E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 32, No. 40, October 4, 2018

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 32, No. 40, October 4, 2018

UN General Assembly Advances  Toward a New Just World Economic Order This year’s United National General Assembly was marked above all by the intervention of U.S. President Trump, although very little of substance of what he had to say was actually covered in the mainstream media in Europe. Most striking was his wellfounded defense of national sovereignty and his rejection of “the old dogmas, discredited ideologies and so-called experts who have been proven wrong over the years, time and time again.” That must have been discreetly welcomed by many third world countries that have suffered under the current world order. But it also explains, quite succinctly, why the trans-Atlantic establishment is so hysterically intent on destroying Donald Trump’s presidency... before their own power and institutions are destroyed. Outside of the official speeches, many important strategic meetings took place on the sidelines. Trump met with his South Korean counterpart Moon Jae-in, who thanked him for the progress he has helped make possible on the Korean Peninsula in less than one year (cf. below). Trump, he added, has “become more than a friend” and someone whom he fully trusts. Russian Foreign Minister Sergei Lavrov stated that Russia will do everything possible to facilitate the economic success of a reunited Korea, including the development of infrastructure. And Japanese Prime Minister Abe stressed that he hoped a formal peace treaty could be signed with Russia by the end of the year, which would considerably strengthen peace and stability in Asia. Lavrov delivered a hard-hitting attack on US policy, but noted that Trump had invited Putin to Washington and that Putin had reciprocated with an invitation to Moscow.On the Middle East, it is reported that the Trump Administration is working on an overall peace plan (cf. below). Trump’s accusations against Iran were overblown, of course, especially as concerns sponsoring terrorism, but many drew a parallel with the vicious attacks he had leveled against North Korea at last year’s session. Trump also indirectly supported the Astana process in Syria, which involves Russia, Turkey and Iran. And he indicated he would be willing to meet President Rohani. Both the Russians, in the person of Foreign Ministry spokeswoman Maria Zakharova, and the Chinese welcomed Trump’s insistence on defending national sovereignty, but insisted that this must apply to all nations, and not just the United States. That directly counters the idea that sanctions imposed by the 
United States against one country must apply internationally, which is known as the extraterritoriality of US law. The most problematic aspect of Trump’s speech, as Helga Zepp-LaRouche pointed out on Sept. 28, is that that he seemed to equate the rise in the stock exchange to an actual economic upswing in the United States. That illusion will be wiped out from one minute to the next when the next crash occurs. In addition, he claimed that the US deficit toward China is mainly due to China’s joining the WTO, which is not the case, as ZeppLaRouche explained. Already in the 1980s, institutions such as the Council on Foreign Relations and the Trilateral Commission were promoting deindustrialization and outsourcing of production to “cheap labor” countries, which China was at the time. That latter approach is part of the “old dogmas” that have been proven wrong, and the United States and Europe should recognize it, and take up China’s offer of cooperation in its gigantic project of infrastructure and economic development, the Belt and Road Initiative. National Sovereignty and the Return  to Westphalian Principles The dynamic put into motion by China’s Belt and Road Initiative was a determining, albeit discreet, factor very in the UN proceedings this year. Chinese Foreign Minister Wang Yi held many bilateral meetings with other world leaders, as well as speaking engagements in New York City, at which he emphasized the cooperative, win-win aspects of the BRI, and its openness to all that want to join. Contrary to what many claim, it is not in contradiction with national sovereignty, a theme which Donald Trump struck. In response, the Chinese government’s thinking was likely reflected in an editorial in the Sept. 25 Global Times , which noted that it is common sense that “sovereignty will only play a positive role if it is pre-conditioned on equality, the basic principle everyone abides by. Historically, the concept of sovereignty and equality among nations was born at the same time in the Peace of Westphalia [of 1648], a peace treaty that first introduced and assured the equality of national sovereignty. Nowadays, the indivisibility of sovereignty and equality bears crucial meanings to the world.” This is indeed a key notion for international relations, one which the Schiller Institute and our newsletter have researched and strongly defended, and one that has been severely eroded over the past decade. 
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President Emmanuel Macron, for example, in his speech to the UNGA, wrongly stated that the crisis today is due to the failure of the “Westphalian liberal world order” to regulate its own financial, social and climatic failings. But on the contrary, today’s crisis today is a result of that same globalization, which is the antithesis of the Westphalian order. It was first rabidly promoted by former British Prime Minister Tony Blair, who expounded on the end of the era of national sovreignty in a speech in Chicago in 1999, calling instead for a doctrine of the “international community”, which has since become known as the “responsibility to protect” (R2P) or “humanitarian interventionism”. That has served as a pretext for countless military interventions into sovereign countries, beginning with Kosovo, to topple regimes considered undesirable by the western powers. Tony Blair, it will be recalled, is the one who convinced President Bush at the time, on the basis on evidence he knew to be fabricated, to wage war in Iraq, without a mandate of the United Nations, just as he pushed for illegal interventions in Libya, Afghanistan, Syria, etc.. Emmanuel Macron, by the way, in his short time as President of France, has fully supported such military adventures abroad, while defending the supranationalism of the European Union. If Donald Trump is ready to fight to overturn that “colonialism by any other name”, at least that aspect of his policy deserves international support. The Vice Tightens  on the Putschists in Washington According to a New York Times article on Sept. 21, Deputy U.S. Attorney Rod Rosenstein proposed secretly recording conversations with President Donald Trump, to prepare the case for using the 25th Amendment to remove him from office, presuming that recordings would show him to be too mentally unstable, incompetent, etc., to continue as President. The article relies on a memo (or memos) from former FBI Deputy Director Andrew McCabe, and anonymous sources, describing an exchange between Rosenstein and McCabe in May 2017, which occurred in the days after Trump fired FBI Director James Comey. At the time of the meeting cited, McCabe was acting FBI director. Rosenstein issued a firm denial, saying the story is “inaccurate and factually incorrect,” adding that he would not comment “on a story based on anonymous sources.” A follow-up article included the suggestion that McCabe proposed the recording, to which Rosenstein replied sarcastically: “What do you want me to do, Andy, wire the president?” While it has not been determined whether or not Rosenstein’s denial is true, no one has denied that McCabe made the suggestion. McCabe and Rosenstein have both been key participants in the regime change coup plot against President Trump. McCabe was involved in the FBI task force set up in July 2016 to investigate charges that Russia meddled in the U.S. election and that Trump colluded with the Russians. (Those charges originated with British intelligence networks and were laundered through U.S. networks by John Brennan, James Clapper, and officials of the FBI and U.S. Department of Justice.) According to text messages released by two other members of the task force, FBI agents Peter Strzok and Lisa Page, meetings were held in “Andy’s office” as they were preparing an “insurance policy”, to remove Trump if he won the election. Rosenstein moved into center stage when he drafted a memo to Trump on May 8, 2017, which laid out the case for firing Comey. The meeting reported on in the NY Times is thought to have occurred on May 16. Therefore, if the newspaper’s 
report is accurate, Rosenstein rejected the idea of wire-tapping Trump, choosing instead to appoint Robert Mueller special counsel, to head the investigation into Russiagate, the day after that meeting. Additionally, Rosenstein signed the fourth application to the FISA court for a warrant to conduct surveillance on Trump campaign official, Carter Page (cf. SAS 39/18). The FISA warrants are among the documents Trump ordered declassified on Sept. 17. McCabe was fired on March 16, 2018, and is a subject of a grand jury investigation into leaks of classified material to media. Rosenstein is scheduled to meet with President Trump the first week of October, and may resign although White House sources say he will probably not be fired. What is clear from all of this is that the declassification of the documents ordered by the President should proceed as rapidly as possible. Italy Defies EU Cost-Cutting Dictates  in New Budget The Italian government announced on Sept. 27 a 2.4% deficit to GDP for the next three years to finance growth, which is three times higher than that planned by the previous government. The infamous European Union’s Stability Pact mandates that socalled “indebted” countries must implement yearly deficit cuts in order to reach a zero rate over GDP. Since such austerity policies prevent GDP growth, it is a recipe for economic suicide and a major factor in the “populist” victories throughout Europe. The Italian government has now decided to challenge the rule, invoking the fact that EU Law (EU Treaties) allow a 3% deficit, whereas the Stability Pact is an intergovernmental agreement. The increase is expected to result in a GDP growth of  at least 1.5% in 2019. The deficit planned for 2019 provides expenditures of 27 billion euros more (total new debt will be ca. 40 billion), which the government aims to invest mainly in alleviating poverty and partly for job creation. The minimum pension will be raised to €780, and a system similar to the German Hartz 4 will be introduced for the unemployed starting April 1919. In addition, the Fund for compensation of small bank bondholders will be increased to 15 bn. And to help SMEs, a tax amnesty of up to €500,000 is aimed at those reinvest in equipment and jobs. The budget also includes an increase of 15 bn for investments, on top of the 36 bn planned by the previous government, which makes a total of 51 bn over three years. It is not clear how much will go to direct investments in infrastructure, although deputy PM Salvini spoke of a program for roads and bridges. Paolo Savona, a senior member of the Italian government, told a think-tank on Sept. 28 that Italy’s sovereign decision on the budget means war with the EU. “Without a strong political will we could not have done anything. We threw down the gauntlet to the Old Europe. Now we must win the war, because war it will be”. The European Union is now in a box: if they reject the plan, this will boost the chances for “populists” to win the European elections next year. If they don’t, that’s the end of budget discipline in the EU. Especially since Italy is not alone: three other “indebted” countries -- France, Spain and Greece -- have announced an increase in their budget deficit. “Merkel-Dämmerung” Looms Large  in Germany “How Much Longer Can Merkel Be Chancellor?” was the banner headline of Germany’s leading mass-tabloid Bild on Sept. 26, in a report on the results of an INSA opinion poll published 
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the day before. Given the pattern of crises inside the Grand Coalition (CDU/CSU and SPD), 36% of those polled believe the Merkel-led coalition will collapse before the end of its term in 2021. Only 28% believe it can remain in power, while 26% are uncertain what will happen, with many of them likely tending towards the 36% camp, and 9% have no opinion. This opinion poll is congruent with another done most recently on party ratings: the CDU/CSU is down to 28%, followed by the SPD at 17%, which means the ruling coalition (at 45% combined) is no longer supported by a majority of voters. The decline is largely due to an erosion of confidence Chancellor Merkel. A Kantar opinion poll of Sept. 28, commissioned by Der Spiegel , has the approval rating of Angela Merkel at only 47%, compared to 68% one year ago, at the time of the national elections, while 49% no longer support her. Dissatisfaction is growing in her own ranks, as seen in the Bundestag last week, where her candidate for chairman of the CDU group, Volker Kauder, known as Merkel’s “right hand”, lost to rebel candidate Ralph Brinkhaus. At this point, provided an alternate candidate with sufficient backing among party members steps forward, Merkel could even lose the re-election to party chairwoman at the CDU party convention in Hamburg in early December. If that happens, the end of her role as Chancellor would not be far away. But before then, two important elections will take place for state parliament, in Bavaria on Oct. 14 and in Hesse on Oct. 28. In both cases, considerable losses are expected for the CSUCDU. The net winner of these developments is the populist AfD party, which benefits from most of the protest vote against the Chancellor. It is already ranked as the 3rd party in recent polls, with the potential to soon replace the SPD in second position. In that context, Bild headlined its issue of Sept. 27 “Who will write a letter to Merkel?”. That refers to the famous open letter 19 years ago, with which Angela Merkel overthrew her mentor Helmut Kohl and replaced him at the top of the CDU. That was the first step toward becoming her party’s chancellor candidate, before finally being elected Chancellor in 2005. Der Spiegel went a step further than Bild , dedicating last week’s 8-page cover story to the theme “What will come when Merkel goes?” The weekly leaves the answer to this question open, but warns that if the German power elites keep neglecting the mood in the population, a surprise could occur in the next national elections, similar to the upset victories of Emmanuel Macron and Donald Trump. Trump Administration Sheds Light  on Its Mideast Policy at UN Significant Middle East policy statements were made by President Donald Trump and U.S. officials during the United Nations General Assembly. While the President himself accused Iran of malign conduct throughout the region, he nonetheless thanked Iran, Russia and Syria for “substantially slowing down their attack on Idlib province...”. This can be seen as an indirect endorsement of the agreements reached between Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin as well as the actions of the “Astana” group (Russia, Iran, Turkey) who are acting as guarantors of the ceasefires being carried out in Syria (cf. SAS 38, 39/18). Donald Trump also endorsed the two state solution for the Israeli-Palestinian peace agreement and asserted that he hoped to broker a peace agreement by the end of his first term. On the issue of having moved the US embassy to Jerusalem, he 
said “I took probably the biggest chip off the table and so obviously we have to make a fair deal, we have to do something. Deals have to be good for both parties ... Israel got the first chip and it’s a big one.” Although Trump did not mention where a Palestinian capital would be, it is well known that the ideal peace agreement calls for two capitals in Jerusalem, with that of the Palestinians being in Arab East Jerusalem. Note that Trump did not endorse Israel’s official position of having Jerusalem as its “undivided capital”. Adding to Trump’s statement on Syria was a special briefing on Sept. 27 by his Special Representative for Syria Engagement, James Jeffrey. He warned in particular that the recent downing of the Russian military aircraft, which Russia blamed squarely on Israel, represented a potential escalation scenario in the region that must be stopped (cf. SAS 39/18). He pointed out that in addition to the Syrian forces, there are US, Russian, Turkish and Israeli forces, “at least in the air over and around Syria, bumping into each other.” Reasserting the need for a political settlement of the war, he again warned of the risk  “of a much larger conflict, a red-onblue conflict (that is to say among military powers) as opposed to a conflict of military forces with local jihadis or local rebels.” In that context, he added that Washington will seek the removal of Iranian forces from Syria through political pressure and not military force. The Syrian government, he recognized, has invited the Iranians in, but “at the end of the political process or at some point of the politics process,” it may no longer “feel the need to have the Iranian forces there.” To fill out the picture concerning Iran, it should be noted that even Trump’s hawkish National Security Adviser, John Bolton, stated at the UN on Sept. 24 that “Regime change is not the administration’s policy.” One Year Later, a New Era Opens up  in Northeast Asia The ongoing denuclearization negotiations on the Korean peninsula got a boost last week on the sidelines of the United Nations General Assembly session in New York City, where President Trump met with two key Asian leaders, South Korean President Moon Jae-in and Japanese Prime Minister Shinzo Abe. President Moon provided his American counterpart with a detailed assessment of his recent meetings with North Korean Chairman Kim Jong-un, who committed to the full denuclearization of the peninsula, and made concrete offers to dismantle two key nuclear weapons and ballistic missile sites, in the presence of  international inspectors. As a result, Donald Trump declared his willingness to meet with Kim for a second time in the near future. If a second summit takes place in October, it could provide a boost to Trump’s foreign policy credentials and help Republicans facing a stiff challenge from Democrats in the Nov. 6 mid-term elections. US Secretary of State Mike Pompeo is scheduled to travel to North Korea with the newly appointed Special Envoy Stephen Biegun, to advance preparations for a possible summit. During his visit to the United Nations, Trump held two meetings with Shinzo Abe, where they discussed a wide range of issues, including bilateral trade negotiations, Japan’s economic engagement with China and Russia, and Korea. Trump pledged to Abe that, as the Korea talks progressed on the issue of denuclearization, he would also raise the importance of agreements on medium-range ballistic missiles targeted at Japan and the issue of reuniting of families of the abductees (Japanese who were kidnapped by DPRK and brought to North Korea during 
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the height of the Cold War). In response, Abe gave his full and enthusiastic support to Trump’s diplomatic approach. But both leaders also discussed some wariness about a premature agreement for Korean unification, based on recent statements by Moon about the opportunity for the two Koreas to unite. The visit by Pompeo and Biegun will seek to break the impasse in negotiations over the issue of the sequencing of the denuclearization process and the lifting of the sanctions (cf. SAS 38, 39/18). At the UNGA, President Trump praised Chairman Kim and emphasized that the world is safer today as the result of the Korean diplomatic process. It was a stark contrast to his speech of one year ago, when he assailed Kim as “little rocket man” and threatened nuclear devastation of Korea. As difficult as the ongoing negotiations will be, the fact that DPRK has frozen testing of nuclear weapons and ballistic missiles, is moving to normalize relations with the South, and is talking with Washington at the highest level is a vast improvement. It holds out the prospect of a new era in Northeast Asia that was unthinkable just one year ago. Mexico Looks Forward to Fair Trade Agreement with the United States On Aug. 27, Mexican President Enrique Peña Nieta and U.S. President Trump announced a new bilateral trade deal had been worked out, paving the way for “termination” of the infamous North American Free Trade Agreement (NAFTA), which has had disastrous consequences for both countries since its inception in 1994. The new deal already has the blessings of President elect Andrés Manuel López Obrador, who will be sworn in on December 1, 2018. It still has to be approved by Congress and the Mexican Parliament. While Donald Trump issued many highly mediatized threats about building a wall on the southern border to stop migrants, a much more effective approach is to rebuild Mexico’s economy, workforce and security situation through development and increased living standards. As it now stands, the new deal would strengthen the manufacturing sector in both the United States and Mexico, with pay scales set to rise on both sides of the border and greater social protection provided. It would also discourage companies from outsourcing to Mexico to loot its “cheap labor”, which has sent so many American workers to the unemployment lines. A few highlights of the new deal are: * In the automobile sector, a major aspect of US-Mexico trade, between “40 and 45% percent of auto content must be produced by workers earning at least $16 an hour” for the companies to avoid tariffs. Mexican auto workers typically make less than $8 an hour, and considerably less at parts plants, according to the Center for Automotive Research. * Provisions for new labor rules to benefit manufacturing workers have been set out, including that Mexico has agreed to pass a law to provide “worker representation in collective bargaining.” * Under the new “rules of origin” on vehicles made in the United States and Mexico, 75% of their content must be produced in the United States or Mexico, up from 62.5% previously. Moreover, 70% of the steel, aluminum and glass used to make a vehicle must also originate in North America. For example, American auto companies that assemble their cars in Mexico would also need to use more U.S.-made car parts to avoid tariffs, a plus for U.S. manufacturing workers. * The “dispute settlement provisions” of NAFTA were weakened. These had featured a system of supranational tribunals 
staffed by predatory corporate lawyers, which nullified protective national laws. City of London/Wall Street interests and wage-gouging “businessmen” insisted on keeping these tribunals in place to reduce the risks of their investments. This “worker friendly” deal has created yet another dilemma for the anti-Trump, “progressive” forces in the United States, who can’t support it because it’s Trump, but can also not oppose it openly. What has not been adequately addressed so far is agriculture, which is a key aspect of bilateral trade. Until the late 1990s, Mexico was a net exporter of agricultural products, yet today it is a net importer, mostly from the United States. Meanwhile, American farmers have been operating below break-even for decades, and most of them have to hold off-farm jobs in order to keep their land. As we go to bed, Canada, the third NAFTA partner, has just agreed to join the new “fair trade” deal, which will be known as the United States-Mexico-Canada Agreement (USMCA), if it finally enters into force. Africa Develops with China’s Help Ghana’s President Nana Akufo-Addo, in his address to the UNGA, emphasized a point that many African heads of state made at the recently-concluded FOCAC summit in Beijing: African nations that want to develop are looking to China as their partner, not to Western nations whose “assistance” has done virtually nothing to eliminate the legacy of colonialism. Addressing Western allegations that African nations are getting trapped in debt or in a new form of colonialism by partnering with China, Akufo-Addo noted that the first railways in China were built by Western companies and financed by Western loans to a nearly bankrupt China dynasty. But today, China “is lending billions to countries throughout Africa, Asia and Europe to construct not just railways, but highways, ports, power plants and many businesses.” Zimbabwe President Emmerson Mnangagwa also dismissed fears that his country could fall into a dept trap with China, in a speech to a gathering of Zimbabweans in New York City. Most of the money provided by China, he said, was going towards revenue-generating infrastructure projects that would pay themselves off. Mnangagwa gave the example of the expansion of Kariba South and Hwange power stations, which are financed with Chinese capital. “I do not see any danger where you have a project which becomes productive in terms of revenue streams to pay for itself,” he said. “When you finish paying the loan, the asset remains with us and we will continue to have electricity, so I do not see the danger there.” Moreover, China Communications Construction Company has just drilled the longest railway tunnel in East Africa, with a total length of 4.5 km, along the track from the Kenyan capital city of Nairobi to Naivasha town. 
E.I.R. STRATEGIC ALERT        www.eir.de  Published by: E.I.R.GmbH,  Bahnstr. 4, 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 Germa