E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 30, No.40  - October 6, 2016
JASTA: Override of President Obama’s Veto  Is “A Historic Victory” The vote in the U.S. Congress, on Sept. 28, to override President Barack Obama’s veto of the Justice Against Sponsors of Terrorism Act (JASTA), was hailed by Lyndon LaRouche as “a historic victory,” not just for the United States, but for all of humanity. That may sound exaggerated to European ears, but only because the profound implications of this fight have been carefully kept out of the mainstream media. Indeed, although JASTA had been passed unanimously by both Houses of Congress, Obama went on to veto it, expecting that his threats, backed up by Saudi money, would cause enough Congressmen to change their votes, so that his veto would hold (cf. SAS 38, 39/16). What Obama had not expected was that the American people, led by LaRouche’s associates, and by organizations of family members of 9/11 victims, and related groups, would escalate their mobilization, so that normally easily-blackmailed and frightened Congressmen would not capitulate, as they had done so far. The vote to override the veto was 97 to 1 in the Senate, followed by a 348 to 77 vote in the House, a landslide for justice, and a crushing defeat for Obama. As an immediate result, legal proceedings filed to hold the Kingdom of Saudi Arabia and leading members of the House of Saud responsible for the deaths of over 3,000 people on Sept. 11, 2001, may now begin.  In November, the Southern District of New York federal court will hear the first legal suit. The broader implication, though, which LaRouche referred to in his comments, is that the veil of secrecy protecting the Saudis and others, who have been sponsors of terrorism -- including networks run by British and U.S. intelligence -- has been ripped apart. This is not just about 9/11, but the continuing sponsorship of terrorism, targeting not just Middle East nations, but Europe, Russia, China and the U.S. It’s also about the wars that have been and are being waged on the basis of lies in Afghanistan, Iraq, Libya and Syria. At the heart of the terror operation protected by the Bush and Obama Administrations for 15 years, is the Al Yamamah oil deal, negotiated at the time by Saudi Prince Bandar and British Prime Minister Thatcher. In addition to being an arms-for-oil deal, Al Yamamah provided Bandar with a slush fund of more than $2 billion, which he disbursed to various terror operations. As former U.S. Senator Bob Graham, a leading supporter of JASTA, pointed out, the cover-up of the Saudi role has allowed the proliferation of terrorism globally.
LaRouche warned that Barack Obama will not let this pass. There is likely to be a counterattack from circles around him, and from the Saudis, because they are now desperate. But the American people must build on this historic victory to pursue the fight for justice, he insisted. US-Russia Relations at All Time Low,  As War Danger Grows U.S. Defense Secretary Ashton Carter traveled last week to Minot, North Dakota, home of a major US nuclear weapons facility, to promote his $1 trillion nuclear weapons modernization plan. He used the occasion to deliver a direct threat to Russia, accusing Moscow of adopting a policy of first-use of nuclear weapons in the event of a conventional military conflict between Russia and NATO allies in Europe. Just two days later, Carter reiterated that the U.S. reserves the right to use nuclear weapons first. The Russian Defense Ministry immediately responded by accusing Washington’s Defense Secretary of being part of a growing “Russophobic” chorus of top American officials, who have tried to demonize Russia for their own political advantages, thus heightening the danger of a hot war conflict between the two countries. In the same time frame, Admiral John Kirby, the State Department public spokesman, delivered a blunt threat that, if Moscow did not abandon the ongoing assault on Aleppo, Russian soldiers would be returning from Syria in body bags and jihadi terrorists would take the fight to Russian soil. Again, Moscow responded sharply to those threats, indicating that the United States could actually back jihadi fighters to conduct terrorist operations on Russian soil. All of these highly dangerous statements follow the breakdown of the US-Russia negotiations on Syria, which John Kerry and Sergei Lavrov had been working hard on. Even as they were completing the ceasefire plan in Geneva in mid-September, which was anchored in joint military operations against the Islamic State and the Al Qaeda front in Syria (i.e., al-Nusra), opposition to the deal was almost unanimous back in Washington. While President Obama gave his lukewarm approval, Carter was adamantly opposed, and it was de facto dead on arrival. At the first opportunity, the U.S. coalition then bombed a known Syrian Army outpost and days later, accused the Russians, without evidence, of having bombed an aid convoy (cf. SAS 38, 39/16). Thereupon, as we reported, Russian President Putin appar
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ently concluded that there was no prospect of a deal with Obama on Syria, and Russian action is now focused on shutting down the Aleppo pocket controlled by rebel forces (largely Nusra) for the past several years.  After a prolonged battle, in which rebel forces deployed the equivalent of two armored divisions of fighters, the Syrian-Russian-Iranian forces have sealed off the pocket and it is only a matter of time before the last rebel holdouts are either wiped our or allowed to leave.  Aleppo will soon fall under the full control of the Assad government, giving them control over 85-90% of the country’s population. Some in Washington see this as a chance to lure Russia into a “new Afghanistan” in Syria. Some argue that the U.S. should now fully align with Saudi Arabia and other Gulf Arab states to heavily arm the Syrian rebels, including the majority jihadists, with manpads and other anti-aircraft weapons to escalate the fighting into a full-scale guerrilla war against Assad and his Russian and Iranian backers. Al Nusra Commander Confirms to German Journalist: “The Americans Are on Our Side” Jürgen Todenhöfer, the veteran journalist who has reported on the Syrian rebels for years, and even spent some weeks with ISIS a few years ago, interviewed an al-Nusra commander on Sept. 16, who speaks matter-of-factly about the group’s goals and the external support it receives from the U.S., Saudia Arabia, Kuweit, etc. The interview, which was conducted in a stone quarry near Aleppo, was published on Sept. 26 in the Kölner Stadtanzeiger and widely reported internationally  ( available in English at http://www.moonofalabama.org/. “We are one part of al-Qaeda,” the commander, who goes by the name of Abu al-Ezz, told Todenhöfer openly. The Americans support the rebels, but not directly. “They support the countries which support us. But we are not yet satisfied with this support,” because we want more “highly developed weapons,” in particular TOW missiles. Indeed, the jihadist army was given some TOW missiles not “indirectly through the Free Syrian Army,” as Todenhöfer had assumed, but directly from the United States, which delivered them to a “certain group”. When Nusra was besieged by the Syrian Army, he explained, “we had officers here from Turkey, Qatar, Saudi Arabia, Israel and the United States,”  who were “experts in the use of satellites, missiles, reconnaissance work, thermal surveillance cameras.” Yes, “the Americans are on our side,” he went on. And he freely admitted that Saudi Arabia and Kuwait have openly financed their military operations. He also stated that after the Arab world, the group’s next conquest would be Europe. Al-Ezz stated outright, that “We do not recognize the ceasefire. We will reposition our groups. We will undertake in the next few days an overwhelming attack against the regime.” On the humanitarian convoy that was bombed on its way to Aleppo on Sept. 19, he said “we will not let those trucks pass. The regime must retreat from all areas in order for us to let the trucks pass.” Al-Ezz claimed that all opposition groups shared al-Nusra’s view of the ceasefire. “Each group has its own name but their belief is homogeneous. The general name is al-Nusra Front. One person has, for example, 2,000 fighters. Then he creates from these a new group and calls it ‘Ahrar al-Sham’.” If “someone comes to you and makes you a ‘moderate fighter’ and offers you to eat and to drink, will you accept that or not?” In subsequent interviews, Todenhöfer has stressed that everyone knows that the weapons the U.S. and other countries
supply to the so-called “moderate” rebels, always end up in the hands of the jihadists, sometimes within hours of their being received. Deutsche Bank on the Brink of Insolvency: Cui Prodest? Rumors of Deutsche Bank being on the verge of a “Lehman’s moment” dominated the financial headlines last week as investors began heading to the exits. Two elements must be considered: the collapse of Deutsche Bank, first of all, has its own causality, due to high exposure to inflated, speculative assets, combined with the ECB zero-interest policy, and secondly however, is only the most visible aspect of the crumbling of the global financial system. That said, it looks like an operation is underway, to make Deutsche Bank (DB) an easy prey for vulture funds, in order to loot its deposit and wealth-management division. Whereas the right solution is the one indicated by Lyndon LaRouche and backed by Japanese economist Daisuke Kotegawa (cf. below), it is likely that the German government, in cahoots with the ECB, is ready to implement a “market solution” for DB, similar to the one implemented for the Italian MPS: sell the bank to a private international consortium in a highly leveraged, securitized scheme. For months now, George Soros and other speculative funds have shorted Deutsche Bank shares. More revealing is the fact that one of DB’s dollar denominated Coco bonds plummeted below a historical quota of 70. This convertible bond with a 7.5% yield will be converted into shares, in other words „bailed in“, if the Tier 1 capital ratio goes under 5.1%. Tier 1 is the ratio of equity to risk-weighted assets, conventionally used in the EU, although what should be measured is the leverage ratio, i.e. equity to total assets. On the last day of trading before the Oct. 3 German national holiday, DB shares recovered at the news that the fine threatened by the US Department of Justice would be reduced from $14 billion to $5.4 billion. However, the unconfirmed report has been linked to a spinoff of the DB crisis on French banks, which are exposed to DB (for example, by insuring its derivatives) and have requested an extraordinarily high levels of dollar liquidity. But even such a reduced fine would wipe out the 5.5 billion it has set aside for all the legal cases brought against it. Japanese Economist: How to Implement LaRouche’s Plan to Save Deutsche Bank Last July, Helga Zepp LaRouche put forth a proposal for a government intervention to keep Deutsche Bank afloat as a necessary institution for the German economy, but only provided that the bank return to the competent banking policies of former Deutsche Bank CEO Alfred Herrhausen, who was assassinated in 1989. In light of Zepp-LaRouche’s proposal, former Japanese Executive Director to the IMF Daisuke Kotegawa, and currently Research Director at the Canon Institute, who oversaw the resolution of the banking crisis in Japan in the late 1990s, presented a plan to EIR on how to deal with the DB crisis. First, there is no option other than nationalization. Neither bailout nor bail-in can overcome the massive derivatives bubble and other liabilities of the bank. To accomplish this, a date must be set upon which all derivatives must be settled. Those that cannot be settled are declared void. A Glass-Steagall-type policy must be imposed on Deutsche
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Bank, completely separating its commercial banking activities from its investment banking activities. In preparation for these moves, the entire western banking system must be put on notice that the impact on the counterparties of the massive derivative holdings of DB which will be declared void -- mostly other US and European banks -- will be profound, leading to contagion on the markets. Therefore all the major banks, and the governments involved, must prepare to implement similar policies upon those banks which are threatened with failure. Finally, those responsible for the destruction of DB must go to jail for their crimes. This is necessary, among other reasons, to convince the population that the policy is serious. Kotegawa also stressed that the implementation of Glass- Steagall by all the governments involved, before the crisis explodes, would dramatically lessen the danger of a panic and contagion. Tuscany Investigative Committee  Calls for Glass-Steagall Solution for MPS There is no end in sight to the crisis of Monte dei Paschi di Siena, whose equity is down to a mere one tenth of what it was in 2008. A Milan judge has now set the date of Dec. 15 for a trial against several former managers of MPS, as well as of Deutsche Bank and Nomura, for concealing losses. The proceedings should shed light on an entire set of financial choices and frauds that ultimately bankrupted MPS, which is now at the center of a national banking crisis that could rock the Eurozone. One week earlier, on Sept. 22, an investigative committee set up by the Tuscany Regional Council on the MPS crisis had presented both its reports, one from the majority and the other from the minority. The majority report calls for a Parliamentary Investigating Committee on the MPS crisis, and for for separation of commercial from investment banking. EIR can only welcome such a proposal, as we strongly argued for a modern “Pecora Committee” at the onset of the financial crisis in 2008, in reference to the U.S. Senate committee investigation of 1933 led by Ferdinand Pecora, which generated public support for President Franklin Roosevelt’s financial reforms. As for the minority report, it calls for rejecting the bail-in solution currently being considered by the new MPS directors. The Tuscany Council investigating committee does not have the judiciary powers of a parliamentary committee, but it can demand that Parliament consider its conclusions. The majority report reconstructed how starting in 1995, MPS was transformed from a commercial bank into a speculative bank, through leveraged acquisitions and high-risk derivatives trading. It points to the role of Mario Draghi first as Director General of the Italian Treasury and later as central banker, in promoting the people and the strategy that bankrupted MPS, including the catastrophic purchase of Antonveneta from Santander, which cost a total of €19 billion. To cover the losses, MPS arranged two derivative transactions (“Alexandria” and “Santorini”) with Deutsche Bank and Nomura, which caused even more losses for MPS. The investigating committee, according to chairman Giacomo Giannarelli (M5S), ascertained “serious political responsibilities” and “serious plots of undemocratically representative powers, which have caused economic damage to depositors and undermined the stability of credit to the economy.” The report calls for a set of six measures, including: “The nationalization of MPS bank, with integral protection of savings;
Reintroduction of separation between investment banks and commercial banks (credit and savings); “Reform of the Bank of Italy ... whose equities, not sellable, should be owned only by the Italian state, to eliminate any conflict of interest.” Israel’s President Rivlin Warns of Neo-Nazi Elements in Ukraine The conflict in Ukraine has not made many headlines here over the past months, but civil war does continue sporadically in the eastern Donbas region, while crushing austerity has been imposed on a population struggling to survive in the debt-ridden country (cf. below). At the same time, the government has repressed opposition communist and socialist parties, including the Progressive Socialist Party of Ukraine, chaired by economist Natalia Vitrenko, while giving free rein to fascist and other extreme right-wing elements, allowing them to set up militias. Those extreme nationalist forces, as our readers know, were used by the West, and the Obama Administration in particular, to organize what became the “Maidan coup” against the elected President Victor Yanukovych, forcing him in February 2014 to flee Kiev for his life. After the success of the “color revolution”, Washington then insisted the extremists be put into positions of power. The danger this represents was denounced by Israeli President Reuven Rivlin, who was invited to Kiev to commemorate the anniversary of the massacre of Babi Yar on Sept. 29-30, 1941, where more than 33,000 Jews were killed. In his courageous and shocking (for many) speech to a special session of the Ukrainian parliament, he brought up the collaboration of the OUN (Organization of Ukrainian Nationalists) with the Nazis during World War II and the threat of neo-Nazism today in Ukraine. “About 1.5 million Jews were killed on the territory of contemporary Ukraine during the second world war,” Rivlin said, including by “fighters from the OUN, who tortured Jews and killed them...” He called on Ukrainians not to deny history, and to recognize that “national leaders who support anti-Semitic, racist, or neo-Nazi ideas will not be welcomed as friends...” The speech hit a raw nerve among the extremists, but also in government circles in Kiev, where earlier this year a street was named in honor of Stepan Bandera, the leader of that same OUN during World War II. Meanwhile, in the EU, the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs has just passed a bill that would grant Ukrainian citizens visa-free access to the European Union’s 27 member countries. A number of Polish analysts and observers have noted with alarm that this could lead to a rapid rise in Banderistas in their country, who will seek to spread ultra-nationalist ideas among the Ukrainians living there, as well as elsewhere in Europe. Inside Ukraine, Vitrenko’s PSPU has been physically attacked by Right Sector goons and is now facing government attempts to deregister it. Vitrenko Denounces Unbearable  Economic Hardship in Ukraine Economist Natalia Vitrenko, the Chairwoman of the Progressive Socialist Party of Ukraine, has continued to campaign against the brutal economic policy implemented since the Feb. 2014 coup. On Sept. 15, the Presidium of the PSPU’s Central Committee put out a statement reviewing the situation, since the putsch-installed government signed the Agreement on Association with the EU some months later.
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The PSPU statement notes the in the period “2014-15, Ukraine lost 20% of its GDP and 25% of its industrial output. These declines are continuing in 2016. The national debt is now US$65 billion, greater than 80% of GDP. In effect, Ukraine is in a state of technical default. “During this time period. 2 million jobs have been lost, the hryvnia has been devalued by more than 70%, and utilities rates have skyrocketed, with natural gas rates rising ten-fold, heating costs 5.5 times over, and electricity rates 2.5 times. The population’s income fell by two-thirds. Fifty-nine percent of the population is now living in poverty. With the latest round of electricity rate hikes on Sept. 1 and heating rate increases on Oct. 1, as high as 80% of the population will be in poverty. “Despite these wild price and rate increases, wages and pensions were indexed at only 10%. The minimum wage is currently US$54 per month and the minimum pension is US$42. The Ukrainian government has raised prices and rates to European levels, for the benefit of foreign and domestic oligarchs, while freezing wages and pensions at levels seen in the world’s poorest countries. This is why the mortality rate in Ukraine disgracefully ranks first in Europe and second in the world. “Despite these problems, vital infrastructure is not being financed in our country. The lion’s share of the budget in 2016, 113 billion hryvnias, has been spent on waging war. The regime has failed to prepare Ukraine for the winter, thus preprogramming general catastrophe.” Lake Chad Leaders Bring Transaqua  to UN General Assembly For the first time since the 1992 Earth Summit in Rio, the Transaqua project for replenishing Lake Chad and building a Central African system of waterways and dams was raised in the framework of the United Nations. At this year’s General Assembly, Nigerian President Muhammadu Buhari addressed the UNGA on Sept. 20, reiterating the need to solve the horrendous crisis in the Lake Chad region through a water transfer project. Indeed, the humanitarian crisis there, provoked by the terrorist organization Boko Haram, has worsened considerably, as the UN has only been able to raise one-fourth of the money needed for emergency assistance. The drying out of Lake Chad, he said, and the resulting poverty, have provided a breeding grounds for terrorism. Some 30 million inhabitants of the Lake Chad Basin, spread across Cameroun, Chad, Niger and Nigeria, are severely threatened, President Buhari said. “The cost of replenishing the lake has been put at 14 billion US Dollars under a five year plan which should be accorded global attention,” he added. On Sept. 22, the executive secretary of the Lake Chad Basin Committee, Abdullahi Sanusi, spoke at a UN side event “Taking Climate Action for Sustainable Development,” and described the Transaqua project as a proposed solution. Sanusi went through the historical process of the drying up of Lake Chad and presented three proposed solutions. “Transaqua proposes to capture 5% -- 100 billion cubic meters of the Congo River’s 1.9 trillion cubic meters of water -- that flows into the Atlantic Ocean each year, and instead redirect it north through a 2,400 km navigable canal east of the Congo River, northwest across the Democratic Republic of Congo (D.R.C.) to the Central African Republic (C.A.R.) by gravity to meet the Chari River, which would release this additional volume of water into Lake Chad. Initially, it was viewed as diplomatically complex and expensive because it seeks to cre
ate a new platform of development in agricultural, industrial, transportation and electrical production affecting up to 12 African nations.” The other two proposals mentioned by Sanusi are: 1. Pumping water from the Ubangi River, a tributary of the Congo River; and 2. A variation of 1 using solar energy to power the pumps. Experts interviewed by EIR consider both proposals to be economically and environmentally unfeasible. The suspicion is that Western interests are pushing alternative, “cheaper” plans to sabotage Transaqua, but they are not going to work. Even the engineering firm which produced a feasibility study for the alternative Ubangi project, came to the conclusion that the water pumped from the smaller Ubangi River is not sufficient to replenish Lake Chad, and suggested looking into the Transaqua project, proposing to build the last Transaqua station at Bria, in the Central African Republic! China’s Lunar Missions To Be International, Space Official States China is planning ground-breaking missions in its multi-stage exploration of the Moon, as reported by Wu Yanhua, vice administrator of China’s National Space Administration, at the International Astronautical Conference in Guadalajara, Mexico, on Sept. 26. And the programs are open for international cooperation. China will place a communications satellite into lunar orbit to support the 2018 Chang’e-4 mission to the far side of the Moon, which Wu can also be used for lunar exploration missions of other nations. The orbiter is needed to relay data to and from the lander with Earth. So far, Wu reported, “we have confirmed that four of the payloads, from Germany, from Sweden, from the Netherlands, as well as from Italy, will be flying on board the Chang’e-4 mission.” He explained that Chang’e-4’s science suite will collect data on the Moon’s seismic activity, survey underground geologic layers with a ground-penetrating radar, and observe the universe with a Very Low Frequency receiver, exploiting the pristine radio environment on the lunar far side, for astronomical research. Wu also announced that if the Chang’e-5 sample return mission next year is successful, the back-up spacecraft can be used later for another sample return mission, possibly on the far side of the Moon. Meanwhile, the Chang’e-3 lander, which has been on the lunar surface since late 2013, has continued its astronomical observations. Andrew Jones reported Sept. 28th in GBTimes that during a four-hour lunar eclipse on Sept. 16th, the Ultraviolet Telescope on the lunar lander snapped 232 highquality images. The telescope, which he reports is the only instrument still working from the mission, has observed galaxies, binary stars, and galactic nuclei, which cannot be observed from Ea