E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 32, No. 13-14, March 29, 2018

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 32, No. 13-14, March 29, 2018

Donald Trump Outflanks British Empire’s Attempt to Provoke New Cold War British Prime Minister Theresa May and her government had positioned themselves to lead the “free world” into a merciless crusade against Russia, after accusing the wicked Kremlin of poisoning a former Russian spy Sergei Skripal and his daughter in broad daylight on the streets of Salisbury. Despite the refusal of the British authorities to present any evidence of the charges, the cold war propaganda reached new heights, as the EU hastened to declare their solidarity with Theresa May and NATO secretary general Stoltenberg hysterically warned that Russia could deploy nuclear weapons next. But then, the ploy was dealt a setback on March 21 when Donald Trump called Russian President Putin to discuss urgent strategic issues and to congratulate him on his election victory. If that weren’t bad enough, from the standpoint of the cold warrior geopoliticians, Trump went on to tell reporters that “we had a very good call, and I suspect that we‘ll probably be meeting in the not-too-distant future to discuss the arms race, which is getting out of control,” and “also to discuss Ukraine and Syria and North Korea,” among other issues. Trump later tweeted, once again, that “Getting along with Russia (and others) is a good thing, not a bad thing....“ His reference to the dangers of a “new arms race”, in addition to his announcement of an upcoming summit meeting with Vladimir Putin, is a key point, as the Russian President himself had addressed that danger in his post-electoral victory speech, which Trump then explicitly welcomed. Nonetheless, under increasing pressure from London, the White House made the concession on March 26 of expelling 60 Russian “intelligence officers” from the United States in response to the “Skripal affair”. According to leaks published by various media, top White House advisers had warned Trump not to congratulate Putin during the call. Whoever that was, by the next day, National Security Adviser General H.R. McMaster had been fired and replaced by John Bolton, in order to consolidate a loyal team. Just over one week earlier, Trump had dumped his secretary of state Rex Tillerson, reportedly also because of differences on Russia and China in particular, but also Syria. When White House press secretary Sarah Sanders was bombarded with hostile questions after the announcement of the Putin-Trump phone call, she indirectly restated Donald Trump’s fundamental opposition to to “regime change” operations, stat
ing that Putin had been duly elected in Russia, and “We don‘t get to dictate how other countries operate. Meanwhile, the Chinese have not missed the importance of the “overkill” campaign against Russia from the West, as reflected in articles in Global Times, which note that this has drawn the two countries closer together, to better protect their independence and sovereignty. The same “bullying” tactics could well be used against China, the editorial board wrote on March 16. Moreover, a summit is planned for very soon between the leaders of Japan, South Korea and China, which is a breakthrough, given the rocky relations of the past, in particular in the context of President Obama‘s “Asia Pivot” targeting Russia and China. And the North Korean Minister of Foreign Affairs Ri Yong-ho is scheduled to visit Russia  before the end of April. China’s “Two Sessions” Consolidate Rejuvenation Program and Belt and Road Initiative China’s National People’s Congress and the Chinese People’s Political Consultative Conference concluded their lengthy 15-day session on March 20 with a major speech by Chinese President Xi Jinping. Over the course of the proceedings, the two bodies discussed many of the proposals put forward by last year’s 19th CPC Party Congress in charting a route forward for the nation up until the year 2049, when China will be celebrating the 100th anniversary of the founding of the People’s Republic of China. The legislature elected new officials in the government and eliminated term limits for the president and the vice president (cf. SAS 11/18). The new government includes people who had worked closely with President Xi during his earlier career and are very much in tune with his thinking. His major economic adviser, Liu He, who previously held no government position, was elected as one of the vice premiers. Wang Qishan, who was Xi’s pointman on the anti-corruption campaign, was elected vice-president. Wang also has extensive experience in dealing with the United States on financial and commercial matters. At his concluding press conference, Chinese Premier Li Keqiang stated that China would continue on the road of “reform and opening up,” and would make more investment opportunities available for foreign capital and facilitate its entry into the Chinese market in order to more rapidly develop into an “innovation economy.” “Innovation” and “creativity” were key words during the congress. At the same time, China will consolidate
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financial and insurance regulators into a single entity in order to better guard against financial risk. And it will continue to prioritize poverty reduction to reach the goal of the elimination of abject poverty in the country by 2020. As part of the anti-corruption drive, it was decided to establish “supervisory commissions” to monitor public officials, and Xi introduced an oath to the Constitution to be taken by all government officials, establishing a rule of law basis for their actions, which Xi was the first one to take. In his concluding speech to the two sessions, President Xi stressed the importance of the long history of Chinese thought and philosophy, which had made it one of the earliest examples of an “innovative society.” “The Chinese people‘s magnificent scientific achievements such as paper-making, gunpowder, printing and compass have profoundly influenced the progress of the human civilization,” Xi said. He appealed to this sense of creativity in the Chinese people to reach the goals set out by the middle of the century. Noting the hardening international environment, he warned the Western nations against any attempts to split any part of Chinese territory from China, and soundly rejected the notion that China was seeking some form of “hegemony” or “expansionism”. In conclusion, he reiterated his appeal to the Western countries to work to replace “geopolitics” with a “community of shared interests”. Former Top Regulator Sheila Bair  Warns of Blowout as Fed Pursues “Tapering” One week before the planned interest rate increase by the Federal Reserve, a strong warning about the current unsoundness of the U.S. banking system and the explosive quality of the corporate and household debt bubbles was issued by Sheila Bair, the former head of the United States FDIC (Federal Deposit Insurance Corporation). In her interview to Barron’s, the magazine referenced Bair’s set-to with Alan Greenspan 13 years ago, over her warning then of a subprime mortgage meltdown. Central banks are caught in the dilemma that if they continue “Quantitative Easing”, inflation can get out of control, but if they stop it (so-called “tapering”), the financial bubble and megabanks are set to explode. Nevertheless, the Federal Reserve took its decision long ago and on March 22 raised the rates from 1.25-1.50 to 1.50-1.75, in a plan that should bring them to 3% in 2019. No one knows exactly when the monetary squeeze will trigger a financial blowout. However, Bair noted that “An independent research arm of the U.S. Treasury Department has found that the financial system still would be in great peril if one or more big banks fail.” She is referring to the Treasury Office of Financial Research, which Congress is attempting to eliminate. She added that there is “soaring corporate debt with overvalued collateral: loans that finance corporate leveraged buyouts, and general corporate debt. Any type of secured lending backed by an asset that is overvalued should be a concern. That is what happened with housing.” As if to illustrate the point, American Banker reported on March 19: “More and more nonbank lenders are taking advantage of the strong appetite for short-term, floating-rate debt to bundle bridge loans into collateral for vehicles called commercial real estate collateralized loan obligations, or CRE CLOs.... This lending is white hot.” And Bloomberg News March 14 reported a study by Thomson Reuters finding that U.S. non-financial corporate debt has actually now reached $19 trillion, roughly equal to U.S. GDP
for the first time in the history of such records going back to World War I. With insight, Sheila Bair concludes her interview by praising China: “Banks and regulators alike in China are increasingly concerned about risk management, credit quality, and nonperforming loans. Prudence and sustainable growth are becoming watchwords. I‘m struck by the difference in the tone of the political leadership -- with Xi talking about deleveraging, constraining asset bubbles, and accepting short-term tradeoffs to growth for long-term stability. Contrast that to the U.S., where we have a move to deregulation and borrowing more.” London’s Multifarious Clandestine  Operations Coming to Light Outside of the mainstream media, numerous political observers have blasted the blatant attempts by the British government to stir up a new round of Russiaphobia. They point to the inconsistencies of the official version of the “Skripal affair”, beginning with the lack of evidence presented, and with the absence of any cui bono from the side of the Russians. While the government immediately drew conclusions on the guilty party, the Metropolitan police has warned that it could take “months” before their investigaion is concluded, while the Organization for the Prevention of Chemical Weapons, which was only allowed in well over two weeks after the attack, will also need weeks to carry out their tests. Nonetheless, British Defence Minister Gavin Williamson said on March 15 of Russian protests that “Russia should shut up and go away,” while Foreign Secretary Boris Johnson dared to compare Vladimir Putin presiding over the next World Cup to Hitler at the 1936 Berlin Olympics. So, they are clearly unhinged. But that is not the only headache for Her Majesty’s government. Indeed, the British have also come under attack for other, dirty secret service operations. It surfaced last week that Cambridge Analytica, a data mining firm used by the Trump campaign, improperly obtained data from Facebook to influence the 2016 presidential elections. Immediately, a barrage of attacks was launched against both Donald Trump and Facebook. However, such attacks are very serious diversions from the real culprits, according to a bombshell article published March 20 by investigative journalist Liam O‘Hare , entitled “SCL, a Very British Coup” in Bella Caledonia. ( http://bellacaledonia. org.uk/2018/03/20/scl-a-very-british-coup/). He looks into the parent company of Cambridge Analytica, called SCL (Strategic Communications Laboratories), whose board is made up of “an array of Lords, Tory donors, ex-British army officers and defense contractors,” offering military grade psy ops as a private company. The two companies, according to The Observer , are for all practical purposes one and the same. The organization boasts that it has conducted behavioral change programs in over 60 countries with clients including the British Ministry of Defense, the U.S. State Department, and NATO. SCL has a contract with the U.S. State Department to counter terrorist propaganda and disinformation. And it participated in “countering Russia propaganda operations” in support of Ukraine for NATO. Mark Turnbull, who heads up SCL Elections, used to head a Pentagon-funded PR campaign in occupied Iraq which included production of fake Al Qaeda videos. The president of SCL is Sir Geoffrey Pattie, the Defense Secretary in Margaret Thatcher‘s government.
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O‘Hare ends his profile by noting that the “shadowy actors using dirty tricks in order to rig elections”, are not in Moscow but are “British, Eton educated, headquartered in the City of London and have close ties to Her Majesty‘s government.“ On March 21, Prime Minister May was asked in Parliament about the role of the UK in “subverting the democratic process in another country,” by Ian Blackford of the Scottish National Party, who went on to document numerous ties between Cambridge Analytica and May‘s Tory Party. In addition, Julian Assange of Wikileaks published a dozen tweets on March 22, concerning the role of the UK in the coup against Donald Trump, naming a number of British individuals, including Christopher Steele, Claire Smith of the U.K. Joint Intelligence Committee, and Sir Andrew Wood, former U.K. Ambassador to Russia. Theresa May Leads the Charge against Russia, and the EU Ends Up Going Along On the surface, it appears grotesque: Great Britain has opted to leave the European Union, but is able to dictate Russia policy to EU members as if they were British puppets. That is what formally occurred at the March 22 meeting of the European Council, whose final communique reads: “The European Council condemns in the strongest possible terms the recent attack in Salisbury, expresses its deepest sympathies to all whose lives have been threatened and lends its support to the ongoing investigation. It agrees with the United Kingdom government‘s assessment that it is highly likely that the Russian Federation is responsible and that there is no plausible alternative explanation. We stand in unqualified solidarity with the United Kingdom in the face of this grave challenge to our shared security.” Lithuanian President Dalia Grybauskaité told the press that Theresa May had delivered “reliable” information which “influenced our decision, which has been unanimous, to strengthen the text of the final conclusions and use the intelligence services‘ formulation on the Russian threat and relations.” Besides the bizarre method of accusing a foreign power on the basis of information not disclosed to the public – which might therefore be non existent -- - European leaders were at first reluctant to worsen their relations to Russia. dFrance’s behavior has been criticized by the left-liberal website german-foreign-policy.com . According to an article posted there, France and Britain have formed a “new Entente Cordiale” to replace the traditional Franco-German axis in Europe, and Berlin “is maneuvering: On the one hand, it is closing Western ranks against Moscow and, on the other, it is unwilling to cede leadership of EU foreign policy.” This is one of the many conflictual issues between Paris and Berlin that arise in the course of the dubious process of “European integration”, which will be compounded in the case of a German government coalition that squabbles every other day and when it is unclear whether the next Italian government will be pro or anti-EU. French Population Wakes up to Emmanuel Macron’s Social Nightmare On March 22, over 200.000 public sector employees – railway workers, nurses, teachers, air traffic controllers and many others -- took to the streets in France to protest against the government’s social and economic reform policies. In Paris alone, some 50.000 demonstrators showed up, with actions staged in 180 other cities and an overall turnout larger than expected.
The date of March 22 was deliberately chosen to echo the start of the nationwide protests in 1968, that led to the country’s largest strikes ever and to the notorious street battles between police and students 50 years ago. This time, in order to carry out protests without paralyzing the entire economy, the trade unions will launch a series of rolling strikes (2 days out of 5) starting April 2 and scheduled to continue until June 28. They warn that the Macron-Philippe government intends to do away with the last remnants of public services and of social protection. The population is generally divided: most think the reforms are unavoidable and necessary, while backing those who oppose them. In the same way that the reforms of the labor laws were rammed through by decree last September, the reform of the railway system is set to be quickly imposed with no debate to speak of in the Parliament. Especially under attack now, the social regime of the railroad workers. Over the years, as compensation for strenuous work schedules, generally poorly paid, including week-ends and holidays, and after long labor battles, the railroad workers were granted some protection: they cannot be fired and they are allowed to take early retirement, albeit without a full pension (cf. SAS 9/18). However, the privatization proposed by the government might not be as profitable as it may seem. A rail expert, quoted by the French paper Capital, found that if all these workers were paid according to the standards of the private sector, the cost would be far higher than it is today… Note also that the world’s best rail system remains the Swiss one, 100 % run by the state. Next on the chopping block after the railroad system, are unemployment benefits and the pension system. Former French presidential candidate Jacques Cheminade and a delegation of his Solidarity and Progress Party participated in the Paris demonstration and distributed a leaflet which denounces the socalled reforms as a thin disguise for privatization of public services and social protection. The French social system is based on the notion of solidarity. Every Frenchman pays social contribution proportional to his income, and in return, everyone is covered by the social safety net. Quoting from the preamble of the French Constitution, the leaflet emphasizes that Macron’s policy is clearly unconstitutional. It also recalls the fact that in 2013, Cheminade had explicitly warned Macron, then advisor to then President François Hollande to reject the recommendations of a confidential note by JP Morgan, which urged countries in the euro zone to change the Constitutions adopted after WWII, that enshrine the basic rights of the citizens. Today, Emmanuel Macron has to choose: will he be the President of the French people or the President of the banks? Ominous “Experts” Recruited  by New German Finance Minister For weeks, fiscal conservatives mourned the fact that the Finance Ministry in the new government was to be awarded to the SPD junior partner. Deep concerns were voiced that the designated new Minister, Olaf Scholz, would deviate from the strict budgetary austerity (the “black zero”) of his predecessor Wolfgang Schäuble of the CDU. Those concerns proved to be superfluous, as the commitment to the “zero deficit” is part of the coalition agreement, which Mr. Scholz is obliged to respect, and two recent appointments to top posts in his ministry indicate that he will do so. First of all, he recruited as deputy minister Joerg Kukies, a banker at Goldman Sachs since 2001 who most recently led the
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German branch of the multinational. Apart from being a Social Democrat, Kukies is said to be “well-connected internationally,” one who will work with the “financial markets”, notably for the “consolidation of the European banking sector” and to deal with “market regulation”. He may also serve as a sherpa for international meetings, in negotiating deals with the finance ministries of other countries. In a  recent survey, 64,9% of the Germans polled were against the nomination of an international banker to the ministry. On top of that, Scholz re-hired Werner Gatzer, the original architect of the “black zero” approach, who had begun working on that concept back in 2005, under then Finance Minister Peer Steinbrück (SPD), and then under his successor Wolfgang Schäuble (CDU). When the latter resigned after the national elections in Sept. 2017, Gatzer took a new job at Deutsche Bahn. Now, he will serve as a watchdog for Olaf Scholz, just in case the new minister might attempt to soften the strict budget austerity policy. Nigerian Industry-Labor Alliance Objects to Free Trade Agreement The European Union massively lobbied for the African Union countries to adopt a major free trade agreement, which would create a single continental market for goods and services, and dismantle trade barriers among member countries. By March 21, 44 of those countries had been lured into signing the “African Continental Free Trade Area” (AfCFTA) during a summit in the Rwandan capital of Kigali. However, Nigeria and 9 other governments refused to join. Citing strong opposition to the agreement coming from industry as well as from labor in his country, Nigerian President Muhammadu Buhari canceled his trip to Kigali on a short notice, declaring that more discussion and a more thorough study of the proposals for free trade were required. The EU nevertheless lauded the implementation of the agreement in a March 22 statement by Federica Mogherini, “in the spirit of the African Union-European Union partnership”. In fact, Brussels hopes to sign an Economic Partnership Agreement with the AU, under which African countries would also lift their customs duties on EU products. But at a session of the European Parliament two years ago, Buhari had already argued that such measures would ruin agriculture and industry in his country and prevent it from industrializing, because the country is not yet strong enough to withstand competition from outside. Therefore, initial investments needed into onsite farming and manufacturing sectors are immense, and their products could not be competitive in terms of price. In addition to Nigeria, the leaders of  Algeria, Botswana, Burundi, Eritrea, Guinea-Bissau, Namibia, Sierra Leone, South Africa and Tanzania did not sign the agreement. The absence of Nigeria and South Africa, as the two major African countries, is particularly significant. Sani Yan Daki, deputy director general of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), pointed out to Germany‘s Deutsche Welle news service just ahead of the Kigali summit, that Nigeria is still a developing economy and does not have the infrastructure necessary for manufacturing. “Who is going to buy Nigerian products? Nobody is going to buy them. Industries in Nigeria will collapse.” Economist Augustus Niwagaba from Uganda’s Makarere University also pointed out that “it is important to first understand the impact of opening the borders” in order to avoid killing manufacturing. Although the proponents of the free
trade agreement argue that subsidizing nations industries will prevent them from becoming competitive on an African or a global scale, Niwagaba disagrees. In fact, the history of protective measures shows the contrary. Commenting on the Kigali event on Twitter , President Buhari remained firm in his opposition, saying: “We will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to Nigeria becoming a dumping ground for finished goods.” Biomass Fraud Creates Ecological Catastrophe The German government‘s obsession with promoting so-called “renewable” energy sources, such as solar, wind and biomass, has created an intolerable situation in the lumber industry and for forestry. Indeed, the demand for wood pellets for heating has been artificially boosted through subsidies to the point that the branches of felled trees, other forest debris, sawdust, etc., no longer suffice, and entire wooded areas are being felled to cover the shortfall. As owners of large forests are now cutting down high quality trees to be turned into pellets for household heating and local biomass power plants, the wood-processing industry is increasingly obliged to import quality raw material from Africa, Ibero-America and Asia. That, in turn, drives up the prices for building lumber significantly, whereas the public subsidies granted to the biomass sector, emphatically including the pellet-producing companies, keep consumer prices artificially low, even though energy generated from biomass is notoriously low in efficiency and should be high-priced. And the situation is projected to get much worse: the huge demand for biomass in Germany expected sometime after 2030 could not even be covered by all the forests in the country taken together. Logically, imports will increase at the expense of the ecology in other parts of the world. The irony it that in some cases, the lumber industry has allied with Greenpeace and such groups to protect the forests from the pellet-making industry and biomass fundamentalists. Executives in the woodprocessing industry are furious over the German government‘s untenable “renewables” strategy. What is no less absurd is that quality logs are to be exported in increasing volumes, even in rail freight containers, from Germany to far-away China and other parts of the world, to be used in building projects there. The forest owners in Germany, which include state forestry agencies such as in Bavaria, are happy to get the high export revenues. All of this was exposed in a special, carefully researched documentary with aerial photographs of the situation in select forests, broadcast on Bavarian TV on March 21. To our Subscribers: Due to the Easter holiday, our next issue  will be dated April 12, 2018.
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