E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 32, No. 29, July 19, 2018

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 32, No. 29, July 19, 2018

Trump-Putin Summit:  The New Paradigm in Action The extraordinary summit on July 16 between Presidents Donald Trump and Vladimir Putin marks a phase-shift in history. It is the result of a long, difficult battle, led in no small part by Lyndon LaRouche over the past 50 years, to create an alignment of interests among nations and cultures as the necessary force to usher in a just, new world economic order freed of geopolitics and offering mutual development to all peoples and nations. It is thus a reflection of the “new paradigm” that is sweeping over the world and has become unstoppable. Presidents Trump and Putin met the press after a two-anda-half-hour private discussion and a luncheon with their aides. They both confronted the “foolishness” and “danger” of allowing the relations between the two leading nuclear powers to continue to deteriorate. Only through dialogue and cooperation, they both stressed, can the dangers of war, radicalism and terrorism be averted and solutions to regional conflicts, cybersecurity threats, etc., be sought. While disagreements between the two were discussed and frankly recognized, including on Iran and Ukraine, they intend to move ahead to cooperate on shared interests. In his opening statement, Vladimir Putin noted that “the current tension, the tense atmosphere, essentially have no solid reason behind it. The Cold War is a thing of past. The era of acute ideological confrontation of the two countries is a thing of remote past....” He proposed setting up three different panels of experts to work on solutions to the fundamental issues, one on cyber affairs (to get to the truth of so-called charges of Russian meddling in elections), one of business leaders to further economic cooperation, and a third of political and military experts to look for ways to improve relations. Donald Trump, in his statement, said he had determined to “continue the proud tradition of bold American diplomacy. From the earliest days of our republic, American leaders have understood that diplomacy and engagement is preferable to conflict and hostility.” He said that the relationship between the two nations “has never been worse than it is now. However, that changed, as of about four hours ago,” adding that  “I would rather take a political risk in pursuit of peace than to risk peace in pursuit of politics.” Important international issues discussed included Iran, Ukraine and the progress made on the Korean Peninsula, which the two leaders welcomed. On Syria, both noted with
satisfaction the defeat of ISIS, but also stressed the importance of humanitarian aid for the country, and creating the conditions for the refugees to return. Trump and Putin agreed that the National Security Councils of both the United States and Russia would hold regular meetings to follow up on the issues discussed during the day. Trump also mentioned to the press, before the meetings, that the two leaders were also cooperating with „our mutual friend President Xi.“ All peace-loving citizens of the world would welcome such dialogue and a reduction of tensions. Not so those forces still attempting to save the unipolar world and its trans-Atlantic financial system on the verge of collapse. Given the general hysteria in the mainstream media reports, we would strongly urge our readers to watch the press conference themselves online, and/or to read the actual transcripts, rather than the spins put on them. All the Huffing and Puffing... During the press conference, the American journalists could only bring up Russian meddling in the presidential elections, challenging the U.S. President to denounce Mr. Putin “with the whole world watching”. Trump answered by asking to see the evidence: why did the FBI never examine the supposedly hacked DNC server, why was the FBI told to leave the office of the DNC? Show me the facts, he said. As for Putin, when asked if Russia had any “compromising material on President Trump or his family”, he laughed, explaining that he knew nothing of Trump being in Russia previously, and concluded that “it‘s difficult to imagine an utter nonsense of a bigger scale than this.” The Russian President also made an interesting legal proposal for investigating the claims of Russian meddling and other contentious issues. Those running the coup against the elected President of the United States – and are losing -- are now beside themselves with rage. Former CIA chief John Brennan, with whom President Obama used to draw up lists of terrorist suspects to assassinate, perhaps best demonstrated the hysteria among these layers, tweeting: “Donald Trump‘s press conference performance in Helsinki rises to and exceeds the threshold of high crimes and misdemeanours. It was nothing short of treasonous. Not only were Trump‘s comments imbecilic, he is wholly in the pocket of Putin.”
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Many other Democrats, and a good number of Russophobic Republicans as well, joined in with similar rhetoric. One is reminded of the story of the “three little pigs”: “I’ll huff and I’ll puff and I’ll blow your house in”. They can protest all they want, that won’t stop the dynamic now sweeping the world. Again, do read the original sources on the comments by Donald Trump and Vladimir Putin. Russiagate Protagonists Launch Last Minute Attempt to Poison the Trump-Putin Summit On July 13, just three days before the planned meeting between U.S. President Trump and Russian President Putin, Deputy U.S. Attorney General Rod Rosenstein announced the indictment by Special Counsellor Robert Mueller of 12 Russians for allegedly hacking into the Democratic National Committee (DNC) and various Clinton campaign websites during the 2016 presidential campaign. All twelve were identified as members of the GRU, the Russian military intelligence agency, accused of engaging in a systemic effort to disrupt the election. Of course, since none of the GRU indictees are likely to present themselves before a court of law in the United States, Mueller and his team who have been investigating so-called Russian meddling for well over one year now, will never have to prove any of the charges. But it provided the occasion for a new outcry outcry against the Helsinki summit, with some, such as Charles Schumer, the Democratic minority leader in the Senate, and Republican Senator John McCain, demanding that either Trump aggressively confront Putin with this new „evidence“, or cancel the meeting. The Mueller team‘s findings were countered by former NSA Technical Director William Binney, who described the evidence in the indictment as „a fabrication.“ On behalf of the Veteran Intelligence Professionals for Sanity (VIPS), Binney had helped to conduct the only forensic evaluation of the „hacking“ of the DNC computers, and they concluded that the leaked emails resulted from an „inside job“, and not from hacking (cf. SAS 2, 6/18 and 35-35/17). After the latest move by Mueller, he recalled that the FBI “never even bothered to examine the DNC computers, relying instead on the DNC and Atlantic Council cyber contractor Crowd Strike for its evidence.” Crowd Strike is run by Dmitri Alperovitch, a notorious Putin-hater, and its conclusions in other cyber investigations have been challenged. Binney further identified the possibility that “the CIA‘s Vault 7 Cyber weapons arsenal enabling false attribution and ‘telltale’ signs in Cyrillic and other ‘obfuscation’ may be at work in a least some of this.” He stated his belief that the continuing effort to blame Russia for the leaks comes from the anti-Russian views of former Obama officials John Brennan (CIA) and James Clapper (Director of National Intelligence), the two individuals who worked with counterparts in British intelligence to concoct the story of Russian interference. This aspect of the offensive against the Trump-Putin summit coincides with the ongoing effort of Obama‘s intelligence operatives to portray any criticism of their efforts as part of Putin‘s “masterplan”. When Peter Strzok, a leading official of the FBI with a blatant anti-Trump bias, was confronted at a Congressional hearing on July 12, he responded by attacking the investigation of the FBI and the intelligence community as putting “a victory notch in Putin‘s belt”. Donald Trump himself has a different view: asked by British interviewer Piers Morgan why he is meeting with „ruthless dictators“ such as Kim Jong-un and Putin, the US President
responded: “I‘d like to see peace...we‘re getting rid of wars. We‘re actually getting out of wars.“ It is this sentiment which is driving the neocons and geopoliticians mad. Her Majesty’s Government Hit from All Sides It was a very tough week for British Prime Minister Theresa May. Only 48 hours after she announced that her government was fully unified behind her new strategy for taking the UK out of the European Union, David Davis, her top Brexit negotiator resigned from her cabinet. A few hours later, four other ministers, including Foreign Minister Boris Johnson, her chief rival, did likewise. While all were quickly replaced by loyal mediocrities, the subsequent release of the White Paper outlining her “Brexit light” policy (maintaining a free trade area for goods), ignited another political storm. If Theresa May thought the “working visit” by President Donald Trump, whose presidency has been undermined directly by Her Majesty’s Secret Intelligence Service, would give her a boost, she was in for a surprise. An interview given by Trump to Rupert Murdoch’s British tabloid  The Sun just ahead of his arrival, poured “nitroglycerin” on the British political crisis, to quote that tabloid. “If they do a deal like that soft Brexit, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal,” Trump told the Sun , referring to the free trade agreement that the British government hopes to negotiate with the United States. If May’s plan  goes through, he indicated, “I would say that that would probably end a major trade relationship with the United States….” In sum, it is clear that May’s Brexit proposals pleases neither the Brexiteers, nor the “remainers” in the British electorate. Moreover it would be unacceptable for the EU itself. In a commentary in the Britain’s liberal Observer, former EU Trade commissioner Peter Mansfield, a top policy adviser to Tony Blair and a staunch remainer, declared May’s policy the “worst of both worlds” and if carried out would lead to Britain’s “humiliation” at the hands of the EU, so it would be better to leave completely. Rumors are now rife in the UK about the imminent fall of Theresa May’s government and new elections. A recent opinion poll by the Observer gave the Labour Party 40% popular support, a 4 percentage point lead over the Conservatives’ 36%, which dropped from 42%, while Labour Party leader Jeremy Corbyn now has a higher approval rating than Theresa May. At the same time, support for the eurosceptic UKIP party increased from 5% to 8%, as Tory voters abandoned May’s Titanic . At the close of Trump‘s visit, with its own cynical twist, the Guardian aptly commented: “The presidential hurricane had swept through southern England, uprooting protocols, rattling institutions and leaving politicians with a sense of whiplash....Britain may have to humbly accept, however, that for Trump it was a mere stopover between hammering the German chancellor, Angela Merkel, at the Nato summit in Brussels and renewing his warm relationship with Russia’s president, Vladimir Putin, in Helsinki….” At a joint press conference with May, Trump addressed the latter point directly, certainly knowing the crucial role played by the British in the witch hunt against him in the United States. “I think I’d have a very good relationship with President Putin if we spend time together,” he said. The rigged witch hunt
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“really hurts our country and it really hurts our relationship with Russia.  I think that we would have a chance to have a very good relationship with Russia and a very good chance — a very good relationship with President Putin.  I would hope so.” The Fate of the City of London  Is Key to the Brexit Outcome If Prime Minister Theresa May has her way, the British government will manage to negotiate with the EU an agreement to maintain full financial integration and privileges for the City of London. The White Paper T h e F u t u re R ela tio n s hip b e t w e e n t h e United Kingdom and the European Union , released on July 12 by the Theresa May cabinet Department for Exiting the European Union, warns that, given the role and the dimension of the City of London, there is no alternative to negotiating such an agreement with the EU Commission (see https://vgc. no/pdf/0f1702.pdf). The White Paper speaks for itself, pointing on p. 32 to how “highly interconnected” the U.K. and EU financial services markets are: * “U.K.-located banks underwrite around half of the debt and equity issued by EU businesses; * “U.K.-located banks are counterparty to over half of the over-the-counter interest rate derivatives traded by EU companies and banks; * “around £1.4 trillion of assets are managed in the U.K. on behalf of European clients; * “the world-leading London Market for insurance hosts all of the world‘s 20 largest international (re)insurance companies; * “and more international banking activity is booked in the U.K. than in any other country. “This interconnected market has benefits for consumers and businesses across Europe. For example, one study has found that if new regulatory barriers forced the fragmentation of firms‘ balance sheets, the wholesale banking industry would need to find £23-38 billion of extra capital. These are costs that would ultimately be borne by consumers and businesses. “This interconnectedness also highlights the U.K.‘s and the EU‘s shared interest in financial stability. The U.K. is host to all 30 global systemically important banks and is the home regulator for four of them. Given its scale, the International Monetary Fund (IMF) has described financial stability in the U.K. as a ‚global public good.‘“ By leaving the EU, the United Kingdom is losing the “passport” for U.K.-based firms to operate in all EEA (EU and EFTA) countries and is reduced to “third country” status. Therefore, to maintain full integration, the white paper proposes a new economic and regulatory arrangement that would maintain the economic benefits of cross-border provision of the most important international financial services traded between the U.K. and the EU. The White Paper was preceded by a warning from the Bank of England, that, if the EU refuses to negotiate a deal, $137 trillion of notional value of OTC derivatives contracts might find themselves in limbo and blow up. The chief executive of the International Swaps and Derivatives Association (ISDA), Scott O‘Malia, underlined in a letter to the Financial Times that, if there is no agreement, the problem “is not the notional figure but the substantial number of contracts that would have to be transferred and the number of counterparties that would
individually have to agree to the transfer in a short period of time.” An operation unlikely to succeed. Italian Government Announces Bank Separation and Investment Policy On two different occasions last week, the new Italian government announced guidelines for a pro-growth economic policy and initiatives to protect credit unions. On July 5, Undersecretary to the Treasury (Economy) Ministry Massimo Garavaglia confirmed the government’s intention to achieve a bank separation regime, in response to a question from a member of the Finance Committee of the Chamber of Deputies. Garavaglia stated that the government is working to freeze a reform of credit unions in order to keep them under national jurisdiction in the framework of a banking separation policy. The idea is to prevent the merging of community banks into larger unions, whose dimensions would put them under ECBEU jurisdiction. He recalled that Prime Minister Conte, responding to questions just before the confidence vote in the Chamber of Deputies, raised “the advisability of distinguishing, especially on a community level, between credit banks and investment banks, and therefore the need to define a clear differentiation under the law. This can be achieved by working on a review of the current reform, above all to save the traditional function of credit unions with respect to the primary aim of adequately supporting the productive sector of small and medium enterprises [SMEs] in the community.” Then, on July 10, the minister for EU Affairs Paolo Savona made it clear that Italy will pursue an increase in public investments, which will require at least a temporary violation of EU deficit rules. He did so in the course of reporting on the deliberations of the first meeting of the Interministerial Committee for European Affairs, the task force that de facto gives him an upper hand in negotiations with Brussels (that, despite the fact that the ECB had vetoed his nomination as Treasury Minister). Savona criticized current EU proposals which consider stability “to be a precondition for the growth of income and employment, and not the result of joint action on these two objectives. The general orientation is that growth should be entrusted to the ‘reforms’ to be carried out at the national level, in substance to the supply policy, without being accompanied by the indispensable interventions into aggregate demand.” In fact, to achieve real stability, Savona explained,“the instrument suggested by theory, and historically established, is that of investments which, in contrast to current expenses, have the characteristics of being one-time and easily revocable in the face of inflationary ignitions of demand.” That reality, he added, had been recognized by EU institutions themselves in the 2000 Lisbon Agreement and even in the so-called Juncker infrastructure plan. The program hammered out by the coalition Lega-M5S does include an increase of current expenditures, Savona admitted, such as pensions and unemployment payments and tax breaks, but “the government and Parliament are not in a rush to proceed with the current expenditure side, before the investments show the expected effects. The problem is not therefore whether to implement the promises, but the ways, and among these the timing, in which they will be implemented. It is also true that, beyond a positive effect of its announcement, an investment expense fully reflects its effects on GDP within a period of time, being reflected in a larger public budget deficit.
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Much depends on the size of the multiplier in the sectors in which the investment is to be directed to remove bottlenecks in development.” China and Arab Countries Are “Natural Partners” of the Belt and Road Initiative At this year‘s ministerial meeting of the China Arab States Cooperation Forum, which took place in Beijing on July 10, Chinese President Xi Jinping spoke intensely of the need for peace in the region. Among his announcements of new initiatives, he stressed the need for reconstruction in Syria, Yemen, Lebanon and Jordan, pledging 600 million yuan ($90 million) in aid to that end. He also announced a grant of 100 million yuan ($15 million) for Palestinian economic relief and additional emergency assistance for the region through UNRHA, while stressing his support for a two state solution with Israel. Xi opened his keynote at the Great Hall of the People, with Silk Road references, saying that Sino-Arab connections are “both old and young.” They are “far in distance, and close as family.” Further, “our ancestors traveled the Silk Road overland and by sea, and whatever the obstacles, Chinese-Arab relations were always good.” At a later point in his speech, when speaking of people-to-people, “inter-civilizational” exchanges, he told the Arab state representatives, “You have created a splendid civilization.” Three accords were passed at this meeting, the eighth since the CASCF was founded in 2004. Reporting on the results to media after the event, State Councillor and Foreign Minister Wang Yi said that it marked a new chapter in the process by which China is helping Arab countries speed up industrialization and economic diversification. Wang gave specifics on connectivity and projects, as reported by Xinhua : “Having started work on industrial parks in Egypt, United Arab Emirates, Saudi Arabia and Oman, China plans to connect construction and management of the industrial parks with Abu Dhabi’s Khalifa Port, the port of Djibouti, and Port Said.” Xi presented some specific initiatives under the rubric of “a community with a shared future.” All nations should work together toward peace and stability in the Mideast. Altogether, China has pledged $23 billion in loans to promote projects and create jobs, including in Syria, Yemen, Lebanon and Jordan, countries that have been ravaged by war or by the immediate effects of it. This initiative is particularly important now for Syria, where the government forces have nearly eliminated the jijhadi forces and continue to make progress toward stabilizing the country. Among the goals of economic activity, nations should „synergize“ energy resources; develop the “Blue Economy Corridor” (Maritime Silk Road,) and conduct other “Oceanic” development, collaborate on satellite remote sensing, low carbon fuels, including the “peaceful use of nuclear power,” as well as solar, wind, and hydropower. A new China-Arab Bank will be set up with an initial capitalization of USA$3 billion. In the name of win-win trade, industrial parks and connectivity will be pursued, so that over the next 5 years, the figure for trade can reach $8 trillion. Helga Zepp-LaRouche to Institut Mandela: Good Reason for Optimism in Africa Schiller Institute Chairwoman Helga Zepp-LaRouche was invited to address the Institut Mandela for the African Economic and Consular Days in Paris on July 6, on the theme “Partner
ship, Inclusive Growth and Infrastructure in Africa.” The invitation followed the June 15 release of her call to the European Union to apply the spirit of the Singapore summit between President Trump and Chairman Kim Jong-un to a European development project for Africa. Her appeal, “History Is Now Being Written in Asia! The EU Summit Must Follow the Example of Singapore!” has circulated widely in African networks in France, as well as throughout Europe (cf. SAS 25/18). Opening the first panel was the Ambassador of Eritrea to France, HE Hanna Simon, who spoke of the end of the war with Ethiopia and the economic perspectives for real cooperation in the region, in particular with the just-inaugurated Chinese-built free trade zone in Djibouti. Ghana‘s Minister Plenipotentiary and Deputy Head of Mission at the Paris Embassy, Bonaventure Adjavor, then developed the concept of a new era for Africa, when it will no longer just export raw materials but use them in manufacturing industry. Helga Zepp-LaRouche, in her presentation, noted that the profound change in the strategic situation, mainly due to China’s New Silk Road policy, hold great promise for Africa to overcome poverty and become a global manufacturing powerhouse. She went through some of the infrastructure projects that the Schiller Institute has developed or proposed over the past decades, including the prodigious Transaqua plan to refill Lake Chad and transform the entire region. African nations, she urged, “do not have to repeat all the levels and phases of the industrialization of the Western countries, but like China they can leapfrog to the most advanced technologies, such as focussing on high-speed trains, on magnetic levitation, on the fourth generation nuclear power.  Part of this plan should be, first, a regional infrastructure investment bank, like the Asian Infrastructure Investment Bank  for Asia, and that should be paralleled with national credit mechanisms, or national banks, to have the internal financing of the infrastructure.” China, which has achieved an amazing transformation in the last 40 years from a very underdeveloped country to a highly dynamic economy, and has lifted 700 million people out of poverty, could become a model forA many African countries, she proposed. Certainly that is preferable to the terrorism, war, financial turbulence, and migrations crises that have plagued the continent under the IMF-World Bank regime. The audience of diplomats, entrepreneurs and civil institutions was quite electrified by the perspQective laid out by Helga Zepp-LaRouche and the Schiller Institute. The video of her presentation can be viewed at https://www.facebook.com/ SchillerInstitute/videos/1786728528074441/.
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