E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 30, No. 42 - October 20, 2016
BRICS Defend Multipolar World, Sovereignty and Serious Fight against Terrorism While Western media tend to portray the BRICS grouping as “riddled with tensions” and “of little importance” worldwide, the just-concluded Eighth BRICS Summit in Goa, India, advanced the course of a new multipolar international order built around great infrastructure projects, “win win” collaboration, and a fundamental reform of the financial and economic system. Despite upheavals in the world economy and geopolitical machinations, the five member countries (Brazil, Russia, India, China, South Africa) have consolidated their place as a “voice of influence on the world stage, which delivers direct benefits to our people,” as the final Goa Declaration put it. The full functioning of the New Development Bank, which will increase its lending to $2.5 billion next year, after a successful first year of operations, is evidence of the group’s institutional character. The Contingent Reserve Arrangement has now become operational, and the leaders intend to set up a credit-rating agency very soon, which is independent of the Wall Street and City of London based agencies. Just before the summit, Indian Prime Minister Narendra Modi held important, fruitful bilateral meetings, first with Russian President Vladimir Putin and then with Chinese President Xi Jinping. The latter two then also held a bilateral exchange. Despite issues that remain unresolved, the consensus is for increased cooperation, including against terrorism in the framework of the Shanghai Cooperation Organization. As it has been little covered in our media, we give a few highlights of the Goa Declaration: International law: The BRICS are committed “to international law and the central role of United Nations as the universal multilateral organization entrusted with the mandate for maintaining international peace and security, advance global development and to promote and protect human rights.” The leaders reject intervention into the internal affairs of other countries, urging “cooperation excluding imposition of unilateral coercive measures not based on international law... we condemn unilateral military interventions and economic sanctions in violation of international law....” On the specific cases of Syria and North Africa: these are matters of deep concern, requiring solutions “in accordance with international law” and in conformity with the principles of “independence, territorial integrity and sovereignty of the countries of the region.”
International terrorism is condemned “in all its forms”. The Islamic State, Daesh and its affiliates, are “a global and unprecedented threat to international peace and security....” Industrial policy: while monetary policy is important, it alone “cannot lead to balanced and sustainable growth.” And further, “We recognize that innovation is a key driver for mid and long term growth and sustainable development. We stress the importance of industrialization and measures that promote industrial development as a core pillar of structural transformation.” Nuclear energy: the Goa Declaration specifies that nuclear energy will play “a significant role for some of the BRICS countries in meeting their 2015 Paris Climate Change Agreement commitments” and points to the importance of “predictability in accessing technology and finance for expansion of civil nuclear energy capacity which would contribute to the sustainable development of BRICS countries.” As BRICS Were Meeting, Joe Biden  Pushed Global Showdown with Russia As the heads of state of the five BRICS countries were meeting in Goa, India, President Obama was continuing his drive for direct confrontation with Russia. In an NBC TV interview aired on Oct. 16, Vice President Joseph Biden threatened a direct cyber warfare attack against Russia, a threat which the Russian leadership has taken very seriously. That follows persistent and somewhat outlandish charges from the Hillary Clinton campaign that Russian hackers, deployed by the government, have been directly intervening into the U.S. presidential elections by leaking documents aimed at damaging her election prospects.  Last week, the Director of National Intelligence Gen. James Clapper and the Secretary of Homeland Security Jeh Johnson seconded the campaign allegations, without offering any proof. The tensions between Washington and Moscow have been accelerating since the State Department cut off talks with Russia over a Syria settlement (cf. SAS 39/16). Nonetheless, on Oct. 15, in what was billed as a last-ditch effort to get the Syrian negotiations back on track, Secretary of State John Kerry met with his Russian counterpart Sergei Lavrov, along with the foreign ministers of Turkey, Saudi Arabia, Jordan, Iraq and Iran in Lausanne, Switzerland. As expected, no agreement was reached, , but follow-up talks were scheduled for the following week. In the meantime, Kerry flew off to London from Lau
EIR STRATEGIC ALERT WEEKLY NEWSLETTER2 N°42 / 2016
sanne, where he, together with his British counterpart Boris Johnson, threatened Russia with new sanctions, unless Moscow calls off its support for Syrian President Bashar Assad’s drive to take back control of the entirety of Aleppo, Syria’s second city, which is still partly under the control of Al Qaeda (Nusra). French President François Hollande warned that Russia could be charged with “war crimes” at the International Criminal Court, and refused to receive Vladimir Putin during his planned visit to Paris, other than for a working meeting, whereupon the Russian President cancelled his visit. While ruling out direct military action in Syria, John Kerry also accused Moscow of committing “crimes against humanity” in the siege of Aleppo. But other Obama administration officials are not dismissing the idea of military interventions. Sources close to the White House indicated that four options are being discussed among national security officials, which would likely lead to direct conflict with Russia (cf. SAS 41/16). The combined threats of direct cyber attacks, US bombing in Syria, and the modernization of the US nuclear triad, have led Russian officials to warn the people that they must be prepared to be attacked, perhaps to even face nuclear war.  One night last week, Evgeny Kiselyov, a prominent TV news anchor, spent 40 minutes walking his audience through a range of nuclear war scenarios that could spring from the current U.S.-Russian conflict. Earlier this month, Russia held the largest civil defense drills across the entire country since the end of the Cold War.  And simultaneously, Moscow has deployed Iskander-M missiles to the Kaliningrad enclave bordering Lithuania and Poland, in response to the missile defense systems being installed by the US along the Russian borders.  Obama’s Drive to Praise His “Legacy”:  Myth versus Reality Since President Obama’s address to the United Nations General Assembly on Sept. 20, he has been aggressively promoting a narrative of the great successes achieved under his leadership. At the UN, he asserted, for example, that today, 25 years after the end of the Cold War, “the world is by many measures less violent and more prosperous than ever before,” thanks to U.S.-led military interventions and globalization. In an op ed in The Economist of Oct. 8, Obama claimed that he “enacted a larger and more front-loaded fiscal stimulus than even President Roosevelt’s New Deal,” which has created “a more durable, growing economy.” He also reiterated to the City of London’s mouthpiece that he is against breaking up the big banks, i.e., against Glass-Steagall. He nonetheless expressed concern that, in spite of all the prosperity, “our societies are marked by uncertainty and unease.” Why, he seems to be asking, given all the jobs that he has created and the rising incomes, are his accomplishments not being recognized? (The residents of North and South Carolina ravaged earlier this month by Hurricane Matthew, due to the lack of investment in infrastructure, could certainly provide him with an appropriate answer, as could all those millions whose health-care premiums are due to rise up to 60% in 2017). The UNGA address and The Economist op ed are prima facie evidence that Lyndon LaRouche’s charge, in an international webcast in April 2009, that Obama suffers from a form of pathological narcissism, was absolutely accurate.  At a moment when his policies are pushing the world toward a financial crash and possible thermonuclear war, the U.S. President is patting
himself on the back as the greatest peace maker and financial genius in modern times. There are even reports that Barack Obama has told his closest allies that his presidency is most similar to that of Abraham Lincoln, in its importance for securing the well-being of the nation! To top it off, Obama penned an editorial for CNN on October 11, “America will take the giant leap to Mars,” in which he claims credit for restoring vision to the space program, and returning science “to its rightful place.”  This, from the President who has repeatedly downgraded NASA and slashed its budget – while promoting anti-scientific nonsense regarding “manmade” climate change, as well as private initiatives in space! Obama is correct, however, that there is “great uncertainty and unease” in the U.S. And it is fueled by such blatant lies written by a President who shows no concern for those suffering from his failed policies, and those fearful that his legacy, of unending wars and a free hand for corrupt bankers corporate cartels, will be continued by a Hillary Clinton presidency. LaRouche’s Proposal for Deutsche Bank Gaining Ground Three months after Lyndon and Helga LaRouche launched their proposal to rescue Deutsche Bank by cleaning it up and returning it to its pro-industrial tradition, prominent representatives on both ends of the political spectrum in Germany are joining the campaign. Most notable is an intervention by Wolfgang Reuter, editor of the of the Focus magazine, who called in an article on Oct. 16, for returning Deutsche Bank to the legacy which ended with the November, 1989 assassination of Alfred Herrhausen, then head of the bank. Reuter, one of Germany’s senior economics journalists, describes with precision how the two “investment banks” acquired by Deutsche, London’s Morgan Grenfell and Wall Street’s Bankers Trust, became the cancer that ruined its tradition of “economic patriotism”, which had served Germany’s industrial development since the bank’s founding in 1870: “Basically, this never corrected aberration was a ‘reverse takeover’, where those that were taken over took over, after which Deutsche Bank lost its roots.” They plundered the bank, as the €50 bn in bonuses paid out since 1999 to its investment traders was more than that division ever brought in. Reuter supports German industry taking on a 30% ownership share of Deutsche Bank, but simultaneously junking its trading in securities and derivatives, although some universal bank activities would be maintained. Such measures would not only be “a patriotic act”, he writes, such as the founding of the bank was, but “it would be a new beginning, a ‘reverse, reverse takeover,’ a credible return to the roots of this once proud banking house.” In a paragraph headlined, “Rhineland Capitalism as Rescue”, he points to the reciprocity of government and industry working together, as with the European aerospace consortium for Airbus. Germany has always benefited from this, “so why not today?” If this is not done, the Deutsche risks being taken over by a foreign bank. “Should our country passively watch this happen? A little bit more self-respect and will to survive hopefully remains in Germany and its industry.” In the left camp, Sahra Wagenknecht, chairwoman of the Linke party, published an op-ed in the magazine Der Spiegel on Oct. 12, together with her colleague Fabio De Masi from the European Parliament. De Masi had already called for nationali
EIR STRATEGIC ALERT WEEKLY NEWSLETTER 3N °42 / 2016
zation of Deutsche Bank and a separation of its commercial and investment banking activity (cf. SAS 42/16). The two leftist politicians call for a temporary nationalization of Deutsche and charge both the European Parliament and the Bundestag with failing to split up universal banks. As for a larger role of foreign investors in Deutsche Bank, be they from Qatar or from Wall Street, it would only escalate the systemic risk, they write. “That would like turning on the air conditioning in a room full of influenza patients.” Implement Glass-Steagall and Punish Criminal Bankers, Says Japanese Economist A lively and instructive interview was given to Michael Billington of EIR on Oct. 8 by Daisuke Kotegawa, the Japanese economist largely responsible for resolving the Japanese banking crisis in the late 1990s, and Japan’s Executive Director at the IMF from 2007 to 2010. Today, he stressed, if western nations are to survive the current breakdown of their financial system, they must divide the banks in a Glass-Steagall manner, and must arrest the bankers responsible for bankrupting the financial system, otherwise the wrongdoing will continue and confidence will not be restored among the population. “The largest problem we have now is due to the abolishment of Glass-Steagall,” Kotegawa said, which allowed investment bankers to gamble, using ordinary people’s money and deposits. “These deposits are very, very important for the ordinary people,” so the government has to maintain a basic financial system, and bail out such banks to save those deposits. But the investment bankers “actually privatized their own profits, while they nationalized the losses and socialized their risk.” Kotegawa repeated his proposal for dealing with the Deutsche Bank crisis, which involves, beyond bank separation and prosecution of those responsible, settlement of the trillions of euros of derivatives (cf. SAS 40/16). In addition, he said it is “very important for the German government to announces that ‘will be standing right behind this bank’.  The best way would be for the government of Germany to announce that they will partially nationalize Deutsche Bank, and insure that this bank will not collapse.” Whether Berlin is prepared to do so is another question, since “this big problem was created by the London branch of Deutsche Bank where most of the employees are either British or American.  The Germans are not involved...” But if the Deutsche collapses, it “would have, I think, a tremendous contagion effect on other major banks in Europe.  I just will refrain from specifying the names of those banks, but I should say that about 10-15 major banks in Europe would become insolvent and disappear.” Coming back to the question of holding banking officials accountable for their practices, Kotegawa noted that he, personally, “was in charge of the investigation of those failed financial institutions back in Japan; and I found that those people who worked in banks didn’t have any loyalty to their own banks, nor did they have any loyalty to their nation. Their interest was just for their own personal interests.  Unlike some people’s imaginations, they are not smart people.  Once they have a very good opportunity to have made fortunes in investment banking, then they really would like to repeat it.  So, unless our authorities stopped them, it was highly likely that they would just repeat it.  “The government would have to bail them out again and again, as long as commercial banking is linked with investment banking.”
Genocidal War on Yemen  Can and Should Become Global The ongoing aggression against Yemen was catapulted into international headlines last week after a Saudi-led air strike on a public mourning ceremony in the capital Sana’a left hundreds dead and seriously wounded. First of all, the expression “Saudi aggression on Yemen” is misleading, because the assault is spearheaded by the United States, Great Britain and Saudi Arabia, together with their allies in the Gulf such as the United Arab Emirates and Qatar. The weapons, intelligence and logistical support are provided primarily by Washington and London. The fact that the use of force was authorized by the UNSC Resolution 2216 (April 14, 2015), does not legitimize the war, but rather condemns the UN itself for allowing the atrocity to proceed. The resolution was adopted after the Anglo-AmericanSaudi coalition launched a bombardment campaign (“Decisive Storm”) and invasion of southern Yemen on March 25, 2015. Today, after more than 19 months of this truly horrific war, the Yemeni internal front is still solid, and there are no signs that the Saudis and their allies will be able to gain ground, except in some areas near Aden. The fact is that what are called Houthi rebels and the forces of “former dictator Saleh”, which are in reality the national army, have been capable of effectively attacking forces inside Saudi Arabia and in Yemeni waters in the Red Sea. But what this aggression has achieved is the near-complete destruction of almost all modern infrastructure, healthcare, food production and distribution, and the enforcement of a complete land, sea and air blockade against 30 million Yemenis. This is threatening a humanitarian catastrophe worse than the more publicized Syrian crisis. In spite of its extreme poverty, Yemen is a key Arab nation historically, culturally and geographically. It can control the passage of global trade through the Bab El-Mandab Strait from Asia to Europe. It is also a potential land-bridge between Asia and Africa, going from Iran across the Hormuz Strait to Oman, then through Yemen and across Bab El-Mandab to Djibouti in Africa. It is not a coincidence that China is currently building its first overseas naval base in Djibouti, to protect the Maritime Silk Road which passes from East Asia to the Mediterranean through Bab El-Mandab. It is an irony of history, that, like in Syria, this seemingly regional conflict should turn into a global conflict to force all parties and major powers to resort to diplomatic means to end such truly genocidal wars, rather than let them lead to  World War III. Washington Could Be Held Complicit  in Saudi War Crimes Unconditional U.S. support for Saudi Arabia has come under growing attack in the United States, and even in the Congress, as witnessed in the recent passage of the JASTA bill, and before that, in the decision of the Obama Administration, under excruciating pressure, to release – although in redacted form -- the 28 pages of the original Congressional inquiry into the Saudi role in the September 11, 2001 terrorist attacks (cf. SAS 29, 39, 40/16). The blatant war crimes in Yemen, now carried out by the so-called Saudi coalition have led to renewed calls in the U.S. and the UK to end arms deliveries to Riyadh. After the Oct. 8 bombing of the funeral ceremony in Sana’a (cf. above), Democratic Representative Ted Lieu of California, sent a letter to US Secretary of State John Kerry, calling for a halt to the sales of
EIR STRATEGIC ALERT WEEKLY NEWSLETTER4 N°42 / 2016
U.S. arms to Saudi Arabia and to U.S. military support to the Saudi-led coalition in its campaign in Yemen.  “The frequency and scale of the civilian killings by the Saudi military coalition make it difficult to come to any conclusion other than that war crimes have been and are continuing to be committed in Yemen,” Lieu wrote, adding that human rights groups have counted, “at least 70 unlawful airstrikes on civilians by the Saudi coalition. And that was before the latest air strike on civilians at a funeral.” That number is far too high to be simple mistakes, as is claimed, he adds. “It appears that either the Saudi coalition is intentionally targeting civilians or they are not distinguishing between civilians and military targets,” Lieu notes. “Both would be war crimes.” As a former Air Force attorney, Lieu knows the subject well. He also cites an Oct. 10 Reuters dispatch that reports concerns among State Department lawyers that the U.S. could be held liable for war crimes that the Saudis commit in Yemen with U.S. support. That warning was issued during the Oct. 2015-Jan. 2016 time period. Despite the warnings, President Obama went ahead with the arms sale that was then being contemplated, a $1.29 billion deal for air-dropped munitions. On Sept. 21, the U.S. Senate voted on a resolution to block the planned sales of weapons to Saudi Arabia, introduced by two Republicans and two Democrats, all of whom denounced the Saudi atrocities in Yemen, and the kingdom’s backing for radical ideology leading to terrorism. The resolution was rejected by 71 to 25, but that is still a very high level of opposition, knowing that military export deals typically go through. African Leaders Confront German Chancellor with Reality German Chancellor Angela Merkel travelled Oct. 9-11 to Niger, Mali and Ethiopia, primarily to discuss migration to Europe and how to stop it. Just after that, she received the President of Chad Idriss Déby in Berlin on Oct. 12, followed by Nigerian President Muhammadu Buhari on Oct.14. The offers Angela Merkel made, however, have been exposed as “peanuts”, compared to the needs in the entire region, which is plagued by terrorism and poverty. Niger’s President Mahamadou Issafou pointed out that €1.8 billion in aid promised by the Europeans at the EU-Africa Summit one year ago, was not nearly enough, and that Niger alone would need at least one billion just to fight illegal migration. What is required, he insisted, is a real “Marshall Plan” to ensure economic development. Mrs. Merkel made clear that she would not support that approach. Meeting President Déby in Berlin, the Chancellor promised him €8.9 million to improve “water and food problems” in the Sahel region. Chad now hosts some 700,000 refugees from other countries who have fled from Boko Haram attacks, and Déby stressed the “humanitarian disaster” looming around Lake Chad, where poverty due to the drying up of the lake fuels both terrorism and migration to Europe. At at an event with businessmen hosted by tahe German Afrika Verein in Berlin on Oct. 14, Nigerian President Buhari stressed the severe infrastructure deficit in his country, including roads, rail, ports, and power. Building the manufacturing sector, he said, is essential, to be able to move away from an economy, based solely on oil, and to “lift up the 70% of our people who live in poverty.” His government, he added, has studied the German “economic miracle”, and is learning from
it, and announced the launching of their own national development bank, modeled on Germany’s Kreditanstalt für Wiederaufbau. With Chancellor Merkel, Buhari stressed the urgent need to replenish Lake Chad, where the livelihood of some 30 million people in the basin is in danger. Speaking before Buhari arrived at the same conference, Nigeria’s Minister of Agriculture Chief Audu Ogbeh explained the failure of previous governments to use the money from the oil boom to foster savings and development. Nigeria depends on imports of food, which cost $20 billion per year. The government is therefore focused not just on food production, but on building an agriculture-industrial economy. One point he made quite forcefully is the low productivity in milk production as compared to Europe, which is primarily due to the amount of water consumed per cow daily. Responding to a question by an EIR representative about his view of the Transaqua Project to replenish Lake Chad, Ogbeh replied: ‘”I am delighted by your question .” Since that project requires investments far beyond what the surrounding nations can pay, German and European help with funding is needed. “If Lake Chad dries up further,” Ogbeh warned, as it will in the next 10-15 years, it will lead to mass migration from the region, with 30 or so million people with nowhere to go. I think you know where they will go!” Russia and Turkey Deepen Trade Relations The growing strategic relationship developing between Russia and Turkey was again evidenced at the third bilateral meeting between Vladimir Putin and Recep Tayyip Erdogan, in less than three months. On the invitation of the Turkish President, Putin was the featured speaker and special guest at the 23rd World Energy Congress in Istanbul on Oct10. On the sidelines of that event, in-depth talks were held a wide range of issues. One agreement signed concerns the strategic Turkish Stream gas pipeline, that will carry Russian natural gas to Turkey under the Black Sea and eventually on to Europe through Greece. Construction of the first phase of this project is to begin in 2018. Cooperation on nuclear energy and in space-based communications satellites was also on the agenda, while an agreement was signed to create a one billion dollar joint fund to boost investment in many areas including tourism, energy, agriculture and transport. On the strategic level, the crucial issue of Syria was discussed “from all angles” as Erdogan put it, and it remains to be seen how that issue will develop. In addition, cooperation in the military technology sector was also discussed, with Putin offering to supply Russian air defense systems. This is a highly controversial move for a NATO member country, and certainly a very strong signal sent by Erdogan to Washington