E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 31, No. 41 - October 12, 2017 Quo vadis Europa? Recent developments serve to underscore the two fundamentally different dynamics that are developing in the world today. The geopolitical approach of the past decades in the United States and Europe is collapsing and legitimately so, as it is increasingly contrary to the general welfare. The revolt against that paradigm was manifest in the Brexit vote, in the defeat of Hillary Clinton in the U.S. presidential election and the victory of anti-Establishment candidate Donald Trump, followed by the rejection in Italy of a change in the Constitution to cede more power to the European Union. The trend was confirmed in the Sept. 24 legislative elections in Germany, with historic losses for the two major parties (CDU-CSU and SPD), and an alarming rise in the xenophobic Alternative for Germany (AfD). Not surprisingly, the AfD is particularly strong in the eastern states of the country, which were hit with profound social injustice after reunification in the name of neo-liberalism. The referendum on independence in Spain’s Catalonia is another expression of the failed EU/ECB policy (cf. below). In all these cases, the gap between rich and poor is widening, and the populations no longer feel represented and defended by the respective political classes. The imminent blowout of the trans-Atlantic financial system and renewed talk of new bailout and bail-in schemes to make taxpayers and small bank customers and bondholders foot the bill add to the popular fears and anger. The other dynamic is reflected in the fact that China has achieved a true economic miracle over the past decades, perhaps the greatest in history, and has invited all other countries to join in its Belt and Road Initiative, which has already led to an explosion of development. The key difference for the so-called Third World countries, compared to the trans-Atlantic monetarist model, is that now, for the first time, developing countries have access to credit to develop their economies. China has created the Asian Infrastructure Investment Bank (which now has 70 members), the New Silk Road Fund, and the Maritime Silk Road Fund, while the BRICS created the New Development Bank. In these frameworks, credit has been and will be extended for concrete development projects in Asia, in Africa, in Latin America, etc. This has generated a completely new spirit, as Helga ZeppLaRouche has stressed. Those countries have justified hope, for the first time in decades, to overcome underdevelopment and poverty. With Donald Trump scheduled to visit China in November, and to meet with many other Asian leaders during the summits that will take place in Asia, the all-important question is which dynamic the United States will choose. Trump has often enough indicated his willingness to break with “the swamp” in Washington and the financial interests that finance it, otherwise known as the “deep state”. Whether he has the competence and the popular support needed to do so remains to be seen, but the LaRouche political movement is committed to mobilizing to get that done. Will Donald Trump Deploy the Debt Bomb against Wall Street? When President Trump suggested, after visiting Puerto Rico which had been devastated by the hurricane, that the island’s debt should be “wiped out”, Wall Street went into a panic mode. The usual culprits in the “Fake News” media insisted that a.) he can’t do it; b.) he doesn’t know what he’s talking about; and c.) Cabinet members are “walking back” his comments. But for all their huffing and puffing, there is an obvious point which is being missed, which is that there is no way that Puerto Rico can pay back the debt! Trump is right, it must be written-off. Puerto Rico’s economy is in an advanced state of collapse, and the Obama administration’s solution, the PROMESA bill, set up a financial oversight board to impose austerity in a futile effort to collect debt, but it only accelerated the collapse. The U.S, media, however, is too busy blaming Trump for the difficulties in aiding the victims to find time to report that it was under Bush and Obama that the island’s circumstances deteriorated. Puerto Rico’s debt was downgraded to below investment grade in 2014. In August 2015, it defaulted on $58 million in bonds. Under the austerity regime brought in by PROMESA, the poverty rate soared to 45%, Medicaid health care for the poor was slashed, along with pensions -- and the debt rose to over $74 billion. After the underfunded and inadequate infrastructure that did exist had been destroyed by the hurricanes, Trump called for federal funds to be spent to upgrade the island’s infrastructure. In addition, he said to Fox News correspondent Geraldo Rivera: “They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out. You’re going to say goodbye to that, I don’t know if it’s Goldman Sachs but whoever it is can wave goodbye to that.” Wall Street went into a frenzy, and by the end of the day, EIR STRATEGIC ALERT WEEKLY NEWSLETTER2 N°41 / 2017 Puerto Rico’s bonds had fallen to an all-time low, to 33 cents to the dollar. But the financiers’ reaction was not to the $74 billion of Puerto Rico’s debt that Trump mentioned, but to the principle behind it: what if Trump is serious about no more bailouts to banks, financial firms and hedge funds, with their exposures today larger than in 2008, including hundreds of trillions of dollars in derivative obligations carried on their books? An increasing number of economists, including from the IMF and the BIS, have come to the same conclusion as American economist Lyndon LaRouche, that this debt will never be repaid, and is a nuclear time bomb waiting to blow up the global financial system, far beyond what happened nine years ago. Trump’s statement on wiping out the Puerto Rico debt echoes a proposal made by LaRouche in 1982, when he advised Mexico’s President Lopez Portillo to use the “debt bomb” -- to adopt a debt moratorium -- to end the imperial looting system that was destroying nations and killing people then. That is what is driving the panic on Wall Street. The EU Resorts to Police State Measures The failing European elites are resorting to police-state measures in their attempt to stem the tide of what they call a “populist” upsurge. The brutal use of force by the Spanish police in Barcelona against civilians , not justified by the illegal referendum, is a foretaste of the EU leadership’s determination to use all repressive methods, along with censorship and mass surveillance. We provide a partial picture of actions and measures taken in the recent period. In France, the academic blog of well-known economist Jacques Sapir, an expert on Russia and an open critic of the euro system, was suspended on Sept. 27 by the host OpenEdition, with the motivation that it was “politically partisan”. Sapir had polemized against President Macron and his plans for an EU supranational government. One week later, Google suspended the YouTube account of scenarieconomici.it , a widely followed anti-euro site because of alleged violations of “Community Guidelines” which “prohibit spam, scams or commercially deceptive content”. Scenarieco nomici.it posted no commercial content. But it have videos of several conferences on the future of the EU, including one on “A ‘Plan B’ for Italy” with the participation of Jacques Sapir. Prof. Antonio Maria Rinaldi, the head of the association that runs the site, is convinced that the shutdown of their YouTube account is connected with the censorship against Sapir. Moreover, EU member states are now supposed to ratify a law that would introduce mass surveillance methods called “deep packet inspections” by Internet providers, which involves analyzing the content of IPs. If something turns up, the communications authority could then preemptively block users without a court order. In Germany, a new law has come into force aimed at regulating social media platforms to ensure they remove hate speech within a given period of receiving complaints -- within 24 hours in straightforward cases, or within seven days where the evaluation of content is more difficult. The law, which translates as “Network Enforcement Act” (NetzDG in abbreviated form in German), leaves it is up to private companies to decide what is “hate speech”, which is a very slippery path to massive censure – especially since it includes “fake news”. Fines of up to €50 million can be applied under the law if social media platforms fail to comply, though as Spiegel Online reports, there is a transition period for companies to gear up for compliance, which will end on Jan. 1, 2018. However the ministry in charge began inspections this month. And in Great Britain, Home Secretary Amber Rudd announced that viewers of terrorist sites could face up to 15 years in prison. Thus, a “crime of opinion” is being de facto introduced even if no act is committed. Spain Should Secede from the Bankrupt Financial System! The growth of the independence movement in Catalonia has been very much a consequence of the austerity policy imposed by the European Union and the European Central Bank in the aftermath of the 2008 financial crash, in order to save the bankrupt banks. Unemployment is nearly 20% average, and for young Spaniards, it is up to 40%, forcing many to leave the country in search of a job. According to the Bank of Spain, the Spanish state injected €54.3 billion of public funds into the banks, but only 3.8 billion has been reimbursed so far, and another 10 billion are expected. That means that taxpayers have paid 40 billion to bail out the banks. Catalonia may be better off economically than the rest of the country, but the lack of a positive perspective overall, combined with complex political considerations, has fueled the discontent. But an independent state cannot be the solution. On Oct. 2, the day after the vote in Catalonia, which was repressed with totally disproportionate force on orders from Madrid, the LaRouche Movement in Spain issued a statement proposing a different paradigm: “The real secession discussion which should dominate Spain’s national attention, should not be that of Catalonia separating from Spain -- which would only benefit the City of London and Wall Street’s geopolitical Great Game -- but that of separating Spain from the bankrupt and genocidal system of the European Union, of the Troika, which is the expression in Europe of the bankrupt monetary system whose austerity measures have left millions of Spanish youth with no future. A united Spain must declare its independence and reclaim is national sovereignty, and fully join the New Silk road. This is a pregnant moment.” There is another, less obvious, aspect to the upsurge in calls for breaking up the nation states in Europe, which was taken up by Karel Vereycken, the former spokesman for French presidential candidate Jacques Cheminade, in an interview with Sputnik on Oct. 6. For hard-core Europeanists in the tradition of Leopold Kohr, a protégé of Winston Churchill, Vereycken said, “the large historical nation-states of Europe have to be broken up into smaller entities of about 5 to 8 million inhabitants in order to get the European population to accept an EU empire-like supranational super-state.” That could apply to Catalonia, Flanders, Scotland, Lombardy, and countless other regions. https:// sputniknews.com/analysis/201710061058019216-cataloniaeurope-fragmentation-independence/ Such plans have been in the cards for decades now, becoming more or less prominent according to the circumstances. As concerns Spain, the government has recently shown its eagerness to participating in China’s Belt and Road Initiative, which may be one reason for the destabilization attempts. Japanese Prime Minister Abe Conducts High-Profile Diplomacy The upcoming snap elections in Japan organized by Prime Minister Shinzo Abe are part of a high risk maneuver, but he is obviously hoping to fare better than British Prime Minister Theresa May, who suffered a dramatic setback when she pulled a similar unscheduled election in June of this year (cf. SAS 25/17). Prospects for Abe appear, on the surface, to be much better. EIR STRATEGIC ALERT WEEKLY NEWSLETTER 3N 0°41 / 2017 The opposition Democratic Party of Japan (DPJ) is deeply divided and many of its supporters have been drawn into a new political party, the Party of Hope. That party, headed by the Governor of Tokyo Yuriko Koike, promotes the shutdown of the nuclear power grid and is attacking Abe on his tax hikes. The Oct. 22 vote is being presented as a vote of confidence in Abe’s tough stand against the threats coming from North Korea. The two DPRK missile launches over Japanese territory have shaken the pacifist culture in the country, and the election will be the first test of how much impact the North Korean threat has had on Japanese voters. While Abe has cultivated a close relationship with US President Donald Trump, he has also forged close economic and political ties with Russian President Vladimir Putin, to the point that some leading Japanese analysts believe that Russia and Japan will reach an accord on the status of the four disputed northern islands by sometime in 2018. Abe has also gone a long way towards rebuilding Japan-South Korea ties, beyond the shared concerns about North Korea’s ambitions to be recognized as a nuclear weapon state. Weeks after the Oct. 22 elections, Abe will be hosting a visit to Tokyo by President Trump, and will be meeting with Chinese President Xi Jinping and Russian President Putin on the sidelines of the APEC summit in Vietnam. While Abe is famous for his proposal of a “security diamond” involving the configuration of Japan, India, Australia and Hawaii (from the U.S. side), which vectors in the direction of a containment strategy against China, he has also improved Japanese-Chinese ties. He surprised most observers on Sept. 28, by personally attending the gala marking the 45th anniversary of the normalization of diplomatic relations between China and Japan, at the Chinese embassy in Tokyo. In his recent visit to Beijing, U.S. Secretary of State Rex Tillerson discussed joint Chinese-American options for preventing North Korea from going any further with its development of long-range missiles and nuclear weapons. Moreover, the American envoy on North Korea, Joseph Yun, was recently in Moscow meeting with Kremlin officials, which was followed by a North Korean delegation to Moscow, a visit that was publicly noted and praised by the U.S. State Department. If the US, Japan, South Korea, China and Russia can develop a common strategy for addressing the North Korea issue, the chances of a successful resolution, short of military action, greatly improve. The Abe snap election, coming in the midst of all of these dramatic events in Northeast Asia, will shape the regional political/economic dynamics in the coming months. Abe told reporters that if his coalition with the Komeito secures 233 seats out of the total 465 in the Diet, it will be a victory. India: No Home Will Lack Electricity by 2019 India’s Prime Minister Narendra Modi has announced a $2.5 billion scheme to bring electricity to all homes in the country by Dec. 2018, as he had promised to do during the 2014 election campaign. In a speech addressing the nation on Sept. 25, Modi stated: “Forty million of the total 250 million households still don’t have power, which means 25 per cent of people are living in the 18th century. The government will electrify every household, whether it’s in a village, city or a remote region.” On the ground, India is generating enough surplus electricity to achieve that goal, but the last-mile connectivity, the cost of which has to be met by consumers, has proved to be a hurdle. Addressing the issue, Modi said: “No fee will be charged for electricity connection in households of poor citizens.” The PM’s plan, named “Saubhagya” (Good Fortune), will be funded by a mix of federal government grants, investment by state utilities and loans, according to available reports. India’s power program depends heavily on coal and hydropower. In recent years, nuclear and renewable power sources have been given a boost. Although the contribution of nuclear power to India’s power-generation capacity mix is still nominal, the country does have a vibrant nuclear power program. Last month, the government gave the go-ahead to setting up 10 700MW indigenous pressurized heavy water reactors. As of now, India has 22 nuclear reactors, 18 of which are indigenous. In addition, last August, India’s Atomic Energy Commission reported completion of the 500 MW fast breeder reactor at Kalpakkam, which is expected to start generating power before the year ends. It will be using the fissionable element thorium instead of uranium. The only other commercial fast breeder nuclear reactor presently is located in Russia. Moreover, India has invited foreign nuclear power plant manufacturers to set up power plants. Russia has built 2- VVER1000MW reactors at Koodankulam and has started working on two others. So far, Russia has been contracted to supply six reactors. Furthermore, Electricite de France (EDF) has now accelerated talks with the Indian authorities for the supply of 6 1650 MW reactors at Jaitapur, which when operational will be the largest nuclear power generation park in the country. The talks are expected to be finalized before President Emmanuel Macron visits India later this year. Trump Administration Begins to Reverse Policy on Nuclear Energy Nuclear plants proved to be the safest places to be during the recent Hurricane Harvey. The two 1300-MW nuclear reactors of The Texas Project in Bay City, just south of Houston, Texas, provided safe and reliable electricity to 2 million homes and offices throughout the storm. The Obama administration had threatened to shut down although the plant’s two, 20-year licenses were not technically due to expire until 2027 and 2028, one reason invoked being the danger of radiation exposure should the plant be struck by a hurricane! But on Sept. 28, the Trump administration authorized their recertification until 2047 and 2048. The following day, Energy Secretary Perry also announced that the federal government will extend up to $3.7 billion in further loan guarantees to secure completion of the construction of two advanced nuclear reactors in Georgia. This is consistent with the new energy policy announced by Perry in an eight-page letter to the Federal Energy Regulatory Commission (FERC), instructing them to adopt changes in the rules governing energy pricing so as ensure that the U.S. has a reliable, resilient national electric grid, which functions day-today and in the face of disasters, natural and man-made. What he is proposing is a “parity policy” for energy, under which electricity prices reflect the cost of production of reliable energy. Nuclear plants, for example, have been shutting down across the country, because they have been forced to financially “compete” with heavily subsidized “renewables” which only provide energy when the sun shines or the wind blows, and with fracked natural gas. French Government Finally Okays Major Canal Infrastructure Project On Oct. 3, an agreement was reached among all partners to finance one of the largest infrastructure programs in European history: a barge canal connecting the Paris region with EIR STRATEGIC ALERT WEEKLY NEWSLETTER4 N°41 / 2017 the dense canal grid of Northern Europe including Antwerp in Belgium, Rotterdam in the Netherlands and the entire Rhine region. Numerous governments have talked about it before, and concrete plans have been on the drawing board for at least 35 years. But it is only now that the project is scheduled to go ahead under the name of Canal Seine Nord Europe (CSNE). This EU4.7 bn project, the largest in the EU, has three major components: widening and deepening existing rivers and canals, building larger and longer locks, and building higher bridges to allow barges with three layers of containers to pass under them. Geographically, the program includes: 1) an upgrade of all infrastructure along the Seine and Oise Rivers, especially between Le Havre in Normandy, the second largest French seaport, and Conflans-Sainte-Honorine close to Paris, and then from there to Compiègne, less than 100 km north of Paris; 2) The digging of a new 54 meter wide and 104 km long canal between Compiègne and Cambrai and linking it to Belgium via Lille; 3) a massive upgrade of the existing canal connecting Dunkerque, on the Atlantic Coast with Lille. Across the border in Belgium, a massive upgrade of the inland navigation canals is already underway. The aim of the project is to move transportation of goods from the over-congested highways linking France to its neighbors to waterways. During his 2017 presidential campaign, Jacques Cheminade insisted on the importance of modern infrastructure, in particular urgent action for both the Seine Nord canal and Le Havre. If not sabotaged, the construction work for the new canal will immediately create about 15,000 jobs, and the intermodal platforms connecting rail, road and airports with the canal will generate another 50,000. The “compromise” concluded last week uses creative bookkeeping to kickstart the program. The company that will supervise the canal will become a “regional” entity. Over the coming two years, the regions will front the financing of the initial costs to start the program, and later be refunded by the French state, which will raise a new tax on the activities of the canal. The regions also volunteered to be the security for the loan. Since it is the French regions and not the state per se which will go into debt, France’s so-called deficit will remain within the Maastricht 3% criteria. Gravitational Wave Give New Insights into the Birth of the Universe On Tuesday, Oct 3, the Nobel Prize in Physics was awarded to MIT’s Rainer Weiss and to CalTech’s Kip Thorne and Barry Barish, for what the Royal Swedish Academy has called “a milestone, a window on the universe” -- the observation of gravitational waves. Such waves are described as ripples in the fabric of space-time caused by extremely violent energetgic processes in the universe. This phenomenon is a theoretically required consequence of Einstein’s 1916 General Theory of Relativity, but the first publication successfully detailing the direct observation of such waves was published on Feb. 11, 2016. The observation itself had occurred several months earlier, in Sept. 2015, when the facilities of the Laser Interferometer Gravitational-Wave Observatory (LIGO) collected data in two U.S. locations: in Hanford, Washington and in Livingston, Louisiana. Beyond the excitement of demonstrating gravitational waves themselves, this breakthrough represents a tremendous extension of the human expanded sensorium, allowing the use of an entirely new “sense” for studying the universe around us: the direct measurement of space-time changes caused by a phenomenon which has waited a century, since Einstein, to be observed! These observatories work by a process of laser interferometry -- a technique for measuring very small changes in distance by comparing the change in phase of a light source. In the case of LIGO, two beams of laser light travel in perpendicular directions in a large L-shaped configuration, each 4 kilometers long. By having the laser beam reflect back and forth multiple times, the effective length of the arms is increased. This increases the sensitivity of LIGO, which is able to measure a change in length of the arms of only 1/10,000 the width of a proton. Gravitational waves, changing the metrics of space-time, are remarkably weak, and require processes of enormous magnitude to be potentially susceptible of observation. In the case of LIGO, this event was the mutual orbiting and eventual coalescing of two black holes. Similar cosmic phenomena have been observed in the past, revealing a puzzling decrease in energy as stellar orbits decayed, a decrease that could not be explained without some of the energy being transformed into the form of gravitational waves. (The 1993 Nobel Prize in Physics was awarded for such an indirect detection of gravitational waves.) Gravitational waves, moving at the speed of light, reshape space-time as they travel, resulting in slight changes in distances between two locations. The LIGO facility was sensitive enough to measure the changing apparent length of one of the two arms compared to the other. The result, picked up by both the Washington and Louisiana facilities, accorded with theoretical predictions for the magnitude and frequency of the waves. The phenonenon was described in a LarouchePAC video available at: https://www.youtube.com/watch?v=iV3jboXihfc Schiller Institute Sponsors Weekly Webcast to Spread the “New Silk Road Spirit” On Thursday, October 5, at 6 pm CET, Helga Zepp LaRouche inaugurated a weekly English-language webcast on the Schiller Institute website, at the request of many key players in politics and economics, as well as Schiller Institute friends worldwide. Each week, she will provide a concise update of strategic developments, and a strategy for establishing a new paradigm in international affairs. While Mrs. LaRouche has held a weekly webcast in German for several years now, such an event in English can be followed by a much larger audience. It will also be simultaneously translated into Spanish to reach Ibero-America, in particular, where the Schiller Institute is active and actively supported. The weekly webcast can be viewed at newparadigm.schillerinstitute.org. 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: info@eir.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 Germa

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 31, No. 41 - October 12, 2017

Quo vadis Europa? Recent developments serve to underscore the two fundamentally different dynamics that are developing in the world today. The geopolitical approach of the past decades in the United States and Europe is collapsing and legitimately so, as it is increasingly contrary to the general welfare. The revolt against that paradigm was manifest in the Brexit vote, in the defeat of Hillary Clinton in the U.S. presidential election and the victory of anti-Establishment candidate Donald Trump, followed by the rejection in Italy of a change in the Constitution to cede more power to the European Union. The trend was confirmed in the Sept. 24 legislative elections in Germany, with historic losses for the two major parties (CDU-CSU and SPD), and an alarming rise in the xenophobic Alternative for Germany (AfD). Not surprisingly, the AfD is particularly strong in the eastern states of the country, which were hit with profound social injustice after reunification in the name of neo-liberalism. The referendum on independence in Spain’s Catalonia is another expression of the failed EU/ECB policy (cf. below). In all these cases, the gap between rich and poor is widening, and the populations no longer feel represented and defended by the respective political classes. The imminent blowout of the trans-Atlantic financial system and renewed talk of new bailout and bail-in schemes to make taxpayers and small bank customers and bondholders foot the bill add to the popular fears and anger. The other dynamic is reflected in the fact that China has achieved a true economic miracle over the past decades, perhaps the greatest in history, and has invited all other countries to join in its Belt and Road Initiative, which has already led to an explosion of development. The key difference for the so-called Third World countries, compared to the trans-Atlantic monetarist model, is that now, for the first time, developing countries have access to credit to develop their economies. China has created the Asian Infrastructure Investment Bank (which now has 70 members), the New Silk Road Fund, and the Maritime Silk Road Fund, while the BRICS created the New Development Bank. In these frameworks, credit has been and will be extended for concrete development projects in Asia, in Africa, in Latin America, etc.  This has generated a completely new spirit, as Helga ZeppLaRouche has stressed. Those countries have justified hope, for the first time in decades, to overcome underdevelopment and poverty.
With Donald Trump scheduled to visit China in November, and to meet with many other Asian leaders during the summits that will take place in Asia, the all-important question is which dynamic the United States will choose. Trump has often enough indicated his willingness to break with “the swamp” in Washington and the financial interests that finance it, otherwise known as the “deep state”. Whether he has the competence and the popular support needed to do so remains to be seen, but the LaRouche political movement is committed to mobilizing to get that done. Will Donald Trump Deploy the Debt Bomb against Wall Street? When President Trump suggested, after visiting Puerto Rico which had been devastated by the hurricane, that the island’s debt should be “wiped out”, Wall Street went into a panic mode. The usual culprits in the “Fake News” media insisted that a.) he can’t do it; b.) he doesn’t know what he’s talking about; and c.) Cabinet members are “walking back” his comments. But for all their huffing and puffing, there is an obvious point which is being missed, which is that there is no way that Puerto Rico can pay back the debt!  Trump is right, it must be written-off.  Puerto Rico’s economy is in an advanced state of collapse, and the Obama administration’s solution, the PROMESA bill, set up a financial oversight board to impose austerity in a futile effort to collect debt, but it only accelerated the collapse. The U.S, media, however, is too busy blaming Trump for the difficulties in aiding the victims to find time to report that it was under Bush and Obama that the island’s circumstances deteriorated. Puerto Rico’s debt was downgraded to below investment grade in 2014.  In August 2015, it defaulted on $58 million in bonds.  Under the austerity regime brought in by PROMESA, the poverty rate soared to 45%, Medicaid health care for the poor was slashed, along with pensions -- and the debt rose to over $74 billion. After the underfunded and inadequate infrastructure that did exist had been destroyed by the hurricanes, Trump called for federal funds to be spent to upgrade the island’s infrastructure. In addition, he said to Fox News correspondent Geraldo Rivera: “They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out.  You’re going to say goodbye to that, I don’t know if it’s Goldman Sachs but whoever it is can wave goodbye to that.” Wall Street went into a frenzy, and by the end of the day,
EIR STRATEGIC ALERT WEEKLY NEWSLETTER2 N°41 / 2017
Puerto Rico’s bonds had fallen to an all-time low, to 33 cents to the dollar. But the financiers’ reaction was not to the $74 billion of Puerto Rico’s debt that Trump mentioned, but to the principle behind it: what if Trump is serious about no more bailouts to banks, financial firms and hedge funds, with their exposures today larger than in 2008, including hundreds of trillions of dollars in derivative obligations carried on their books? An increasing number of economists, including from the IMF and the BIS, have come to the same conclusion as American economist Lyndon LaRouche, that this debt will never be repaid, and is a nuclear time bomb waiting to blow up the global financial system, far beyond what happened nine years ago.
 Trump’s statement on wiping out the Puerto Rico debt echoes a proposal made by LaRouche in 1982, when he advised Mexico’s President Lopez Portillo to use the “debt bomb” -- to adopt a debt moratorium -- to end the imperial looting system that was destroying nations and killing people then. That is what is driving the panic on Wall Street. The EU Resorts to Police State Measures The failing European elites are resorting to police-state measures in their attempt to stem the tide of what they call a “populist” upsurge. The brutal use of force by the Spanish police in Barcelona against civilians , not justified by the illegal referendum, is a foretaste of the EU leadership’s determination to use all repressive methods, along with censorship and mass surveillance. We provide a partial picture of actions and measures taken in the recent period. In France, the academic blog of well-known economist Jacques Sapir, an expert on Russia and an open critic of the euro system, was suspended on Sept. 27 by the host OpenEdition, with the motivation that it was “politically partisan”. Sapir had polemized against President Macron and his plans for an EU supranational government. One week later, Google suspended the YouTube account of scenarieconomici.it , a widely followed anti-euro site because of alleged violations of “Community Guidelines” which “prohibit spam, scams or commercially deceptive content”. Scenarieco nomici.it posted no commercial content. But it have videos of several conferences on the future of the EU, including one on “A ‘Plan B’ for Italy” with the participation of Jacques Sapir. Prof. Antonio Maria Rinaldi, the head of the association that runs the site, is convinced that the shutdown of their YouTube account is connected with the censorship against Sapir. Moreover, EU member states are now supposed to ratify a law that would introduce mass surveillance methods called “deep packet inspections” by Internet providers, which involves analyzing the content of IPs. If something turns up, the communications authority could then preemptively block users without a court order. In Germany, a new law has come into force aimed at regulating social media platforms to ensure they remove hate speech within a given period of receiving complaints -- within 24 hours in straightforward cases, or within seven days where the evaluation of content is more difficult. The law, which translates as “Network Enforcement Act” (NetzDG in abbreviated form in German), leaves it is up to private companies to decide what is “hate speech”, which is a very slippery path to massive censure – especially since it includes “fake news”. Fines of up to €50 million can be applied under the law if social media platforms fail to comply, though as Spiegel Online reports, there is a transition period for companies to gear up for compliance, which will end on Jan. 1, 2018. However the ministry in charge began inspections this month.
And in Great Britain, Home Secretary Amber Rudd announced that viewers of terrorist sites could face up to 15 years in prison. Thus, a “crime of opinion” is being de facto introduced even if no act is committed. Spain Should Secede  from the Bankrupt Financial System! The growth of the independence movement in Catalonia has been very much a consequence of the austerity policy imposed by the European Union and the European Central Bank in the aftermath of the 2008 financial crash, in order to save the bankrupt banks. Unemployment is nearly 20% average, and for young Spaniards, it is up to 40%, forcing many to leave the country in search of a job. According to the Bank of Spain, the Spanish state injected €54.3 billion of public funds into the banks, but only 3.8 billion has been reimbursed so far, and another 10 billion are expected. That means that taxpayers have paid 40 billion to bail out the banks. Catalonia may be better off economically than the rest of the country, but the lack of a positive perspective overall, combined with complex political considerations, has fueled the discontent. But an independent state cannot be the solution. On Oct. 2, the day after the vote in Catalonia, which was repressed with totally disproportionate force on orders from Madrid, the LaRouche Movement in Spain issued a statement proposing a different paradigm: “The real secession discussion which should dominate Spain’s national attention, should not be that of Catalonia separating from Spain -- which would only benefit the City of London and Wall Street’s geopolitical Great Game -- but that of separating Spain from the bankrupt and genocidal system of the European Union, of the Troika, which is the expression in Europe of the bankrupt monetary system whose austerity measures have left millions of Spanish youth with no future. A united Spain must declare its independence and reclaim is national sovereignty, and fully join the New Silk road. This is a pregnant moment.” There is another, less obvious, aspect to the upsurge in calls for breaking up the nation states in Europe, which was taken up by Karel Vereycken, the former spokesman for French presidential candidate Jacques Cheminade, in an interview with Sputnik on Oct. 6. For hard-core Europeanists in the tradition of Leopold Kohr, a protégé of Winston Churchill, Vereycken said, “the large historical nation-states of Europe have to be broken up into smaller entities of about 5 to 8 million inhabitants in order to get the European population to accept an EU empire-like supranational super-state.” That could apply to Catalonia, Flanders, Scotland, Lombardy, and countless other regions. https:// sputniknews.com/analysis/201710061058019216-cataloniaeurope-fragmentation-independence/ Such plans have been in the cards for decades now, becoming more or less prominent according to the circumstances. As concerns Spain, the government has recently shown its eagerness to participating in China’s Belt and Road Initiative, which may be one reason for the destabilization attempts. Japanese Prime Minister Abe  Conducts High-Profile Diplomacy The upcoming snap elections in Japan organized by Prime Minister Shinzo Abe are part of a high risk maneuver, but he is obviously hoping to fare better than British Prime Minister Theresa May, who suffered a dramatic setback when she pulled a similar unscheduled election in June of this year (cf. SAS 25/17). Prospects for Abe appear, on the surface, to be much better.
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The opposition Democratic Party of Japan (DPJ) is deeply divided and many of its supporters have been drawn into a new political party, the Party of Hope. That party, headed by the Governor of Tokyo Yuriko Koike, promotes the shutdown of the nuclear power grid and is attacking Abe on his tax hikes. The Oct. 22 vote is being presented as a vote of confidence in Abe’s tough stand against the threats coming from North Korea. The two DPRK missile launches over Japanese territory have shaken the pacifist culture in the country, and the election will be the first test of how much impact the North Korean threat has had on Japanese voters. While Abe has cultivated a close relationship with US President Donald Trump, he has also forged close economic and political ties with Russian President Vladimir Putin, to the point that some leading Japanese analysts believe that Russia and Japan will reach an accord on the status of the four disputed northern islands by sometime in 2018. Abe has also gone a long way towards rebuilding Japan-South Korea ties, beyond the shared concerns about North Korea’s ambitions to be recognized as a nuclear weapon state. Weeks after the Oct. 22 elections, Abe will be hosting a visit to Tokyo by President Trump, and will be meeting with Chinese President Xi Jinping and Russian President Putin on the sidelines of the APEC summit in Vietnam. While Abe is famous for his proposal of a “security diamond” involving the configuration of Japan, India, Australia and Hawaii (from the U.S. side), which vectors in the direction of a containment strategy against China, he has also improved Japanese-Chinese ties. He surprised most observers on Sept. 28, by personally attending the gala marking the 45th anniversary of the normalization of diplomatic relations between China and Japan, at the Chinese embassy in Tokyo. In his recent visit to Beijing, U.S. Secretary of State Rex Tillerson discussed joint Chinese-American options for preventing North Korea from going any further with its development of long-range missiles and nuclear weapons. Moreover, the American envoy on North Korea, Joseph Yun, was recently in Moscow meeting with Kremlin officials, which was followed by a North Korean delegation to Moscow, a visit that was publicly noted and praised by the U.S. State Department. If the US, Japan, South Korea, China and Russia can develop a common strategy for addressing the North Korea issue, the chances of a successful resolution, short of military action, greatly improve. The Abe snap election, coming in the midst of all of these dramatic events in Northeast Asia, will shape the regional political/economic dynamics in the coming months. Abe told reporters that if his coalition with the Komeito secures 233 seats out of the total 465 in the Diet, it will be a victory. India: No Home Will Lack Electricity by 2019 India’s Prime Minister Narendra Modi has announced a $2.5 billion scheme to bring electricity to all homes in the country by Dec. 2018, as he had promised to do during the 2014 election campaign. In a speech addressing the nation on Sept. 25, Modi stated: “Forty million of the total 250 million households still don’t have power, which means 25 per cent of people are living in the 18th century. The government will electrify every household, whether it’s in a village, city or a remote region.” On the ground, India is generating enough surplus electricity to achieve that goal, but the last-mile connectivity, the cost of which has to be met by consumers, has proved to be a hurdle. Addressing the issue, Modi said: “No fee will be charged for electricity connection in households of poor citizens.” The PM’s plan, named “Saubhagya” (Good Fortune), will be
funded by a mix of federal government grants, investment by state utilities and loans, according to available reports. India’s power program depends heavily on coal and hydropower. In recent years, nuclear and renewable power sources have been given a boost. Although the contribution of nuclear power to India’s power-generation capacity mix is still nominal, the country does have a vibrant nuclear power program. Last month, the government gave the go-ahead to setting up 10 700MW indigenous pressurized heavy water reactors. As of now, India has 22 nuclear reactors, 18 of which are indigenous. In addition, last August, India’s Atomic Energy Commission reported completion of the 500 MW fast breeder reactor at Kalpakkam, which is expected to start generating power before the year ends. It will be using the fissionable element thorium instead of uranium. The only other commercial fast breeder nuclear reactor presently is located in Russia. Moreover, India has invited foreign nuclear power plant manufacturers to set up power plants. Russia has built 2- VVER1000MW reactors at Koodankulam and has started working on two others. So far, Russia has been contracted to supply six reactors. Furthermore, Electricite de France (EDF) has now accelerated talks with the Indian authorities for the supply of 6 1650 MW reactors at Jaitapur, which when operational will be the largest nuclear power generation park in the country. The talks are expected to be finalized before President Emmanuel Macron visits India later this year. Trump Administration Begins  to Reverse Policy on Nuclear Energy Nuclear plants proved to be the safest places to be during the recent Hurricane Harvey. The two 1300-MW nuclear reactors of The Texas Project in Bay City, just south of Houston, Texas, provided safe and reliable electricity to 2 million homes and offices throughout the storm. The Obama administration had threatened to shut down although the plant’s two, 20-year licenses were not technically due to expire until 2027 and 2028, one reason invoked being the danger of radiation exposure should the plant be struck by a hurricane! But on Sept. 28, the Trump administration authorized their recertification until 2047 and 2048. The following day, Energy Secretary Perry also announced that the federal government will extend up to $3.7 billion in further loan guarantees to secure completion of the construction of two advanced nuclear reactors in Georgia. This is consistent with the new energy policy announced by Perry in an eight-page letter to the Federal Energy Regulatory Commission (FERC), instructing them to adopt changes in the rules governing energy pricing so as ensure that the U.S. has a reliable, resilient national electric grid, which functions day-today and in the face of disasters, natural and man-made. What he is proposing is a “parity policy” for energy, under which electricity prices reflect the cost of production of reliable energy. Nuclear plants, for example, have been shutting down across the country, because they have been forced to financially “compete” with heavily subsidized “renewables” which only provide energy when the sun shines or the wind blows, and with fracked natural gas. French Government Finally Okays  Major Canal Infrastructure Project On Oct. 3, an agreement was reached among all partners to finance one of the largest infrastructure programs in European history: a barge canal connecting the Paris region with
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the dense canal grid of Northern Europe including Antwerp in Belgium, Rotterdam in the Netherlands and the entire Rhine region. Numerous governments have talked about it before, and concrete plans have been on the drawing board for at least 35 years. But it is only now that the project is scheduled to go ahead under the name of Canal Seine Nord Europe (CSNE). This EU4.7 bn project, the largest in the EU, has three major components: widening and deepening existing rivers and canals, building larger and longer locks, and building higher bridges to allow barges with three layers of containers to pass under them. Geographically, the program includes: 1) an upgrade of all infrastructure along the Seine and Oise Rivers, especially between Le Havre in Normandy, the second largest French seaport, and Conflans-Sainte-Honorine close to Paris, and then from there to Compiègne, less than 100 km north of Paris; 2) The digging of a new 54 meter wide and 104 km long canal between Compiègne and Cambrai and linking it to Belgium via Lille; 3) a massive upgrade of the existing canal connecting Dunkerque, on the Atlantic Coast  with Lille. Across the border in Belgium, a massive upgrade of the inland navigation canals is already underway. The aim of the project is to move transportation of goods from the over-congested highways linking France to its neighbors to waterways. During his 2017 presidential campaign, Jacques Cheminade insisted on the importance of modern infrastructure, in particular urgent action for both the Seine Nord canal and Le Havre. If not sabotaged, the construction work for the new canal will immediately create about 15,000 jobs, and the intermodal platforms connecting rail, road and airports with the canal will generate another 50,000. The “compromise” concluded last week uses creative bookkeeping to kickstart the program. The company that will supervise the canal will become a “regional” entity. Over the coming two years, the regions will front the financing of the initial costs to start the program, and later be refunded by the French state, which will raise a new tax on the activities of the canal. The regions also volunteered to be the security for the loan. Since it is the French regions and not the state per se which will go into debt, France’s so-called deficit will remain within the Maastricht 3% criteria. Gravitational Wave Give New Insights  into the Birth of the Universe On Tuesday, Oct 3, the Nobel Prize in Physics was awarded to MIT’s Rainer Weiss and to CalTech’s Kip Thorne and Barry Barish, for what the Royal Swedish Academy has called “a milestone, a window on the universe” -- the observation of gravitational waves. Such waves are described as ripples in the fabric of space-time caused by extremely violent energetgic processes in the universe. This phenomenon is a theoretically required consequence of Einstein’s 1916 General Theory of Relativity, but the first publication successfully detailing the direct observation of such waves was published on Feb. 11, 2016. The observation itself had occurred several months earlier, in Sept. 2015, when the facilities of the Laser Interferometer Gravitational-Wave Observatory (LIGO) collected data in two U.S. locations: in Hanford, Washington and in Livingston, Louisiana. Beyond the excitement of demonstrating gravitational waves
themselves, this breakthrough represents a tremendous extension of the human expanded sensorium, allowing the use of an entirely new “sense” for studying the universe around us: the direct measurement of space-time changes caused by a phenomenon which has waited a century, since Einstein, to be observed! These observatories work by a process of laser interferometry -- a technique for measuring very small changes in distance by comparing the change in phase of a light source. In the case of LIGO, two beams of laser light travel in perpendicular directions in a large L-shaped configuration, each 4 kilometers long. By having the laser beam reflect back and forth multiple times, the effective length of the arms is increased. This increases the sensitivity of LIGO, which is able to measure a change in length of the arms of only 1/10,000 the width of a proton. Gravitational waves, changing the metrics of space-time, are remarkably weak, and require processes of enormous magnitude to be potentially susceptible of observation. In the case of LIGO, this event was the mutual orbiting and eventual coalescing of two black holes. Similar cosmic phenomena have been observed in the past, revealing a puzzling decrease in energy as stellar orbits decayed, a decrease that could not be explained without some of the energy being transformed into the form of gravitational waves. (The 1993 Nobel Prize in Physics was awarded for such an indirect detection of gravitational waves.) Gravitational waves, moving at the speed of light, reshape space-time as they travel, resulting in slight changes in distances between two locations. The LIGO facility was sensitive enough to measure the changing apparent length of one of the two arms compared to the other. The result, picked up by both the Washington and Louisiana facilities, accorded with theoretical predictions for the magnitude and frequency of the waves. The phenonenon was described in a LarouchePAC video available at: https://www.youtube.com/watch?v=iV3jboXihfc Schiller Institute Sponsors Weekly Webcast to Spread the “New Silk Road Spirit” On Thursday, October 5, at 6 pm CET, Helga Zepp LaRouche inaugurated a weekly English-language webcast on the Schiller Institute website, at the request of many key players in politics and economics, as well as Schiller Institute friends worldwide. Each week, she will provide a concise update of strategic developments, and a strategy for establishing a new paradigm in international affairs. While Mrs. LaRouche has held a weekly webcast in German for several years now, such an event in English can be followed by a much larger audience. It will also be simultaneously translated into Spanish to reach Ibero-America, in particular, where the Schiller Institute is active and actively supported. The weekly webcast can be viewed at newparadigm.schillerinstitute.org.
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