subservient to Washington, has a new president, Rodrigo Duterte, who refuses to follow dictates from any foreign power, especially the former colonial master in Washington, while openly working with China to resolve the sovereignty issues peacefully and welcoming Chinese investment and joint development. The colorful Duterte rejected publicly Obama’s announced intention to lecture him on his war on drugs for its violations of “human rights,” leading Obama to initially cancel a planned meeting. Duterte, meanwhile, was welcomed by the other ASEAN leaders. The South China Sea was addressed in the various communiqués as an issue to be addressed by the relevant countries in the region, without outside interference. Also indicative of the new paradigm is the “Master Plan on Connectivity 2025” adopted by ASEAN. The updated plan reports that the infrastructure needs for the Southeast Asia amount to about $110 billion per year. While the new Chinacentered Asia Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB) will dramatically increase such investments, the report notes there will still be a shortfall, and calls on the private sector to get far more involved in infra
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structure investments – something which the western private sector long ago deserted as not profitable in the short term. The ASEAN + China summit was particularly fruitful. The declaration states that cooperation is ready to take a major step forward through economic development and security cooperation. In addition to the South China Sea, other China-ASEAN agreements covered defense exchanges and security cooperation to address terrorism and drugs and tarde. The ASEAN side noted that China’s development is an important opportunity for the region, and that it supports China’s peaceful development, adding that ASEAN countries also reaffirm adherence to the one-China policy.  Is the ECB Prepared to Buy Baseball Cards? Far from Asia, in the trans-Atlantic central banks’ board rooms, the debate is quite different. Indeed, as we reported, the bankers can’t quite figure out how to get out of the dilemma of terminating quantitative easing (QE), i.e. the monetary expansion policy. The same holds for interest rates. While they acknowledge that the current policy is having disastrous effects on savings and the banking system, they know that, were they to raise rates, financial markets would collapse immediately. However, the QE policy has reached its limits, however much Mario Draghi and his collaborators would like to expand it. The problem is that they are rapidly exhausting the universe of purchasable assets as defined by the current parameters of  the ECB program. The monthly target of the program is €80 billion, but in the last two months the ECB “only” bought €60 billion per month. One reason is that the European corporate bond market is small in size. The ECB now has over €1 trillion in government bonds, but only €20 billion in corporate bonds. The only way to expand is to include assets with sub-junk rating. Baseball cards, anyone? However, ECB Executive Board member Benoit Coeuré recently proposed that the only physical boundary to expanding the zero/negative interest rates policy is... when depositors pull their money out of the banks. Meanwhile, those very Wall Street and London banks which are the only beneficiaries of  ECB money, are using depositors’ and investors’ savings to pump up the derivatives markets. The new product, called “Market-linked certificate of deposits (CD)” or “structured CDs”, link savings accounts to derivatives based on the performance of a basket of stocks or other assets, in ways the investors in the CDs are usually unaware of, or don’t understand. The structured CDs are based on Goldman Sachs indices, and are sold to customers of regional banks and brokerages by bankers and brokers, who receive commissions. Investors are given promises of higher rates of return, but the Wall Street Journal reviewed the statements of hundreds of these structured CDs sold by Barclays and by BNP Paribas’s  subsidiary in the United States, and found that more than 60% of those which had earned a positive return, earned less than a conventional CD of the same maturity, which is very little indeed. A quarter of the structured CDs hadn’t yet earned any return when reviewed. Bloomberg News reported that  the Wall Street megabanks have thus completely evaded a rule of the Dodd-Frank financial reform, which is supposed to prevent their holding companies from issuing similar structured notes to investors. They did so by creating brokerage subsidiaries by the thousands, head
quartered in Delaware, which issue the notes, but the holding companies guarantee them. Only a strict bank separation, along the Glass-Steagall model, can actually protect and regulate the depository commercial banks, and channel the savings held there toward lending to the real economy. Obama on the Ropes at Home and Abroad U.S. President Barack Obama returned to Washington after a series of fiascoes in Asia to a groundswell of bipartisan Congressional support for the JASTA bill, giving American citizens the right to sue the Saudi Royal Family for their role in sponsoring the 9/11 attacks. These combined efforts mean that President Obama can be forced to spend the last four months of his presidency in a political straight-jacket. During a 30 minute floor debate in the House of Representatives on Sept. 9, two days before the 15th anniversary of the original 9/11 attacks, the Chairman of the House Judiciary Committee, Robert Goodlatte and ranking Democrat John Conyers expressed their strong support for the Justice Against Sponsors of Terrorism Act (JASTA), and provided time for other MPs to make the identical case. Following the debate, the House voted by unanimous voice consent to pass JASTA in to law. The Senate had passed the same bill by unanimous voice vote last May. President Obama has vowed to veto the text when it arrives at his desk. But as John Conyers warned during the brief floor debate, if Obama does so, he will be giving an electoral victory to Donald Trump and the Republicans. While President Obama was suffering a string of embarrassments in the last Asia tour of his presidency, events were also taking a dramatic turn in the Middle East. The Syrian Army, backed by Russia and Iran forces, defeated the rebels’ efforts to break the government’s siege of the southeastern portion of Aleppo, held by rebel forces. This defeat of the rebel counter-offensive has been described by Col. Pat Lang, a former head of Middle East for the Defense Intelligence Agency (DIA), as a decisive loss, which has changed the parameters of negotiations. According to Lang, Obama is now faced with a choice of dealing with Russian President Vladimir Putin, or sustaining a major stain on his presidential legacy. On Sept. 9, following marathon negotiations in Geneva, US Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov announced an agreement, under which a nationwide ceasefire will be imposed in Syria as of Sept. 12 and after one week, a joint US-Russian military command will be stood up, to conduct military operations against both the Islamic State and the Al Qaeda forces in Syria, formerly known as the Nusra Front. Moreover, as we reported, the strategic shift worldwide now underway has convinced Turkish President Erdogan to pursue a rapprochement with Russia and with China as well. Turkey is expected to participate in the anti-ISIS effort. Its military forces have already sealed off the Syrian border, and are establishing an extensive area west of the Euphrates River, where they are attacking both ISIS and the Kurdish forces, to prevent the establishment of an extended Kurdish region in northern Syria. At the same time, Vladimir Putin has launched a new surprise move, by inviting Israeli PM Netanyahu and Palestinian President Moahmoud Abbas to a meeting in Moscow to break the current deadlock in talks. The danger of a larger war in the Middle East, or a dramatic flare-up of the continuing crisis in eastern Ukraine cannot be
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underestimated or ignored. However, the position of Washington, of London, and their European allies is greatly weakened at the present time. 9/11 Anniversary: Schiller Institute Exposes Real Story behind International Terrorism On the occasion of the 15th anniversary of the 9/11 attack, the Schiller Institute held a conference in midtown Manhattan titled “Securing World Peace Through Embracing the Common Aims of Mankind,” attended by many members of the UN diplomatic community and political activists. The opening remarks were provided by the Schiller Institute’s Dennis Speed, who also moderated the powerful, 3-1/2 hour event, and its call to seize this historic turning point to bring about an urgent, fundamental change in U.S. foreign policy. The keynote address was delivered by Schiller Institute founder Helga Zepp-LaRouche, in a pre-taped video presentation, who launched a vibrant call to put an end once and for all to geopolitics, and to the chaos and terrorism it has unleashed worldwide. She was followed by Jeffrey Steinberg of EIR, who applauded the LaRouche movement’s success in organizing apparent miracles, such as the unanimous passage of the JASTA bill (cf. above) , and the earlier July 2016 release of the 28 pages of the Congressional Report on the Saudi role in 9/11. He called on the participants to organize to bring about more such miracles, including the passage of Glass-Steagall. Former U.S. Attorney General Ramsey Clark was then introduced to great applause, marking the crowd’s respect for him. He struck the theme of peace and how to bring it about, and referred to the great opportunity provided by the U.S.-Russian agreement on a ceasefire in Syria which had been announced less than 24 hours before. Next, Virginia State Senator Richard Black gave an in-depth presentation on “The Background on the Syrian War,” using photos and images from his recent trip to Syria to explode many of the myths and lies which have been used to further the war in that country and the region. Following the Senator, the Schiller Institute was honored to present the Permanent Representative of the Syrian Arab Republic to the United Nations, Ambassador Bashar al-Ja’afari. He provided a historical discussion of the creation of Wahhabism in the 18th century, and with great passion exposed many of the specific lies and operations, including by the mass media, that have been run against Syria up through the present time. The meeting concluded with a pre-recorded video message from Rep. Walter Jones, who has played a central role in the release of the 28 pages and the passage of JASTA, as well as in sponsoring Glass-Steagall legislation. Jones thanked the LaRouche movement for its leadership role in bringing out the truth for the American people. He promised that when Congress reconvenes later in September, there will be a renewed push to hold full hearings to get at the entire truth behind the 28 pages. Schiller Institute Commemorates  “Living Memorial” to Victims of 9/11 For the 15th anniversary of 9/11, the Schiller Institute intervened throughout New York City to lift the remembrance of that tragic day to the level of a “Living Memorial,” through the use of great art, and thus transcend the fears and thoughts of vengeance to think to the future of Mankind. Three performances of the great Requiem Mass by Amadeus Mozart were performed in New York City by the Schiller Insti
tute New York Community Chorus, with full orchestra, sponsored by the Foundation for the Revival of Classical Culture, on September 9, 10 and 11, in the Bronx, Manhattan, and Brooklyn. A fourth performance was on Sept. 12 in Morristown, New Jersey, the home of many of the families who lost loved ones on 9/11. The invitation to the concerts read in part: “This September, as the United Nations opens, let all those who abhor violence and war, drop their differences and come together in a solemn recognition of what is human in all of us. Let Wolfgang Amadeus Mozart speak in the language of music to our hearts, and to what Abraham Lincoln called ‘the better angels of our nature’.” Printed on the invitation was a picture of the “Tear Drop Memorial,” a powerful ten-story sculpture built in Bayonne, New Jersey, overlooking Ground Zero across the Hudson River. Dedicated “To the Struggle Against World Terrorism,” the memorial was a gift to the United States and the world from Russia after the horrendous attacks of 2001. The groundbreaking ceremony, on Sept. 16, 2005, was attended by President Vladimir Putin. The event on Sept. 11 itself was truly historic. Every year since 9/11, the Co-Cathedral of St. Joseph in Brooklyn has sponsored a march from Ground Zero, across the Brooklyn Bridge to their beautiful Cathedral for a Mass honoring those who died and those who were otherwise affected. Many of the hundreds of firemen who gave their lives to save others as first responders at the World Trade Center were based in Brooklyn. This year, the Bishop invited the Schiller Institute to join in the Mass itself, through the performance of the Requiem . The powerful and moving performance was broadcast live on the Diocesan TV network. BüSo Introduces Silk Road Perspective  to Berlin Voters As the city-state of Berlin prepares to elect a new parliament on Sept. 18, the established political parties have offered the voters no programmatic “ideas” to deliberate on, while they and the media overall have deliberately kept citizens in the dark about the profound political changes now taking place worldwide. Not so the Civil Rights Movement Solidarity (BüSo) of Helga Zepp-LaRouche. Its main message , which put a call for Germany to become an active promoter of the New Silk Road at the center of its election campaign. Their message got out broadly on Sept. 8, when Stefan Tolksdorf, who heads the party’s slate of nine candidates, introduced the optimism of the “new paradigm” into the traditional program on regional RBB TV covering the 15 “smaller parties.” In the introduction, the presenters chose to highlight the main slogans of the BüSo posters : “We Germans Can Stop World War”, “Berlin Must Become the Gateway to the New Silk Road,” and “Reconstruction Instead of War -- Dialogue of Cultures Instead of Barbarism.” The camera also zoomed in on the main campaign flyer, with its proposal to integrate the German capital into the New Silk Road perspective. Reflecting the abysmal level of the vision and themes generally pushed by the media, the moderator asked Tolksdorf how such themes can be of relevance for Berlin, which is not an industrial city (!) and has no harbor? Tolksdorf countered that Berlin must become an industrial city again, and that the BüSo has fought for such a program worldwide since the 1990s. Tolksdorf mentioned that he had been to China three times in
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the last years, and that the spirit of optimism there is absolutely lacking in Germany, which the BüSo intends to change. The moderator also noted that the BüSo has an innovative approach to the still-unfinished and problem-plagued Berlin Brandenburg Airport (BER), since it proposes to make it a regional airport, and that Sperenberg (50 km south of Berlin) should become the major international airport connected by maglev to the capital. Lastly, the moderator asked what the BüSo’s call for colonizing space has to do with Berlin! Tolksdorf explained that without such space pioneers such as Berlin-born Krafft Ehricke, whose 100th birthday will be celebrated next year, space travel would have been impossible and institutions like ESA or NASA would not exist. What youth today, he said, is such an optimistic and exciting worldview for the future. Note that Die Welt , a leading news daily nation-wide, took special note, although with a dose of sarcasm, of Tolksdorf’s remarks on colonizing space and joining the Silk Road. German Development Minister Breaks Ranks, Calls for Marshall Plan for Africa and Mideast The German parliament opened on Sept. 6 the debate on the 2017 budget, with a quite battered Chancellor Merkel attempting to defend her policy against harsh criticism, both within and without her party’s ranks. While the SPD has come out with some potentially useful criticism of Finance Minister Schäuble’s “black zero” austerity policy, the collapse of the trans-Atlantic financial system and of the euro have been blacked out, except by the BüSo (cf. above). A healthy dose of reality was introduced into the otherwise sterile debate in the Bundestag on Sept. 7 by Development Minister Gerd Müller of the CSU, who underscored the profound injustice – and dangers – of the current policy of globalization. He compared the situation to the early phases of capitalism, with its horrendous exploitation. We have a situation today, he said, “in which 10% of the global population owns 90% of the property, and 20% consume 80% of the commodities and resources.... This scissors is becoming wider and wider. And precisely that is the basis of conflicts, tensions, wars and the reasons why millions of people become refugees.” The challenges in the developing sector are enormous, Müller said. In Africa alone, 2 billion new babies will be born between now and the year 2050, tens of millions of  teachers and hundreds of millions new jobs are needed for them. Today, however, 80% of Africans still have no access to electricity. The global economic system which has so far prevented development must be changed, the Development Minister went on, and the WTO must be transformed from a free trade organization into a fair trade organization. Just as on many previous occasions, the CSU minister warned that immediate aid for the refugees in Africa and the Mideast is urgent, and that, beyond that, a real Marshall Plan is needed. Meanwhile, his ministry is providing some funds, although limited, for education of children in the refugee camps, for training war widows in Syria and Iraq to be able to improve conditions in the refugee camps, and eventually to reconstruct their war-torn home regions, and for improving fresh water and power supplìes to camps in Lebanon, Jordan and Iraq. However, as Müller himself has underscored, that is nowhere near enough, and is very far from the World Land-Bridge proposal of the Schiller Institute.
Erdogan Pursues His “Road to Damascus” Turkish President Recep Tayyip Erdogan has added another element to his strategic shift toward an alliance with Russia and Iran over Syria. At the G20 summit in Hangzhou, he made clear that Turkey will join the New Silk Road policy and called on the “developed” countries to change their economic policy, so as to better help developing and emerging economies.” According to English-language Turkish media, following his Sept. 5 meeting with the new European “directorate,” -- Angela Merkel, Francois Hollande, and Matteo Renzi – the Turkish President stressed that his government supports Beijing’s efforts to launch the Silk Road project from China to the UK. Turkey’s megaprojects in his view, such as the subsea tunnel project, Marmaray, and the recent opening of Yavuz Sultan Selim Bridge, Istanbul’s third bridge over the Bosporus (cf SAS 35/16), are indicators of future megaprojects in line with China’s Silk Road project, including new railway systems. Erdogan also pointed out that Turkey had signed three important energy deals and one agricultural deal with China, as reported in Daily Sabah . China By Far the World Leader  in High-Speed Railway Transportation With the opening on Sept. 10 of a 360 km high-speed rail line between Zhengzhou in central China and Xuzhou in the east, the country has now exceeded 20,000 km of high-speed rail routes -- a stunning achievement. China has by far the largest high-speed rail network in the world (the #2 spot is held by Spain, with 3,100 km.). Moreover, China’s first 10,000 km took 11 years to build, according to the China Railway Corp., but the second 10,000 km took only three years. The network is expected to nearly double again by 2025 and reach 45,000 km in 2030. In 2015, China’s high-speed trains carried 961 million passengers, up 237 percent from the number in 2011, according to Xinhua. The newest route will feature trains running at about 300 km per hour. But China also has super-high-speed trains: in mid-July,  two trains travelling at 420 km per hour in opposite directions passed each other on parallel tracks, Xinhua reported Sept. 10, making it the fastest of its kind. In the next few years, China will be inaugurating trains running at over 500 km per hour on the Beijing-Shenyang line. A useful comparison was made with the United States, which de facto has zero km of high-speed rail lines. The Acela Express, which covers the 735 km from Boston to Washington, can technically reach high speeds, but since it shares the same track with slower passenger and cargo trains, its average speed over this distance is a dismal 105 km per hour.
E.I.R. STRATEGIC ALERT        www.eir.de  Published by: E.I.R.GmbH,  Bahnstr. 9a, 65205 Wiesbaden Tel.: 0611/73650, Fax: 0611/7365101, Email:  eirna@eirna.com Verantwortl. f. d. Inhalt: Dean Andromidas, Claudio Celani Subscription: EUR 3000/ ISSN  0936-7527 © E.I.R. GmbH  Alle Rechte vorbehalten, auch die des Nachdrucks von Auszügen, derphotomechanischen Wiedergabe und der Übersetzung, Printed in Germany