E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 32, No. 18, May 3, 2018

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 32, No. 18, May 3, 2018

The “Asia Century” Takes Off The date April 27, 2018, will be remembered as a great moment in history. India and China pledged a new era of cooperation, while in Korea, a process was launched to end the 65 years of “no peace” since the Korean War. The summit in Panmunjeom between South Korean President Moon Jae-in and North Korean leader Kim Jong-un resulted in a friendly discussion and a “Declaration for Peace, Prosperity and Unification of the Korean Peninsula” which is beyond nearly all expectations (cf. below). U.S. President Trump welcomed the summit and reiterated his long-standing intention to meet personally with President Kim very soon. That will be the first meeting ever between the leaders of those two countries and the prospect is freaking out the neocons and neoliberals alike in the United States. (That by the way is likely not unrelated to the latest military provocations against Syria and Iran.) Russian President Putin, for his part, confirmed in a phone call with President Moon Russia’s intention to contribute to the peace process, in particular through implementation of infrastructural and energy projects. Another breakthrough, although less spectacular were the “informal meetings” that Chinese President Xi Jinping and Indian Prime Minister Modi held in Wuhan on April 27 and 28, taking a major step toward establishing a new bond of trust. Both leaders stressed that their countries account for nearly 40% of the total world population (2.6 bn. people), which gives them a very special responsibility for stability and economic development. While no formal communique was issued, it was made known that they had decided to strengthen economic cooperation, as well as people-to-people and military-to-military exchanges, and to enhance joint efforts to combat international terrorism. Conflicts remain, of course, including on border issues, as well as the role of Pakistan in the Belt and Road Initiative, but the trend is toward constructive dialogue and joint development. Highly significant is the two leaders’ intention to jointly develop Afghanistan, which is a hot bed of instability, terrorism and drugs. That was precisely the substance of a proposal Schiller Institute Chairwoman Helga Zepp-LaRouche had made three years ago during her speech to the Raisina Dialogue in New Delhi. Completing the picture, the 10 member countries of the Association of South East Asian Nations met in Singapore on April 28, and welcomed in the final communiqué “the improving cooperation between ASEAN and China” and the negotia
tions toward a code of conduct in the South China Sea. It will be recalled that ASEAN countries were a crucial part of then President Obama’s “Asian pivot”, which was explicitly directed against China and Russia, including militarily. The next major venue for consolidating the “Asia Century” will be the summit of the Shanghai Cooperation Organization on June 9-10 in Qingdao, China. Both India and Pakistan joined the SCO last year, which already included China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, with Iran, Afghanistan, and Mongolia having observer status. Korean Peninsula: The Spirit  of the New Silk Road Is Taking Over The summit between the North and South Korean Presidents in the demilitarized zone was historic for a number of reasons. It is a major step toward putting an end to the hostilities on the peninsula, which began in 1950, and ushered in the dark decades of the Cold War throughout the world. And it opens the way for the full participation of Korea in the Belt and Road Initiative, which would  lead to a new configuration in all of East Asia. The transformation was made possible by the coordinated efforts of China, Russia, Japan and (for the first time) the United States, together, of course, with the two Koreas. Japanese and U.S. policies toward Asia have both changed significantly in the recent period. The final Declaration for Peace, Prosperity and Reunification signed by Presidents Kim and Moon states unequivocally: “there will be no more war on the Korean Peninsula and thus a new era of peace has begun.” The first section of the document calls for reconnecting the people of Korea to “bring forward the future of co-prosperity and unification led by Koreans” by fostering groundbreaking advancement in inter-Korean relations. The second section states the intention to “eliminate the danger of war on the Korean Peninsula,” including “a complete cease of all hostile acts,” the transformation of the DMZ into a “peace zone,and frequent meetings of military officials and defense ministers, to begin in May. The third section calls for the establishment of a “permanent and solid peace regime.” This year marks the 65th anniversary of the Korean armistice agreement (no peace treaty was ever signed), and both North and South will announce the end of the Korean War and both sides will work toward the “common goal” of “complete denuclearization of the Peninsula.”
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They also agreed to “actively pursue trilateral meetings involving the two Koreas and the United States, or quadrilateral meetings involving China as well. As a first practical step, the two sides agreed to work toward the connection and modernization of the railways and roads on the eastern transportation corridor, going from the South to the Rason port, where Russia has already built a rail connection to Vladivostok, as well as between Seoul and Sinuiju, along the west coast to the Chinese border at Dandong. These rail connections would finally complete the Eurasian Land-bridge “from Pusan to Rotterdam” as proposed by Lyndon LaRouche in the 1990s. United States: The Mueller Investigation  Is “Irretrievably Tainted” The Intelligence Committee of the House of Representatives released its report on alleged Russian tampering the U.S. 2016 elections last week. As previously announced, it found no indication of collusion between Donald Trump or his campaign and Russia. However, it is otherwise full of anti-Russian accusations. The report also confirms that the document used by the FBI contained no intelligence from official U.S. agencies, but only “information” peddled in the dossier compiled by a former MI6 agent, Christopher Steele. The Democrats on the Committee wrote a dissenting report, which basically says that the investigation ended prematurely (after 12 long months?) and was not thorough enough. That view, however, is not widespread by many Democratic Party elected officials and the base. A former strategic adviser to Bill Clinton, Mark Penn, expressed their sentiments in an op-ed in The Hill on April 26. “The investigation was polluted from the beginning,” Penn wrote. “Former British spy Christopher Steele was a government contractor when he illegally leaked the dossier to Yahoo and lied about it; Mueller team members and FBI officials Lisa Page and Peter Strzok operated with such open hatred for Trump that they were removed from the investigation after managing key parts of it; and the heads of the FBI and CIA participated in spreading and vouching for a Trump dossier they never verified and yet used to spy on Americans.” The entire process of the Robert Mueller investigation is so “irretrievably tainted”, Penn concludes, that it should be shut down or challenged in court. The City of London, Britain’s Second Empire A film co-produced late last year by Tax Justice Network founder John Christensen and Michael Oswald, The Spider’s Web: Britain’s Second Empir e , lays bare the tremendous damage the City of London and its banks have done to the world economy since the 1960s. It proves wrong both those who believe Britain long since ceased to be an empire and has become an appendix of the powerful United  States., and those who think Britain’s offshore banking havens represent  a  manageable problem such as Swiss banking secrecy. The film is based in part on a 2011 book, Treasure Islands , by expert on British offshore havens Nicholas Shaxson, who is interviewed in the film. The workings of the U.K.’s dependent territories – such as the financial havens of Jersey, Guernsey, British Virgin Islands, Cayman Islands, Gibraltar, formerly Bahamas, etc. -- have been notorious for years. But The Spider’s Web makes a new case, showing that those havens, run directly by the Bank of England and the City of London, have drawn the world’s assets to London banks for 50 years, making the City again the world’s 
dominant financial center, able to loot the developing countries and drive the U.S. economy toward “financialization,” speculation over lending, and deregulation of Wall Street. Moreover, by establishing tax evasion sinks and rules enabling financial corporations and multinationals to pay minimal taxes and wealthy individuals to pay none at all, London has driven wealth inequality to unprecedented levels, with fabulous rewards for non-productive investment, and the growth of populism in opposition. In short, London has driven down growth, productivity, and productive lending and investment in economies throughout the world. A few examples: * 25% of all financial activity in the world takes place on British territory; *Capital flight from developing countries is $1 trillion a year and half of it goes to British financial centers, from which it is conduited to London banks; *Beginning with Chase Manhattan about 1970, London has cut U.S.-based major banks in on the flows, thereby contributing to American deindustrialization and bank deregulation (repeal of Glass-Steagall) as well; * Perhaps $50 trillion of global assets of all kinds “are owned by no one,” to quote co-producer John Christensen, an expert who became an “offshore haven double-agent” for more than a decade. The beneficial ownership of these assets has been rendered virtually impossible to determine, and of course no tax is paid on them; * Of the dozen top tax-evasion law firms in the world, Mossack Fonseca (Panama) is the only one not located in a British possession; * Three-quarters of the world’s hedge funds are headquartered in the Cayman Islands alone; * Starting with the Bank of Credit and Commerce International, or BCCI, in 1972, the Bank of England has harbored and protected banks funding terrorism and drugs. Central Banks’ Dilemma Grows  Amid Increasing Risk of Blowout Some officials at the Federal Reserve fear that the bank’s “tapering” course, as gradual as it has been, might still trigger an uncontrolled collapse of the bubble. Lael Brainard, a former US Treasury Under Secretary and current member of the Board of the Federal Reserve, has spoken against any but the most gradual possible increases in short-term interest rates in recently years. And yet, in a speech in Washington, D.C. on April 19 on the U.S. economy, she delivered what is, for a Fed governor, a fairly detailed warning that a default wave is threatening overleveraged corporate debt. While citing statistics and saying that “cyclical conditions have been strengthening” in the economy, as officials have claimed for nearly a decade, Lael Brainard pointed to “elevated asset prices” and “overleverage,” which means too much corporate debt. “Business leverage outside the financial sector has risen to levels that are high relative to historical trends”, she stated. “In the non-financial business sector, the debt-to-income ratio has increased to near the upper end of its historical distribution, and net leverage at speculative-grade [junk-rated] firms is especially elevated.” From March 2017 to March 2018, the number of bankruptcies of non-financial companies rose by 60%. Indeed, as our newsletter has already reported, non-financial corporate debt to GDP in the United States is now higher than at the height of the financial crisis, at 45.4% in the 3rd quarter of 2017). By October of last year, it had passed the one trillion mark.
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Brainard concluded, with extreme understatement: “As we have seen in previous cycles, unexpected negative shocks to earnings in combination with increased interest rates could lead to rising levels of delinquencies among business borrowers and related stresses to some banks’ balance sheets.” In other words, when the Fed blows up this corporate hyperleverage bubble while trying to reduce it with raising interest rates, the banking system will go into crisis again. The European Central Bank pointed to the same crisis when Mario Draghi announced April 27 that “an ample degree of monetary stimulus remains necessary (…) over the medium term”, justifying that policy with an “unexpected” slowdown of economic growth. The Bundesbank Made Billions on Greek Debt The German Bundesbank has earned €3.44 bn in profits since 2010 from the Greek sovereign bonds it holds, according to information reported on April 26 by Bild , which had seen the response given to a query submitted  in the Bundestag by the Green Party. Over the same time period, the Greek population has suffered intensely under the brutal austerity regime dictated by the European Union. The German tabloid explains that the European Central Bank decided in 2010 to purchase Greek government bonds, because no one else would. The holdings carried an agreed-upon yield, which the ECB then redistributed to the member central banks. While the German population was being told (including by Bild ) that they had to sacrifice to help the Greeks, the German Finance Ministry was in reality making a handsome profit from the scheme. Apparently, the German government’s position now is that if there is debt relief, it could come out of this 3.44 bn, but not the entire amount. The so-called EU bailouts overloaded Greece with an unpayable debt amounting to nearly €300 bn. Not one cent of that money arrived in Greece, it all went directly to French, German, British and other European banks. The bottom line is that the Greek “rescue package” was merely a second bailout of the bankrupt banks, following on the first one they received after the 2008 collapse. Macron Visit to Washington:   Much Show, Little Substance Seemingly oblivious to the new dynamic sweeping the world, French President Emmanuel Macron went to Washington on April 23 for a three-day visit to defend the “Old Paradigm. While his charm offensive appears to have had little impact on President Trump, neocons and neo-liberals in the U.S. Congress cheered him wildly during his address on Capitol Hill, and the anti-Trump media reveled in the opportunity to denigrate the U.S. President while lavishing praise on his French counterpart. Emmanuel Macron, who is facing increasing troubles in France, presented himself as a leader of the “democratic” world, throwing around words such as “freedom,” “equality,” and “opportunity”.  While touting his “leadership” in initiating the “successful” missile strikes against Syria on April 14, he also called for a strong response to Russia’s “destabilizing” presence in that country, and its alleged interference in elections in the West. Macron apparently considers himself as the one western leader who can use his charm to convince Trump to return the U.S. to the anti-scientific, anti-human agenda of the Paris Climate accord, as well as to accept the globalist demands for “free trade”. And, of course, he advocated for continuing the 
wars in the Middle East launched by Trump’s predecessors, George W. Bush and Barack Obama, by keeping a military presence in Syria, with the intent of removing President Assad and confronting an “aggressive” Iran. To his credit, while Trump appeared to be playing along with the media hype of a “bromance” between the two, he did not accept the  globalist consensus. While saying he would “consider” Macron’s proposals, he reasserted his intention to remove U.S. troops from Syria. And despite Macron’s effort to persuade him to stick with the existing nuclear treaty with Iran, it appears that Trump is prepared to withdraw from the agreement by his May 12 deadline. While receiving the French President and then the German Chancellor for a very short discussion on April 27, Trump was preparing for far more crucial summits with Presidents Kim Jong-un and Vladimir Putin, strengthened by positive developments between North and South Korea, and the report from the U.S. Congress finding there was no “collusion” between him and Putin in the 2016 election (cf. above). From this standpoint, Macron’s visit was little more than a harmless diversion. German Government Issues a Blank Check for Violations of International Law Helga Zepp-LaRouche has castigated German Chancellor Merkel and her government for supporting the April 14 missile strikes against Syria, which, was in fact just the most recent in a string of flagrant violations of the United Nations Charter and international law. “Mrs. Merkel characterized the air strikes by the USA, Great Britain and France – which were carried out even before the investigations could take place on whether chemical weapons had even been deployed and, if so, who was responsible for their use – as being ‘necessary and appropriate’,” Zepp-LaRouche wrote on April 28 “And the Defense Minister [Ursula von der Leyen] affirmed the readiness in principle for future such aggressions, saying that what ‘Great Britain contributed in this case from the air, we could also carry out. But we were not asked this time.’” Mrs. von der Leyen said that although she was certainly aware of the expert opinion that the Scientific Research Service of the Bundestag had released on April 18, which states that the military strikes of the 14th were a clear violation of international law, and represent a relapse into the “law of reprisals” or retaliatory strikes from the pre-World War One era. As Helga Zepp-LaRouche points out, the report states that with these strikes, “the principle of ‘legality under international law’ was abandoned, in favor of a subjective ‘ political moral legitimacy ’, which, in turn, constitutes a violation of the prohibition of force under Article 2, No. 4 of the UN Charter. Thus, the air strikes ‘ultimately represent a blatant return to a form – thought to have been vanquished under international law – of armed reprisals in ‘humanitarian garb’.” Such reprisals, Helga Zepp-LaRouche continues, “also known as gunboat diplomacy, were an accepted practice before the First World War, and also occasionally between the wars. After the horrific catastrophe of the Second World War, they were banned by law and replaced by international law as laid out in the UN Charter.” The strikes were carried out in the absence of any issue of self-defense to justify them, and of any resolution from the UN Security Council, the report notes. The UK government did present its legal justification in a Policy Paper of April 14, which amounts to the usual arguments for “humanitarian intervention” and R2P (responsibility to protect), but the German ex
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perts reject those grounds. They note that the admissibility of a humanitarian intervention is highly contentious because of the high risk of abuse and cannot be considered as a valid exception in common law to the ban on force under international law. However, for Zepp-LaRouche, there is a deeper reason why the German political class has supported the military attacks. And that is because they refuse to expose and break with the policy of support for various radical Islamist groups which the western powers have adopted since the 1970s, in order to use them as tools against those considered the enemy, such as the Soviet Union at the time, and to effect regime changes. She then goes on to review those operations, before concluding that when the German government sees no problem in wrecking international law as established after the Second World War, “we urgently need a new policy in Germany.” Western Governments Block Reconstruction  of Syria, As Aleppo Recovers and Raqqa Festers The continued refusal of the European Union, the United States and their allies in the Arab world to commit to postwar reconstruction in Syria became all too evident at two conferences dealing with the issue last week. A “donors” conference held in Brussels featured a yet-to-be substantiated commitment to keep funding relief programs for the 13 million Syrian refugees, mostly those in Jordan, Lebanon and Turkey, but rejected any programs for rebuilding Syria’s destroyed cities, or its agricultural and industrial sectors. “There will be no funding before the political process has begun,” the EU’s chief coordinator of foreign affairs, Federica Mogherini, stated, warning Russia and Iran at the same time to stop obstructing a timetable for the removal of Syrian President Bashar al-Assad. In the United States, the Congress decided not to fund any projects in Syrian regions that “are under the control” of  Assad. A similar message came out of a conference in Paris on April 26, with officials from France, Germany, Great Britain, Saudi Arabia, Jordan, etc., namely, that it was up to Russia and Iran to allow the start of a peace process in Syria by exerting pressure on Assad. Only a few days before, on April 18, a perfidious Saudi air strike with laser-guided missiles had killed acting President Saleh and his entourage near the city of Howeida. That atrocity was denounced by the UN but was given no special attention at either the  Brussels or Paris events. Instead, Saudi Arabia is considered a “prominent” player in whatever design the western powers have for the region. Russia, on the contrary, is already supporting the rebuilding of parts of Aleppo with the supply of construction materials, earth-moving machines and trucks. Maj. Gen. Igor Konashenkov, the Russian Defense Ministry spokesman, reported on March 31 that the city, finally liberated from the jihadis in Dec. of 2016, is successfully recovering. “There are markets, social institutions, schools and hospitals,” he said. “More than 800,000 Syrians have returned to their homes and live in peace.” Rudskoy had reported earlier that the returnees included some 3,800 people who had originally evacuated to Idlib with the jihadis but have since returned through a corridor set up by the Russian-Turkish-Iranian Joint Coordination Center. The situation is unfortunately very different in Raqqa, which was “liberated“ from ISIS six months ago by U.S. backed Kurdish-dominated militias. The Washington Post confirmed that in an April 23 article headlined, “The danger lurking in Raqqa’s rubble”. It shows that the city remains razed and unfit for human life, with next to no rebuilding underway, and thousands of corpses unrecovered (“most assumed to be of non-combat
ants”). “The city has no running water or electricity, and there aren’t enough public employees to defuse the hundreds of explosives planted by the militants.... The destruction of Raqqa and its slow recovery are contributing to a growing sentiment here that the United States wrecked the city but is unwilling to take responsibility for putting it back together.” Ukraine: Protests against Human Rights Violations of PSPU On April 26, the leaders of the Progressive Socialist Party of Ukraine (PSPU), Natalia Vitrenko and Vladimir Marchenko, were attacked by several self-styled Nazi thugs and doused with kefir. The two opposition figures were leaving a courtroom in Kiev, after the judge had dismissed their suit against the police for standing by when a gang of former members of the fascist Azov Brigade had attacked and defaced their apartments one year ago, on May 9, 2017 (cf. SAS 20/17). Just one day before, the PSPU had released a statement protesting the Kiev authorities’ refusal to recognize the PSPU as a legitimate party authorized to take part in the electoral process, and their overall political repression of the opposition, which is reflected in the incident reported above. The statement concludes: “The PSPU Central Committee believes that, instead of democracy, a Nazi dictatorship is being established in Ukraine, which is incompatible with the concepts of democracy and democratic elections.” The European Union has generally turned a blind eye to the fascist/neo-nazi machinations in Ukraine, in spite of many protests. Nonetheless, on April 24, the EU Commission Vice President and High Representative for Foreign and Security Policy Federica Mogherini replied to a query made last Feb. 20 by Marco Zanni, a member of the European Parliament, as to whether she considers the case of the PSPU to be “a serious violation of freedom of thought and political expression.” While noting that she cannot speak about an ongoing judicial procedure, Mogherini answered that she is aware of the case and that Ukraine is expected to comply with democratic rules, including those on chartering and activities of political parties. In the United States Congress, there has been much more outrage, but still very insufficient, about Washington’s support for Kiev. Thus, on April 25, 56 members of the House of Representatives issued a letter to then acting Secretary of State John Sullivan calling for the U.S. to condemn the Ukrainian government’s open support for Nazi gangs, and detailing that support in several cases. The bipartisan Congressional letter, initiated by Democratic Reps. Ro Khanna of California and David Cicilline of Rhode Island, denounced both the Ukraine and the Polish governments for passing laws defending Nazis and Nazi supporters in World War II, but focused on the continuing fascist acts backed by Kiev. They report that Ukraine’s 2015 memory laws glorify “Nazi collaborators, and make it a criminal offense to deny their heroism.”
E.I.R. STRATEGIC ALERT        www.eir.de  Published by: E.I.R.GmbH,  Bahnstr. 9a, 65205 Wiesbaden Tel.: 0611/73650, Fax: 0611/9740935, 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