E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 33, No. 1, January 3, 2019

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 33, No. 1, January 3, 2019

2019 Opens with the World  at an Historic Crossroads Helga Zepp-LaRouche, chairwoman of the international Schiller Institute, recorded a video message for the New Year, which we present below. Some of you may remember that one year ago, I defined the overcoming of geopolitics as the most important goal for 2018, and many of you probably thought “Geopolitics, what is that? Is that really the most pressing issue?”  And I maintained that because geopolitics had been the source of two world wars, we could not continue with such a confrontational policy in the age of thermonuclear weapons. Now, see what happened in the year which just passed. You had an enormous amount of breakthroughs, where many regions of the world are in the process of overcoming geopolitics. Just to name a few: you had the historic summit between President Trump and President Kim Jong-un in Singapore, which is leading to a process of rapprochement between the two Koreas.  Then you had, all of a sudden, Japan working with China on the Belt and Road Initiative.  After the very important summit in Wuhan between President Xi Jinping and Prime Minister Narendra Modi, China and India are now working together on projects.  And after the election of a new prime minister in Pakistan, there is reason for careful optimism as concerns the relationship between Pakistan and India. Also in Africa:  In the Horn of Africa, you have nations which had no relations, or negative ones --  namely, Somalia, Djibouti, Eritrea, Ethiopia – that are now working together on infrastructure and have established diplomatic relations.  The entire African continent is filled with a spirit of optimism because of what China has been doing there, which is now also attracting investments from many other countries around the world. But maybe the most interesting of all of these developments is President Trump’s announcement  that the United States is going to pull out of Syria. This is causing a big irony, because many of the people who were screaming, “Americans, go home!” just a few years ago, are now saying the United States absolutely must stay there, that it will lead to chaos, that it just gives a gift to Presidents Putin, and Rouhani, and so forth. Now, think about it: Isn’t it better that Trump make good on his election promise to end the permanent wars of his predecessors?  And he has promised the same thing for Afghanistan, that after futile efforts to solve the situation in Afghanistan militarily, there is now the intention to solve it through ne
gotiation, to involve all the big neighbors of Afghanistan.  So, isn’t it better to go in this direction, of trying to seek solutions through diplomacy and negotiation? Bringing Europe Out of the Disintegrating Old Order However, there are still forces which are absolutely sticking to the old geopolitical paradigm, that is, the British government.  Look at the recent report by the House of Lords, which is a masterpiece of geopolitics of the worst kind.  [“U.K. Foreign Policy In A Shifting World Order”] Then there is naturally the EU and also, unfortunately, the Berlin government:  They absolutely insist that their “rules-based order” must be maintained. But this is not really very convincing.  And I would actually urge you to find out for yourself, which way is better? Look at the New Year’s message of President Xi Jinping of China, which is a very proud listing of all the incredibly many accomplishments China has made this past year, all the industrial parks, the beautiful bridge between Macao, Zhuhai, and Hong Kong, and many such projects.  China has lifted 10 million people out of poverty in one year alone, and is confident that it will lift all the remaining poor out of poverty by the year 2020. This is a message of somebody who cares about his country and his people, and please look at this message yourself, especially because of all of the anti-China hysteria going on [http://en.people.cn/n3/2019/0101/ c90000-9533655.html]  And then compare that New Year’s message with the one of German Chancellor Merkel, who finds it important to stress as the most important occurrence of 2018 that she announced her resignation, and otherwise, is just more of the same and doesn’t offer any vision whatsoever. I think we are facing dramatic changes in this coming year 2019.  It is not yet clear what these changes will be.  It is clear that the old order is disintegrating, a new order is emerging, and what exactly the parameters will be of this new order, the principles, is also not yet decided.  But I think if we look at the concepts of previous great thinkers of humanity, who had the vision of one single humanity, who had the vision of a harmonious development of all nations, they are the thinkers we can ask for advice.  One of them is Confucius, others are Nicholas of Cusa, Gottfried Wilhelm Leibniz, and, naturally, also John Quincy Adams, and many others, but just to name these few. So I think we are at an absolute, historic branching point. We can shape a new era of civilization where we overcome 
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geopolitics for good.  And I would ask you to work with the Schiller Institute, so that we can convince the remaining nations which are still sticking to the old ways and get especially the European nations to join the New Paradigm. We can build a fantastic future if we work together. Withdrawal from Syria:  Trump Moves to End Permanent War Policy The decision announced Dec. 19 by President Trump to withdraw U.S. troops from Syria and partially from Afghanistan has provoked absolute hysteria among his opponents. By attacking that decision, they are in effect endorsing the continuation of imperial warfare in Southwest Asia, which now is heading into its eighteenth year, even though some may not recognize it. This is especially true of formerly “anti-war” Democrats, who suffer so much from “Trump Derangement Syndrome”, that they reject the outcome he proposes, i.e., ending the wars, although they had supported it when George W. Bush, who began them, was President. Trump’s announcement may have been sudden, but, as he pointed out, it should not have been a surprise, as he was calling for an end to U.S. involvement in Syria long before he arrived at the White House. A series of tweets in 2013 began with a clear statement in June that “We should stay the hell out of Syria, the ‘rebels’ are just as bad as the current regime. WHAT WILL WE GET FOR OUR LIVES AND $ BILLIONS? ZERO.” And during the 2016 campaign, he frequently warned that the election of his opponent, Hillary Clinton, would result in World War III with Russia, due to her insistence of establishing a No-Fly Zone over Syria. His critics now screech that the withdrawal will “damage our alliances” (Sen. Marco Rubio), and leave our allies “confused” and “bewildered” (Brett McGurk, Obama appointee as envoy for the Global Coalition Against ISIS, who resigned three days after the announcement). Many others claim it weakens our alliances and strengthens our enemies -- incoming House Speaker Pelosi described it as “a Christmas gift to Putin.” There is also the panicked reaction to the resignation of Defense Secretary Mattis, who is described as the “last adult in the room,” referring to the previous resignations/firings of the other two former military officials, National Security Adviser McMaster and Chief of Staff Kelly. This latter point gets to the heart of the reason for the hysteria. Sen. Lindsey Graham fretted that “this decision did not come based on advice from his national security team, it came from the president himself.”  This was reinforced by a comment from Trump’s press spokesman Sarah Sanders, who said that Trump listens to his national security team members, takes their advice, but, “...at the end of the day, he makes the decisions.” Those behind the Russiagate fraud have feared from the beginning, that unless Trump is constrained or removed, he will act to do what he promised – and get the U.S. out of the business of regime change wars, and into strategic cooperation with Russia and China. On the other hand, there are indications that many retired and active duty military officials support Trump’s initiative. The U.S. military has been worn down in these wars, which have nothing to do with defending America’s true national security interests, but are all about geopolitics. Trump’s election victory was in large part due to his recognition of war weariness in the U.S. population, and in presenting the idea that the U.S. and the other nuclear power, Russia, would do better working together, than as adversaries. 
2019: The Year Of Financial Meltdown? The same people who told you in 2007 that there was no systemic crisis, are now telling you that there is no meltdown of the financial markets, and that the 2018 stock market losses are all due to specific causes. Thus, for example, the losses of circa 10% on the Dow Jones are due to Donald Trump’s socalled “trade war” with China; London’s 12.4% to the Brexit; Frankfurt’s 18.3% to the scandals around the auto industry and Deutsche Bank; Milan’s 16.5% to the “populist” government in Rome. Less explainable is the biggest drop of all --  Athens with 24.7% -- but where no reason can be found, they can always attribute it to the “contagion” factors. But such financial experts cannot talk away reality: Corporate debt bubbles in the trans-Atlantic countries are busting and the huge derivatives markets are about to crash. Non-financial corporate loan debt is double what it was in 2007, up to $9.1 trillion vs. $4.9 trillion. The sell-off of these assets has begun. As one indication, the value of high-yield corporate bonds held in investment funds, ETFs  (exchange-traded funds) and so forth has fallen steadily since Nov. 15, from an average 98.5 cents to just over 90 cents per dollar of face “value.” The disturbances in the credit markets are far more indicative of the danger of a crash, than anything happening in the stock markets. That corporate junk debt has been packaged into Collateral Loan Obligations, in a way resembling the sub-prime debt before 2007. Economist Carmen Reinhart, writing for Project Syndicate Dec. 20, identified the major Wall Street banks’ dangerous dumping of increasingly toxic debt on all kinds of investors through those CLOs as a crash nears. It is this massive “handing over of losses” by the big banks which makes it most urgent to restore Glass-Steagall bank separation internationally, through a new monetary agreement. Such a measure will prevent those majors from creating hundreds of billions “worth” of securities by which they dump the debt off their books and rob the population of its wealth in a meltdown. The withdrawal from the corporate bond market has prompted fears that large banks may have liquidity problems. Therefore, U.S. Treasury Secretary Steve Mnuchin stunned the complacent on Sunday, dec. 23, by calling up the CEOs of the six largest U.S. banks to check their liquidity status, and then reporting publicly that he had done so. The last time any such “liquidity” statement was issued was by Alan Greenspan, right after the Lehman crisis. ECB Stress Tests:  It’s Worse Than You Thought! A recent issue of our newsletter explained why the bank stress tests in the Eurozone were a fake (cf. SAS 45/18). We were wrong by underestimation: the stress tests amounted to criminal fraud, as seen in the scandal emerging around the role of BlackRock asset management fund in that operation. The scandal is two-tiered: one is outright conflict of interest/ corruption while the other concerns the political circumstances in which the scandal emerged. On the first tier: it turns out that BlackRock Solutions, together with McKinsey, ran the stress tests in 2016, but the 2018 tests were run by BlackRock alone. Previously, the 2014 stress tests were run by Oliver Wyman. BlackRock is the largest investor in bank assets in the world, and a shareholder in several large banks such as Deutsche Bank, BNP Paribas, Unicredit, Ing, etc. Ergo, the term “conflict of interest” is an understatement. For the “support” provided in 2016, BlackRock was awarded €8.2 million. (However, this was cheap 
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compared to the €28 mn paid to the Management Consultant firm Oliver Wyman in 2014!) The second tier leads us to an exchange of letters between the Bundestag chairman Wolfgang Schäuble and Danièle Nouy, the Chair of the Supervisory Board of the ECB, which the Italian financial daily Il Sole 24 Ore reported on on Dec. 19. Schäuble initially forwarded to Nouy an interrogation on the affair by FDP financial spokesman Frank Schäffler, but was apparently not satisfied with the first answer, in which Nouy claimed “there is no reason to be concerned” about a conflict of interests. But Schäuble, according to Il Sole , demanded explanations on the procedures for assigning the task to external firms. Nouy then replied that BlackRock was awarded the task after a fully transparent competitive procedure, while in the case of Oliver Wyman, there was no procedure, “for reasons of extreme urgency” to start the tests. But it was that 2014 stress test that doomed Monte dei Paschi and forced a bailout. Strangely enough, although all Italian media have picked up the Il Sole exposé, no German media have covered the story, in spite of the Bundestag connection. This might have to do with the fact that the Italian government has challenged the transparency of EU institutions, but also with the fact that a leading candidate to replace Angela Merkel in the CDU at the time was the head of the supervisory board of BlackRock Germany, Friedrich Merz. Il Sole also reported on Dec. 22 that there had been a large controversy, around the role of BlackRock in performing tasks for the EU. For instance, Greek supervisors had denied the investment fund access to Greek banks in 2015, and protests had been lodged on its role in Germany, at the European Parliament (two queries), in Spain, Cyprus, and Ireland.
Spiegel Scandal Exposes Fake News  in Mainstream Media Just before Christmas, a leading journalist for Germany’s leading news weekly Der Spiegel was exposed as a fraudster who had authored tens of articles over several years, featuring fabricated stories, persons and facts. The journalist, Claas Relotius, invented  “human interest” reports with a definite political slant, in line with the “narrative” the mainstream media wanted to spread. A few examples: the fake story of the boy in Deraa, Syria, who believed he had contributed to the civil war against the Assad regime, or the siblings in Aleppo who had lost everything (impolicitly) due to the “dictator” in Damascus; details of alleged interviews with former heroic anti-Russian demonstrators on the Maidan in Kiev; and the fabrication of remarks by U.S. militia members firing live shots at refugees trying to cross the border from Mexico. The latter article was exposed as a fraud by Relotius’ own co-author, Juan Moreno, who informed the editors of  Der Spiegel of the affair, and they launched an investigation when it became impossible not to. The German weekly finally canceled its contract with Relotius, followed a few days later by the suspension of the contract with chief editor Ulrich Fichtner, the man who recruited and promoted the journalist, contributing to his becoming an international star of “narrative journalism.” Indeed, this was not just any reporter: in 2014, Relotius received the “CNN Journalist of the Year” for his stories about Syria; in 2013, 2015, 2016, and 2018, he was awarded the prestigious Deutscher Reporterpreis; as well as the European Press Prize in 2017, in addition to many other awards. His articles were often taken up by other “respected” news outlets, without critical questioning. Beyond the exposure of an indi
vidual fraudster, the case of Relotius is widely seen as a huge blow against the international network of fake news journalism in the mainstream media. His main story of the past 2.5 years fed the mainstream media’s narrative about how Donald Trump was elected by allegedly ignorant people in rural, backward, racist America. In a late March 2017 article, he presented a fictitious account of the town of Fergus Falls deep in Minnesota as populated by racist, gun-toting supporters of Trump, sporting a sign reading “Mexicans Keep Out” posted at the entrance to the town. The totally fraudulent story was exposed by a resident of the town, Michele Anderson, in April 2017 on her Twitter account (“an insulting excuse for journalism”), and she and Jake Krohn went on to compile a fact-checking dossier that was posted on her Twitter account this past Dec. 19. The dossier goes through in detail the blatant lies peddled by Relotius in his article, that had the aim of propagating a false picture of “Trump’s America”. A picture which the editorial boards of Spiegel and all other major news outlets have promoted in Germany and beyond. The belated exposure prompted the U.S. Ambassador to Germany Richard Grenell to request a thorough investigation of the Relotius affair, while denouncing the overall “anti-Trump bias” of the Spiegel . US Proposed Withdrawal From Afghanistan Has Set a Ball in Motion On Dec 20 2018, according to U.S officials cited in the media, President Trump directed the Pentagon to withdraw nearly half of its more than 14,000 troops deployed to Afghanistan. That decision followed a series of meetings that had taken place in Abu Dhabi on Dec. 17-18 between the representatives of at least two groups within the Taliban and Zalmay Khalilzad, a former U.S. Ambassador to Afghanistan and the current Presidential special envoy to that country. In an exclusive interview with the leading Afghan news agency, TOLO News , Khalilzad said that he had told the Taliban representatitves that the United States would have no permanent military base in the country and would withdraw all its troops “if Afghanistan becomes peaceful and terrorism from Afghanistan is not a danger to the world.” In response, he was told that “we cannot defeat you, so we should first sit with you, which means the U.S., then with Afghans, and resolve the issues through political means.” Taliban had always demanded total withdrawal of foreign troops as the premise for peace with Kabul. Trump’s decision on the draw-down of troops has initiated a brisk movement among interested countries in the region to establish their stance in the event a settlement of this long war comes to fruition. Pakistani Foreign Minister Shah Mehmood Qureshi met with his Chinese counterpart Wang Yi in Beijing on Dec. 25, after which the Chinese Foreign Ministry’s spokeswoman Hua Chunying told reporters that the two sides agreed that political reconciliation, and not military actions, represents “the only practical and viable way out of” the conflict. Earlier, China had refrained from taking a position on the U.S. troop pullout from Afghanistan. On the previous day, the Iranian Supreme National Security Council Secretary Ali Shamkhani visited Kabul, and met with Hamdullah Mohib, the national security advisor of the Afghan President. According to the Tehran Times , Iran is holding talks with a faction of the Taliban, in full knowledge of the Afghan government. 
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In addition, TOLO News reported that Saudi Arabia and the United Arab Emirates are now leaning on the Taliban to come to a settlement with Kabul, and have proposed a negotiating period of three months, during which a ceasefire should be declared. Saudi and U.A.E. involvement in the process is important, since it will put pressure on Pakistan not to perpetuate the conflict any longer on behalf of some factions of the Taliban. While this motion is positive, it will be a long and difficult process to reconcile the various warring factions inside Afghanistan. However, it will be much easier if and when the country ceases to serve as a geopolitical football and a spawning ground for terrorism and drugs, and can join China’s Belt and Road Initiative. Mexico Looks to Regional Development  to End Migrant Crisis Despite all the attention to the ongoing fight over building a wall along the U.S.-Mexican border, the agreement reached between President Donald Trump and President Andrés Manuel López Obrador on Dec. 19 for their two countries to work together to foster regional development, lays a workable basis to end the migrant crisis. President López Obrador called the agreement “a new, different way of dealing with the problem of migration, which addresses the causes. The day is going to come, very soon, in which people are not going to emigrate from Mexico -- at least, that is my dream.” The State Department, for its part, reported that “The United States and Mexico today commit to strengthen and expand our bilateral cooperation to foster development and increase investment in southern Mexico and in Central America to create a zone of prosperity. Both countries recognize the strong links between promoting development and economic growth in southern Mexico and the success of promoting prosperity, good governance, and security in Central America.” Now the battle begins to turn this initiative into the start of the giant regional infrastructure program which is required to eradicate the brutal drug cartels and unspeakable poverty which are driving so many to flee the region. That includes building the railroad through Central America in order to the continents of North and South America, which has been on the books since the 1897-1901 McKinley administration in the United States. With today’s technologies, that railway could then connect to the Eurasian Land-Bridge through a Bering Strait tunnel. As of now, the agreement is more limited. The U.S. committed to roughly double current planned investment into southern Mexico and the so-called Northern Triangle countries of Guatemala, El Salvador and Honduras, for a total of $10.5 billion dollars. The new money is largely to come from the Overseas Private Investment Corp., in order to “leverage public and private investment” in projects deemed “commercially viable.” Talks to flesh out the agreement will begin in January. A U.S.-Mexico cabinet-level meeting will be held in late January to set up a strategic framework for cooperation, a bilateral high-level taskforce is to be established to work out the projects, and then monitor their progress; and a Bilateral Business Summit is to be held in the first quarter of 2019 to discuss investment opportunities. The Lopez Obrador government already has plans for several development projects in southern Mexico. Now the Central American countries will decide on their own projects to receive 
support, Mexican Foreign Minister Ebrard said in announcing the agreement; “another stage of international support for  their development has begun.” Africa on the Way to Becoming  “the Next China” For optimistic minds, freed from the geopolitical mindset, Africa could quickly become “the new China with African characteristics”, in terms of realizing stupendous economic growth and lifting millions out of poverty in a short period of time, by “leapfrogging” directly to the most advanced technologies. According to UN studies, Africa should reach a population of 2.4 billion people by 2050, most of them very young and with a growing middle class. China has led the way in providing infrastructure and industry to African nations, that continue to be viewed primarily as looting grounds by the former imperial powers. Chinese President Xi Jinping, in his speech to the G20 summit in Buenos Aires, pledged to continue to help Africa develop through “infrastructure, connectivity building and new industrialization.” For 2019, a number of great projects are in the works, of which we can mention just a few: * Space technology: Ethiopia announced its first earth observatory satellite would be launched in Sept. 2019, with China pledging to cover three-fourths of the bill and offering technology transfers. The satellite will be used to collect data on changes in climate and weather-related phenomena. It will be launched from China, but its command and control center will be based in Ethiopia. * Lake Chad: Nigerian President Buhari continues to request the support of the international community for the replenishing of Lake Chad through an “inter-basin water transfer” project starting from the Congo Basin, known as Transaqua, which we have covered here extensively. It is essential to help defeat poverty and eliminate the roots of terrorism and of migration in the Sahel. The Italian government is financing a feasibility study for Transaqua. * Great Lakes region: the Chinese-built Standard Gauge Railway from the Kenyan seaport of Mombasa to Nairobi is expected to reach the border areas with Rwanda, South Sudan, and the Democratic Republic of Congo. The Ugandan government has asked China to extend it to Uganda. China is also building and financing two hydropower plants in the country, along the Nile.
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 Germany
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