E.I.R.STRATEGIC WEEKLY NEWSLETTER ALERT

E.I.R.STRATEGIC WEEKLY NEWSLETTER

ALERT Volume 33, No. 19, May 9, 2019

Trump-Putin Telephone Call Points to Possible Strategic Breakthrough After the failure of the two-year long investigation into Donald Trump known as “Russiagate”, and his push back against the attempted coup, the United States President felt sufficiently strengthened to initiate a telephone conversation with his Rus- sian counterpart on May 3. Both sides subsequently described the discussion, which lasted 90 minutes, as very productive. The last time the two spoke was during a brief informal ex- change at the Dec. 1, 2018 G20 meeting in Buenos Aires, after their scheduled full-scale summit was canceled due to intense pressure on Trump. (Even up to the point of accusing him of being a “traitor” and a “puppet of Putin”.)

Trump himself tweeted after the call: “Had a long and very good conversation with President Putin of Russia. As I have always said, long before the Witch Hunt started, getting along with Russia, China, and everyone is a good thing, not a bad thing. We discussed Trade, Venezuela, Ukraine, North Korea, Nuclear Arms Control and even the ‘Russian Hoax’.”

The statement released by the Kremlin noted that the pros- pects of bilateral relations were discussed with a focus on in- creased economic cooperation and the need to develop “mutu- ally-beneficial trade and investment relations.” Both committed themselves to stepping up bilateral dialogue in a number of areas. Vladimir Putin also informed his counterpart of the key results of his April 25 meeting in Vladivostok with North Ko- rean Chairman Kim Jong Un. On Venezuela, Putin spoke out firmly against any “outside interference in the country’s inter- nal affairs and attempts to change the government in Caracas by force” (cf. below).

One major subject was the potential for US-Russia-China arms control talks. Speaking to reporters at the White House, Trump said it’s all about producing less military equipment, eventually reducing “the tremendous firepower we have right now.” He added that Beijing “would very much like to be part of that deal,” and that he had brought up the topic in the ongo- ing trade talks with China.

According to the White House Press Secretary Sarah Sand- ers, the arms control issue dealt with extending the new START treaty, which expires in 2021. The two leaders, she said, “dis- cussed a nuclear agreement, both new and extended, and the possibility of having conversations with China on that as well.” On a lighter note, Donald Trump was also asked whether he had lectured the Russian President about meddling in US

elections. He replied that it was touched upon, and that Putin “actually sort of smiled when he said something to the effect that it started up as a mountain and ended up being a mouse. But he knew that, because he knew there was no collusion whatsoever.”

With open discussion between Donald Trump and Vladimir Putin back on track, and the prospect of including China in the process, the situation is wide open for building the coopera- tion among major powers required to counter the imperial war drive and establish the new paradigm.

Belt and Road Dynamic Is Unstoppable, Convincing Even Former Critics The extraordinary impact of Beijing’s Second Belt and Road Forum on April 25-27 is proof that the Belt and Road Initia- tive (BRI) has now established an unstoppable new paradigm in economic relations. A growing number of political and business leaders from around the world are recognizing the tremendous potential for all nations to participate in and benefit from this global development process. So much so that even skeptics and outright adversaries have been won over.

Malaysian Prime Minister Mahathir Mohamed, for example, gave interviews in which he expressed full confidence in the BRI and surprise at its scope. Speaking to Bernama News Agency April 28, he pointed out that under previous international ar- rangements, “including the Trans-Pacific Partnership, developed countries made the proposals and asked us to accept them.” But at this forum, small countries sat together at the same level with China and discussed “how to develop infrastructure projects.” He said he was glad to attend the event “because now I understand better the character of the project. China has a lot of new tech- nologies, and we need these technologies.”

Indonesia’s Investment Minister Tom Lembong, who had been critical of China’s rail investments, told the South China Morning Post that China had responded positively to his gov- ernment’s feedback on ways to improve the projects. He now expects additional investments “in probably tens of billions of dollars” over the next 5 to 10 years. An Indonesian-Chinese consortium is now building a high-speed rail link between the capital Jakarta and the textiles hub of Bandung, and plans to earn some $18 billion by developing satellite towns and indus- trial centers along the line. This project, which is part of the Belt and Road Initiative, involves Southeast Asia’s first high- speed rail line.

In Europe, Italy and Austria are joining Portugal in planning the issuance of “Panda Bonds” -- infrastructure bonds issued by other countries in yuan, to be issued into China’s bond market. (For more on Europe, see below.)

In a statement issued May 2, Moody’s Investors Service says investments in the BRI contribute to both near-term economic growth and long-run growth potential in recipient countries. The investments in large transportation and energy projects, in particular, help to expand productive capacity by closing critical infrastructure gaps, Moody’s found.

The Rhodium Group, a leading New-York based investment advisory firm specializing in business in China, issued a report on April 29 titled Why China’s belt and road loans may not be the debt trap other countries fear. The Group studied debt renegociations carried out by China with 24 countries in Asia, Africa, and Latin America. The conclusion: Beijing is inclined to renegotiate or write off debts incurred by other countries and in only one case had to seize assets to cover unpaid loans.

Will Democrats Collaborate with the White House on Infrastructure? As a major faction of Democratic Party Congressmen appear unwilling to drop their efforts to impeach President Trump, despite his exoneration by special counsel Mueller’s report on “Russiagate”, some more thoughtful Democrats have adopted a different approach. Led by House Speaker Nancy Pelosi, this grouping is taking up the post-midterm election challenge from President Trump, to work with him on some key issues, so as to avoid the charge that they ignored the needs of the voters in order to engage in a vendetta against him.

On April 30, several Democrats, including Nancy Pelosi and Senate minority leader Charles Schumer, joined Trump in the White House to talk about working together to address the nation’s infrastructure needs. Pelosi and Schumer emerged from the meeting expressing optimism that collaboration with Trump is possible.

“We’re very excited about the conversation we had with the President,” Pelosi said. “We have the opportunity to work to- gether in a bipartisan way.” Schumer said there was “good will in this meeting,” in contrast to previous brawls which occurred during policy discussions with the President. He said he was somewhat surprised, but gratified, that Trump agreed that $2 trillion is needed as a minimum, to begin fixing the nation’s de- teriorating infrastructure. It was announced that there would be a follow-up meeting in three weeks to discuss how to pay for the plan.

Trump, for his part, evinced enthusiasm, saying he was ready to move. One point of agreement was the rejection of the pub- lic-private partnership (PPP) model, promoted by Wall Street speculators, to fund profit-making boondoggles rather than deploying federal funds for innovative projects. This has been a problem in the past, as many Republicans oppose any use of federal funds for infrastructure. Trump told participants in the meeting that he never wanted the public-private model, saying he thought that the proposal to use PPPs to fund infrastruc- ture, which came from former White House economic adviser Gary Cohn, was “stupid”.

Despite the new-found common ground, there are numerous stumbling blocks which must be overcome. One of these is the question of how to fund it. Unless agreement can be reached to adopt Lyndon LaRouche’s proposal, to go for a “Hamiltonian” credit policy with funding coming from a National Bank, it is unlikely that enough resources can be generated to make it work. The other major question is whether Pelosi has the po-

litical muscle to move enough Democrats away from a fanatic attachment to impeachment to convince them to work with President Trump.

To Meet the Challenge of the New Silk Road, Europe Needs Improved Infrastructures After the success of the Second Belt and Road Forum in Beijing, the awareness is growing in Europe that it is not enough to join the BRI and sign MoUs, but that current infrastructures are inadequate and must be upgraded. That has emerged publicly in Italy and the German state of Bavaria.

On April 30, the second general meeting of the Task Force China took place in Rome, chaired by Undersecretary to the Ministry for Economic Development Michele Geraci. While the latter dealt with the trade issue, he let the head of the Italian Ports Association (Assoporti) Daniele Rossi, take up the issue of infrastructure.

Rossi listed three major factors that make Italy the natural terminal of the Maritime Silk Road: its geographical position which allows the country to be crossed by four Trans-European Corridors; the possibility of relying on integrated road, railway, air and port infrastructures; and a certain familiarity with the Chinese system and mentality.

No other country in Europe can boast all three of those fac- tors, Rossi said. However, he warned, the land-based infrastruc- ture must be completed and although Italy has at least 15 major ports that are relevant for the Maritime Silk Road, “no Italian port is today able to receive the Silk Road”. The Silk Road is not a few thousands more containers, he said. It would bring mega- container ships to our ports, with 10,000 to 12,000 contain- ers each. Italian ports today are not able to accommodate them regularly on a daily basis. Therefore upgrades are urgent, along with the formation of port systems (for instance Trieste with Venice and Ravenna on the Adriatic side).

In Bavaria, a study commissioned by the Chamber of Com- merce and Industry from the Munich-based IFO econometrics team has just concluded that, in addition to the trade with China itself, the New Silk Road offers growth potentials for Bavarian exports to Ukraine, Belarus and Kazakhstan, and for pharmaceutical products, Mongolia and Uzebekistan are of in- terest. In the opposite direction, Bavaria can profit from im- ports from Kazakhstan, Ukraine, Azerbaijan, Armenia, Uzbeki- stan and Kyrgyzstan. More incentives can be expected from the improvement of infrastructure in these countries, the study found, as well as from investments outside of the Silk Road initiative.l

However, “to enable the enterprises to benefit from these changes, policy-makers have to create the required transport infrastructure in Bavaria and Europe. Without a physical con- nection to the corridors of the Silk Road, Europe and Bavaria lose contact to the developments there.” The survey goes on to repeat the usual mantra that European companies should not be “discriminated” against when using the Silk Road infra- structure.

Germany Urged to Join New Silk Road The growing debate in Germany on joining China’s Belt and Road Initiative was welcomed by Helga Zepp-LaRouche, who has been known in China since the late 1990s as the “Silk Road Lady”, due to the Schiller Institute’s active promotion of that project for over 20 years now. In a recent interview, Zepp- LaRouche pointed to the marked change in attitude of Eco- nomics Minister Peter Altmaier, who had voiced the usual EU complaints against China on the first day of the Second Belt

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and Road Forum (cf. SAS 18/19). But then, by the time the event had ended, he admitted to the media that his original skepticism had given way to relative optimism about the future of cooperation with China. It remains to be seen if Berlin will actually change its policy, but more voices are encouraging it to do so.

For example, in a guest commentary published by the May 2 Die Welt, Charles-Edouard Bouee, CEO of the leading consult- ing firm Roland Berger, urges Europe to stop its fear-driven view of China, and begin to understand why the country is making such rapid progress. Bouee addresses several impor- tant aspects: after a history of opium wars, European colonial- ism and Japanese imperial wars, China has a genuine interest in stability and peace; China’s model of development rests on three pillars: Confucianism, respect and love for the country, entrepreneurial energy/spirit; China does not want to conquer the world; it is investing enormously into artificial intelligence, while Europe is lagging behind Bouee proposes that instead of building fences against advanced technologies like those of Huawei, Europe should cooperate with and benefit from them. The free market values of the West are important, Bouee ar- gues, but German and European policy viz. China should em- phasize cooperation.

The German economic daily Handelsblatt, which had been quite critical of the Belt and Road Initiative in the past, ran an article on April 27 by Sha Hua, showing it is wrong to demonize China for an alleged “debt trap”. She cites the examples of Ma- laysia and Sri Lanka in particular. She also notes that of the 17 countries in Africa, that the IMF claims may not be able to pay their debt, China is engaged in only 3 of them. All the rest are indebted to the Paris Club and such big banks as Crédit Suisse.

The head of the Handelsblatt Research Institute Dr. Jörg Li- chter has also called on Germany to become an “offical partner” of the New Silk Road. In a commentary dated May 3, he called on the German government to uphold the EU’s “connectivity rules” but nevertheless take part in the New Silk Road. He points to the multiple advantages of the railway connectivity with China for the German port system.

Split Deepens in US Democratic Party over Impeachment Issue A hearing that took place on May 1 in the Senate Judiciary Committee in Washington highlighted the frenzy with which one faction in the Democratic Party is hell-bent on impeach- ment of President Trump. The hearing featured Attorney Gen- eral William Barr and his handling of the disclosure of the Muel- ler report. He was accused by Democratic Senators of simply “acting as Trump’s lawyer” and “misrepresenting” the findings, which subsequently led to a spate of demands that he resign, as a way of weakening the President.

In fact, behind the focus on impeachment is the failure of the Democratic Party to address the real concerns facing the Amer- ican people, which are primarily related to the deteriorating state of the nation’s economy, the growing disparity between rich and poor, the exploding drug epidemic, and the incredible waste of money and human resources in the last two decades of war abroad. Ironically, Donald Trump did address those is- sues in his campaign, and because of that, won the votes of so many traditional Democratic voters and Independents.

But impeachment is considered by number of Democratic presidential candidates as a popular issue. Thus, Senators Eliza- beth Warren and Kamala Harris have called for Trump to be re- moved from office, while former Vice President Joe Biden has not explicitly called for impeachment, but the announcement of

his candidacy centered on a vicious attack against Trump as an “aberration” in the White House. Senator Bernie Sanders, on the contrary, who currently is polling a close second to Biden in the race for the Democratic nomination, called the focus on impeachment a “distraction.” Sanders is far from “soft” on Trump, but recognizes that he will be a formidable opponent in 2020, especially if the Democrats have nothing to offer but the demand for his impeachment.

In an effort to come up with an another issue, many Demo- crats rallied around the mindless radicalism of freshman Repre- sentative Ocasio Cortez, and her foolish “Green New Deal.” That agenda of radical anti-growth policies, which would threaten massive population reduction if implemented, has drawn sig- nificant opposition even from some Democrats, including union officials, who recognize that the policy would destroy what is left of American manufacturing and advanced agriculture.

It is unfortunate for the Democrats that the party is still controlled by the Barack Obama-Hillary Clinton-Wall Street faction, whose leaders continue to favor the interests of the global financial cartels over those of working and middle-class Americans. They, together with the neocons, are opposed to good relations with Russia and China and to ending military adventures abroad. For example, when Trump announced his intent to withdraw U.S. troops from Syria, many Democrats joined with Republicans in opposing that move.

Venezuela: The Neocons Running “Regime Change” Operation Are in Trouble The self-proclaimed leaders of the April 30-May 3 promised coup in Venezuela -- National Security Advisor John Bolton and Secretary of State Mike Pompeo -- are now exposed and vul- nerable. Not only did that coup never materialize, making an international laughing stock of the United States, but their ef- forts to use Venezuela to put the U.S. and Russia on a collision course were derailed when Presidents Trump and Putin agreed they have similar objectives in Venezuela during their May 3 phone conversation (cf. above).

Since Jan. 23, 2019, the British Empire faction within the Trump administration has orchestrated the farce of regime change in Venezuela via the President of Parliament Juan Guai- do (a 35-year-old, rich-kid political lightweight who declared himself “President of Venezuela” after getting the go-ahead from US Vice President Mike Pence). Their operation is directly aimed against Nicolas Maduro, but the real target of the coup is Donald Trump. If they were to succeed in trapping the latter into launching a Libya-style regime-change intervention against Venezuela and confrontation with Russia and China over that operation, it would sink his Presidency.

Thus, at dawn on April 30, Guaido called on the Venezuelan people to take to the streets in support of a military upris- ing which he said was then underway as the “final phase” of his “Operation Libertad.” Bolton took charge, the very image of Gilbert and Sullivan’s A Modern Major General. He called a press conference midday on the White House lawn, where he ordered three persons by name -- Venezuela’s Defense Minister, Commander of the Presidential Guard, and Chief Judge of the Supreme Court -- “to fulfill the commitments they had made” to Guaido to bring down Maduro. (Not one of them did.) And Bolton once again made the (preposterous) charge that Cuba, with Russia’s backing, was the only reason Maduro was still in power.

Neither the Venezuelan military nor people came out for Guaido’s “final phase” in any significant force. On May 1, Pompeo called his Russian counterpart Sergey Lavrov to accuse

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Russia of destabilizing both Venezuela and “the U.S.-Russia bi- lateral relationship;” and he told Fox News that “military ac- tion is possible. If that’s what’s required, that’s what the United States will do.” As Lavrov drily told the press the next day, “this all sounded rather surreal.”

With President Trump reported to be questioning the intel- ligence the Washington was getting from Venezuela, and with both Trump himself and significant sections of the Pentagon known to be very wary of U.S. military intervention into Ven- ezuela, the war hawks called a meeting at the Pentagon on May 3, for U.S. Southern Command head Adm. Craig Faller, a geopolitical hardliner, to discuss possible military options. Top diplomatic and security leadership, including Bolton and Pom- peo, were present.

Asian Giants Plan New Framework to Fund Southeast Asia Development The finance ministers and central bank governors of Japan, South Korea and China have agreed to suort a plan to set up a new financing framework for infrastructure investment in Southeast Asian countries, aimed at utilizing more private-sec- tor funds The decision was made on the sidelines of the May 1-5 annual meeting of the Asian Development Bank (ADB) in Nadi, Fiji. The same top financial officials are considering add- ing the yen and the Chinese yuan as currencies to their multi- lateral currency swap arrangement, according to press reports, in an effort to avoid market turbulence due to over-reliance on the dollar.

The top financial officials of the three countries also held a meeting with their counterparts of the 10 members of the Association of Southeast Asian Nations, and shared the impor- tance of the new framework for infrastructure investment, it was reported.

The ADB has also decided to prioritize Southeast Asia for development assistance over the coming year.

New British Terror Wave Targets the Belt and Road, Shifts to Africa and Asia In modern history, the British Empire has been the mother of terrorism as a form of modern irregular warfare. Today, there are compelling reasons to believe that the strategic tar- get of the new global wave of terrorism is China’s Belt and Road Initiative.

Within days of the Easter Sunday attacks in Sri Lanka, the purported leader of the Islamic State (IS), Abubakr al-Baghda- di, appeared in a video to praise the bombings and assert they were carried out in revenge for the defeat of the IS caliphate in Syria. He also thanked the attackers for their pledge of al- legiance to IS, without claiming a direct role for the group in orchestrating the attacks. Our battle today is a war of attrition to harm the enemy, and they should know that jihad will con- tinue until doomsday, he said, in what he promised would be a long and bloody war.

In fact, it is not really certain whether Baghdadi ever con- trolled the IS. Nor for that matter whether the man in the video is in fact Bagdhadi, who has not been seen in five years and is believed to have been killed some years back. However, now that IS has been thoroughly defeated in Syria and Iraq, the purpose of that video is to push the shifting of terrorist operations into Asia and Africa, where the Belt and Road policy is most active (cf. SAS 18/19).

Russian Defense Minister Sergei Shoigu, in remarks in Bish- kek, Kyrgyzstan on April 29, warned that Afghanistan is be-

coming a bridgehead for the spread of the Islamic State across Central Asia, which is another crucial region for the Belt and Road Initiative, as well as into Southeast Asia.

In Africa, the long time Islamic terror group Allied Demo- cratic Forces has struck twice in the past three weeks in the eastern region of the Democratic Republic of Congo. The ADF is comprised of Ugandan Muslims who have been acting against the Ugandan government since 1995, which in turn has long historic ties to Saudi Arabia. After being forced out of Uganda, it has been based in eastern DRC for a number of years con- ducting brutal attacks periodically over the years. In the past months, it has rebranded itself as a member of the Islamic State. The two most recent attacks occurred on April 18, kill- ing three DRC soldiers, and on May 1, which took the lives of 6 Congolese civilians, both carried out in the name of IS.

The danger is that ADF could become the nucleus of a greatly expanded terror operation under the cover of IS and begin de- stabilizing East and Central Africa, where Belt and Road activi- ties are developing quickly. Already now, according to the latest Global Terrorism Index (GTI) issued late last year, the Central African Republic, Mali, and Kenya are among the top ten coun- tries where terrorism is increasing the fastest.

MeMorials for lyndon larouche Planned The Schiller Institute has announced that those who knew, ad- mired and respected Lyndon LaRouche will gather in different parts of the United States to memorialize him, on Saturday, June 8. LaRouche passed away on February 12 of this year at the age of 96 (cf. SAS 8, 9, 10/19 and 13/19). The official obituary of LaRouche is available at https://larouchepub.com/ other/2019/lyndon_h_larouche_jr_obituary.html.

The range and productivity of LaRouche, in the fields of economics, music, physics, and several other areas, are easily documented through his voluminous writings, as well as the writings of his associates. Unfortunately, they are far too little known and circulated in America and elsewhere, due to the un- precedented witch hunt and slander campaign against him, by the same British Empire faction which he consistently exposed and fought.

During a presentation on May 4, LaRouche’s widow, Helga Zepp-LaRouche stated that the one one thing dearest to her heart, “is that we all do our absolute most passionate best, to the maximum of our ability, to keep the beautiful ideas of my husband alive. I think it’s so clear, in his works, there are such treasures, such unbelievable pearls, which you will hear many of those in the next classes -- they pertain to music, to poetry, to drama, to deep conceptions about the physical universe -- that I think really the ability of the United States in particular to recover and get back to being a true republic, to be a beacon of hope again, with which all peoples in the world would want to be friends and partners and cooperate, is absolutely identical with the idea of Lyn’s ideas.”

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EIR STRATEGIC ALERT WEEKLY NEWSLETTER 4 N° 19 / 2019