E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 32, No. 11, March 15, 2018

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 32, No.  11, March 15, 2018

Western Geopolitical Dinosaurs  Can’t Handle Evolution Russian President Vladimir Putin, in his address to the Parliament on March 1, delivered a severe shock to the trans-Atlantic and NATO elites, which has continued to produce after-shocks ever since. As we reported last week, Putin presented the new military capabilities Russia has developed to thwart and render obsolete the missile defense programs which the United States and NATO have deployed (cf. SAS 10/18). His announcement put an abrupt end to the illusion of the West being able to launch a first nuclear strike against Russia without fear of retaliation. It also prompted a number of experts to recognize that Russia had taken them by surprise. And it led four U.S. Senators to write to Secretary of State Rex Tillerson urging the Trump Administration to launch a new round of strategic talks with Russia without delay. Although they repeat the usual reasons to mistrust the Kremlin, Senators Markey, Merkley and Feinstein, all Democrats, and Independent Bernie Sanders, recognize the need to engage in order to avoid miscalculation. A second shock for the geopolitical clique came with the announcement on March 8 that North Korean leader Kim had invited Donald Trump to a meeting “by May”, and that the U.S. President had accepted the invitation (cf. below). That undercut Trump’s critics who accuse him of provoking Pyongyang by threatening to launch an imminent nuclear strike against North Korea. The many opponents of Donald Trump had to admit, although begrudgingly, that a breakthrough had occurred. Behind this stunning diplomacy, is the close relationship that Presidents Trump and Xi Jinping have developed, in addition to the persistent efforts of South Korean President Moon to keep up a strategic dialogue with the North. On the day after the announcement, Trump spoke again with Xi, and they both agreed that the prospect of a meeting with Kim was a positive development and they reinforced their shared commitment to the full denuclearization of the Korean peninsula. Russian Foreign Minister Sergei Lavrov offered cautious optimism about the announcement, calling it a “step in the right direction.” A few days after the meetings in Washington, members of the South Korean delegation went to Beijing and to Moscow to brief the governments there on the talks, as well as to Tokyo, which has fully supported the North-South dialogue. The strategic realignment now occurring shows just how quickly the “unipolar world” view is doomed to disappear – in
spite of the resistance in Europe, from such dinosaurs as JeanClaude Juncker and Mario Draghi. What the world needs is a new, global security architecture, which guarantees the security of all the major players, and the minor players as well. Breakthrough: Donald Trump  and Kim Jong-un to Meet by May President Donald Trump has accepted an invitation to meet with North Korea’s head of state Kim Jong-un sometime in the next two months. The invitation was delivered during a White House meeting by the South Korean National Security Advisor Chung Eui-yong, who just completed a visit to Pyongyang, following up on the North-South diplomacy that took place during the recent Winter Olympics. In extending the invitation to President Trump, the North Koreans agreed to major concessions. They will freeze all further tests of ballistic missiles and nuclear weapons, to allow the talks to take place, while accepting that the United States and South Korea go ahead with their annual joint military maneuvers. Heretofore, they had insisted on the joint Chinese-Russian proposal for a “dual freeze” (freezing of North Korean nuclear and missile tests and of the annual US-ROK military drills).  The North Koreans also confirmed that they were prepared to begin talks on denuclearization of the Korean peninsula. In a background briefing at the White House, following the announcement of President Trump’s acceptance of the Kim invitation, a senior Administration officials emphasized that, since taking office, President Trump had called for a “new approach”, to avoid avoiding the mistakes of the past 27 years of dialogue and failed approaches to denuclearizing North Korea. Interspersed with his strident language and polemical tweets, Trump has offered to meet with Kim several times. While the anti-Trump mainstream American media has begrudgingly acknowledged the Trump-Kim diplomatic breakthrough, it was likely a combination of factors that led the North Korean leader to invite President Trump to meet. First of all, from the outset of his presidency, Trump repudiated the “strategic patience” policy of the Obama Administration, which came down to refusing to engage with Pyongyang, and letting the North Koreans develop nuclear weapons in order to have an excuse for a military buildup at China’s borders, and that together with tough talk about military action may have been part of the equation. But even more important was the coordinated pressure exerted by the US, China and Russia on
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the DPRK, based on a shared commitment to denuclearization, as economic pressures began to take their toll, particularly as China weighed in behind UN sanctions after the most recent missile and nuclear tests. China has deployed 300,000 PLA troops to the North Korean border region and has been purposely vague about why they have carried out the troop buildup.  At the same time, Kim Jong-in has asserted that, with the most recent ICBM and nuclear bomb tests, carried out last year, North Korea has completed its strategic deterrent.  In short, all sides can claim partial responsibility for the new diplomatic initiative. The talks would be a first step to calming the crisis, therefore the stakes in a successful meeting are enormous. Chinese Legislature Meets to Confirm  China’s Role in the “New Era” The ongoing annual meetings of China’s “Two Sessions”, of the National People’s Congress and the Chinese People’s Political Consultative Committee (CPPCC), have attracted a great deal of attention this year. They follow on the 19th CPC Party Congress in October of last year, during which President Xi Jinping laid out a broad policy for China to play a greater role in world politics and to introduce new ideas of governance based on new and old traditions in Chinese culture. The issues raised at the Sessions include an increased focus on China’s ambitious program to eliminate absolute poverty by 2020, together with the rural revitalization program to raise the standard of living of the large rural population. That will be a key step toward the 2050 goal of creating “a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious.” In a press conference on the sidelines of the Congress, Chinese Foreign Minister Wang Yi emphasized the new concept of diplomacy: “We will forge a new type of international relations that features mutual respect, fairness, justice and win-win cooperation and build an open, inclusive, clean and beautiful world that enjoys lasting peace, universal security and common prosperity:” Foreign Minister Wang underlined the fact that the “chief architect” of that diplomacy was President Xi himself, having traveled during the last five years to 56 countries and having hosted 110 visits by leaders of foreign governments. Given the development of China’s overall policy, it should be no wonder that the Chinese Constitution, which was last amended in 2004, would also be subject to change, incorporating the new ideas, as encapsulated in the formula “Xi Jinping Thought on Socialism With Chinese Characteristics for a New Era”. The change which caught the most interest from the hysterical Western media was the elimination of a limit of two terms for the president and the vice president. That limit had been established during the Deng Xiaoping period to indicate that the Maoist model was at an end. But no limits were set on reappointment to the positions of General Secretary of the CP (the highest-ranking official in China) and of head of the Central Military Commission (which Deng held). Now, they are all without limits. More significantly however is the fact that the Belt and Road Initiative and the “rejuvenation of the Chinese nation” policy which President Xi has initiated will take more than one generation to carry out. Given the opposition coming mainly from Western financial interests and geopoliticians, bringing this program to fruition will require a firm hand at the rudder. For this reason, the Chinese legislature has decided to give President Xi whatever time he needs to bring the country into its rightful role in determining a “shared future for humanity”.
U.S. Tariffs May Signal Positive Shift  in Economic Policy On March 8, surrounded by cheering steel workers, President Trump followed through on his call to impose tariffs on imported steel and aluminum. While details remain to be finalized, and some exemptions are likely, including for Canada and Mexico, the 25% tariff on steel and 10% on aluminum have triggered widespread despair among free trade advocates, especially in his own party. Among the casualties is his National Economic Chair Gary Cohn, the former Number 2 man at Goldman Sachs, and a rabid backer of free trade and deregulation. Cohn resigned on March 6, after Trump had rejected his efforts to push back against the tariffs. Politico said of the departure that “Wall Street is losing its main man in the White House,” while the New York Times pointed out that Cohn “served as a proxy for the business wing of the Republican Party,” referring to his alliance with free traders such as Speaker Paul Ryan and Senate Finance Committee chair Hatch. The deeper fear among supporters of free trade policies and neo-liberal economics generally is that Trump may be veering resolutely back toward the anti-Wall Street orientation which characterized his election campaign, when he repeatedly denounced the free trade deals, and speculative policies which were responsible for the 2008 crash, and the loss of millions of productive American jobs. That above all, ensured his victory in key “rust belt” states, that is, those hit hardest by the deindustrialization. Further, Gary Cohn was the leading opponent inside the Administration of two other goals stated by Trump: restoring Glass-Steagall banking separation, which the former top White House economic advisor vehemently opposes, and large-scale federal funding for major infrastructure. In fact, Cohn sabotaged the President’s infrastructure plans by pushing through a bill with little federal funding, making investments dependent on Public-Private Partnerships, which Trump does not like, and relying on 80% of public spending to come from cash-strapped state and local governments, which is unlikely to occur. Moreover, Cohn was a key force behind the recent “tax reform”, which is a boon for major corporations and banks. As soon as Trump finalized the tariffs, several steel companies, including U.S. Steel, rehired workers.  However, the tariffs alone will not revive collapsed industries, unless combined with a Glass-Steagall separation of the banks and a credit policy to provide funds for industry, to shift investment away from speculation on worthless financial instruments and into physical production. But with Cohn out of the way, it may be that Trump will be freer to take up the “nationalist”, American System ideas which were a central part of his appeal as a candidate, and revive American manufacturing power and productivity. That is what has Wall Street, and its allies in the City of London, panicked. Tariffs: Instead of Threatening Trade War, “the EU Should Shut up” Donald Trump’s announcement of tariffs on imports of steel and aluminum set off waves of protest from the EU Commission and economists decrying “protectionism” and issuing empty warnings of “retaliation”. A different viewpoint, however, has been voiced by German economist Heiner Flassbeck, the former chief economist of UNCTAD from 2003 to the end of 2012, who gave a number of interviews on the subject to German media.
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In comments to
Deutschlandfunk on March 3, Flassbeck noted that “when a country has a persistent deficit, it is justified, at some point, in taking counter-measures.” In the case at hand, the United States has run up deficits for 30 years now, while Europe has had “gigantic surpluses”, mainly due  to German exports. Previous U.S. Presidents, including Obama, have complained about German surpluses, he said, but Trump is the first to actually act to change it. Thus, Flassbeck ridiculed EU leaders, such as Juncker, who began wildly threatening to launch a “counter” trade war with the U.S., although the measures announced by Trump are only “pinpricks” and “ridiculously small”. Instead, he advised them to simply “keep their mouths shut for a while and see whether the situation will escalate.” What is clear for him is that “in the case of a trade war, the country with a surplus will lose, and the one with a deficit will tend to win.” As for Germany, Flassbeck pointed out that it has been able to generate huge trade surpluses for 30 years now, towards all other trade partners, because of two imposed undervaluations that made German exports over-competitive: a deliberate low wage policy and the low exchange rate of the euro against the dollar. Because of the internal austerity and “wage dumping”, he said, Germany exports quality goods at prices 20% below what they should be. “Germany is too cheap in proportion to its own productivity and to the exchange rate that we have with respect to the rest of the world.” It is also undeniable, for Flassbeck, that a partner with a huge trade surplus, like the European Union and especially Germany, “creates jobs at the expense of the other countries of the world.” Therefore, Flassbeck proposes that Berlin should not be discussing “counter-measures” to US tariffs, but should tell Donald Trump they are ready to “do everything they can to take down the trade surplus as soon as possible.” For this German economist, who was under secretary of Finances in 1998-99 under Finance Minister Oskar Lafontaine, the key question for the Europe-US relation is whether Europe is ready to implement an economic model that focusses on building up the domestic market, as the US is doing, instead of insisting that all of Europe must become “more competitive” -- as Mrs. Merkel repeats every day. Although Heiner Flassbeck did not mention this aspect, domestic growth would also help fight poverty in Germany itself, which has reached scandalous proportions for such a wealthy country. The most recent estimates, cited by Bild among others, are nearly one in five children, that is, almost 20%, are raised in poor families, while the number of single parents and retirees who are dependent on food banks to feed themselves and their families has doubled in 10 years.  “China’s Lending Is Not Politically Motivated” Friedrich Wu, an adjunct associate professor at the S. Rajaratnam School of International Studies, Nanyang Technological University in Singapore, has refuted the growing campaign to depict China’s Belt and Road Initiative as a new form of “imperialism,” in an article taken up in the Straits Times and in the South China Morning Post. To do so, he cites a study conducted by Americans at AidData, at the College of William and Mary in Maryland, which is widely considered to be the most comprehensive data set on China’s development financing on a global scale. AidData’s conclusion: about four-fifths of China’s development lending is on concessionary terms “at below-market interest rates”.
In commenting on that research, Adam Taylor of the Wash ington Post noted that it overturns widespread assumptions about Chinese foreign assistance. When one looks at Chinese aid that matches the strict, internationally agreed-upon definition of official development assistance, Taylor wrote, “it does not appear to be motivated by acquiring natural resources or propping up Beijing-friendly authoritarians.” Professor Wu continues, in his article, that Dr. David Dollar, a senior fellow at the Brookings Institution and a former U.S. Treasury official, reviewed the same data, and came to the conclusion that “Chinese lending in recent years is indiscriminate in terms of geography and quality of governance, suggesting that it is demand-driven rather than supply-driven by a Chinese masterplan.” Prof.Wu looked at the loans dispersed by the Beijing-based Asian Infrastructure Investment Bank in the first two years of its operations, which “further confirms the absence of a political agenda in China’s development financing. Notwithstanding the geopolitical rivalry between Beijing and New Delhi, of the 24 approved projects covering 12 countries with a combined credit volume of US$4.23 billion, India alone has bagged five projects totalling US$1.07 billion (or about 25 per cent)” Revive Lyndon LaRouche’s Call for Antimissile Cooperation with Russia In her March 9 international webcast, Helga Zepp-LaRouche brought up President Vladimir Putin’s March 1 announcement of the new strategic weapons systems developed by Russia, including those based on new physical principles. She urged listeners to seize the occasion to reread the Draft Memoran dum of Agreement between the United States and the USSR , released in March 1984 by her husband Lyndon LaRouche, and republished in the February 9, 2018 issue of Executive intel ligence Review . Issued one year after what had come to be known as the Strategic Defense Initiative was proposed by President Ronald Reagan, the memo called on the U.S. and the Soviet Union to collaborate in “the development of weapons based on new physical principles,” and to apply the same technologies to the civilian sector to provoke a science driver effect. That would then lead, LaRouche wrote, to an increase in productivity in both economies, but especially in the Soviet economy, and then to major technology transfers to developing countries, so they would no longer be used for proxy wars between the superpowers.  On that basis, cooperation among truly sovereign nation-states could take place, offering unlimited opportunities to participate in the benefits of technological progress for the mutual benefit of each and all. For Zepp-LaRouche, the spirit of that LaRouche proposal is reflected today in China’s win-win cooperation and new model of relations among major powers. The time has come, she said on March 9, for “a complete change in the strategic alignment”, opting for a new global security architecture, and doing “what my husband proposed with the SDI, i.e., make nuclear weapons eventually technologically obsolete.” That view is shared by others, including some who worked on the original SDI program. Dr. Peter Pry, who had served on the Congressional Strategic Posture Commission, the House Armed Services Committee staff, told EIR that he though the systems Putin had described in his March 1 address, “are all under development, but likely on the verge of being deployable.” Most importantly, he said, this presents a chance for a bi
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partisan strategic defense consensus; for which he believes the systems with earth-based interceptors should be dropped as clearly ineffective and obsolete, and space-based sensors and directed-energy should be prioritized. “Our best response is to revive the Strategic Defense Initiative.... A simple starting objective would be hardening the electric grid against EMP from any source,” Pry said. In a NewsMax column published March 5, Pry suggested that President Trump should “order a new Manhattan Project focused on strategic defenses that may become the basis for a new Republican-Democrat consensus that is politically sustainable”. Space-based defenses could render obsolete the growing offensive nuclear threats from all potential adversaries, he wrote. United Kingdom Complicit  in Saudi War Crimes in Yemen It was no accident that Saudi Crown Prince Mohamed bin Salman’s first trip to a Western country was to the United Kingdom. According to press reports, he left after three days with a deal for the Saudis to buy 48 Typhoon jets, manufactured by the infamous BAE, with which the Saudi monarchy has longestablished sordid ties. Labour Party leader Jeremy Corbyn blasted Prime Minister Theresa May during the Prime Minister’s Questions on March 8 over the lavish welcome for the visiting Crown Prince, charging that she has made the UK partly responsible for massive human rights abuses and possible war crimes in Yemen. He asked her whether she intended to demand from Bin Salman an immediate ceasefire in Yemen. He also demanded an end to British arms sales to Saudi Arabia. Speaking after the questions, Corbyn’s spokesman expanded on Labour’s position, saying arms sales and the involvement of British military personnel provided a level of complicity in the situation in Yemen. “Britain has not only increased arms supplies to Saudi Arabia dramatically since the start of the war, not only supports the war, as Theresa May said in the chamber just now, but British military personnel advise the Saudi air force and military on targeting -- and so there is a direct involvement in the conduct of the war,” he said. “Which as we know has led to very large numbers of civilian casualties and very clear evidence of the targeting of schools and hospitals. Very large numbers of children have been killed. “British military personnel are in the operations rooms where these military and bombing campaigns are being conducted. If they’re trying to avoid civilian casualties, it’s been a disastrous failure.” British activist Dan Glazebrook, who has long campaigned against London’s support for the Saudi war in Yemen, has provided interesting historic insight into the problem. In a commentary posted on RT on March 9, he attributes the British determination to engage in the war in Yemen to its centuryplus long policy of maintaining the Saudi royal family secure in their rule of the Arabian peninsula, knowing that their sectarianism and lack of popular legitimacy would make them forever dependent on outside colonial support. “The one potential thorn in the side to this plan has always been Yemen, whose population outnumber those of every other country on the peninsula put together, and whose historic civilization appears to give the Saudis an inferiority complex,” he concludes. “The British have always understood that an independent Yemen is the greatest threat to Western domination
of the Arab peninsula, and have consistently sought to smash the possibility every time it rears its head.” Rex Tillerson Tours Africa, Acknowledges China’s Contribution to Development Both in a March 5 speech at George Mason University before leaving for his five nation tour of Africa, and in his first remarks in Addis Ababa, Ethiopia, U.S. Secretary of State Rex Tillerson made it clear that, while Washington is (wrongly) critical of the financial aspect of China’s policy, one cannot deny its positive role in building infrastructure. In an attempt to counter most headlines on his remarks, Tillerson stated at a press conference with the head of the African Union Commission Moussa Faki on March 7, that “We are not in any way attempting to keep Chinese dollars from Africa.” However, he cautioned, “It is important that African countries carefully consider the terms of those agreements and not forfeit their sovereignty.” Interesting insight into the current Administration’s Africa policy was given at a State Department briefing by an anonymous official on March 2, who strongly criticized China’s loan policy, but also recognized the good work done. “China builds things,” the official said. “We don’t construct. And so in that regard China can play a helpful role. The other issue, too, is that China has some really good ideas on development in developing areas, such as how to do better healthcare, how to do water production. So those are things that are good. Also China did a good favor for us in Sudan, providing an engineer battalion to provide assistance to the UN operations there.” The official added that the Chinese have been invited to come to Washington “to talk about their programs in Africa.” Tillerson included in his trip two large countries, Ethiopia and Nigeria, which are both cooperating closely with China and are in the forefront of anti-terrorism efforts, a priority item on his agenda. At George Mason University, Tillerson praised Nigeria’s effort in the Multinational Joint Task Force fighting Boko Haram, a fight which had been sabotaged by the Obama Administration. While noting that private enterprises can help Africa develop, the Secretary of State added that “significant transcontinental infrastructure is necessary to support development, spur economic growth, and boost intraregional trade on the continent.” Nigeria, he said, “is going to be critical to how Africa succeeds as a continent.” He also recognized the need to better integrate African economies, and promote intracontinental trade, rather than just “trading across the transatlantic corridor.” Nigeria just hosted an international conference to launch Transaqua, the large infrastructure to save Lake Chad and create a vast network of infrastructure in central Africa. It would be a tremendous breakthrough if the United States were to join that effort, currently led by Italian and Chinese companies (cf. SAS 10/18)
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 German