E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 34, No. 26, June 25, 2020

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER

Volume 34, No. 26, June 25, 2020

 

REMINDER: The international Schiller Institute is holding a webinar via Internet on June 27, starting 16:00 CET. Simultaneous translation is available via Zoom in French, German and Spanish. Please register at: https://schillerinstitute. nationbuilder.com/20200627_conference_rsvp NATO Aims for Global Expansion  to Counter China and Russia There has been much ado lately about Donald Trump’s decision to withdraw 9,500 U.S. troops from Germany, bringing the total down to 25,000, and to possibly relocate them to Poland. More worrisome, however, than the plans in Washington is the “NATO 2030” initiative presented by NATO Secretary General Jens Stoltenberg on June 9 during a virtual event hosted by the Atlantic Council. Under this new “global vision” for the military alliance, NATO intends to expand its presence in the Asia-Pacific region and work more closely with Australia, New Zealand, Japan and South Korea. The global trends that Jens Stoltenberg predicted that NATO would still be dealing with in 2030 include what he called an even more intransigent Russia under Vladimir Putin; ISIS and other terror groups; and the intensification of the power of a rising China.  To meet the challenges, including the response to climate change, NATO must be used “more politically”, he said, which means “using a broader range of tools, military and nonmilitary, economic and diplomatic.” Many other proponents of the trans-Atlantic war party are also pushing hard for NATO expansion into the Asia-Pacific region, including Ian Brzezinski, the son of the infamous cold-warrior Zbigniew Brzezinski. As for The Economist of London, it recently commented that the overriding issue for NATO, far more important than any “short-term spats” between Germany and the United States, is how to counter the rise of China over the next ten years. That, according to the City of London’s mouthpiece, would be vital to the alliance’s retaining any “sense of purpose” in 2030. In an article written June 19, Helga Zepp-LaRouche points out that what Mr. Stoltenberg and the others refuse to recognize is that China is “on the rise” because it has lifted 850 million of its citizens out of poverty, and to do so “has relied on the scientific and technological progress that the EU, with its economically insane Green Deal, has thrown out the window” They also won’t admit that China’s investments in 

armements are in reaction to the hysterical anti-China campaigns in the West. On that note, the tone in the Trump Administration is becoming ever sharper as the November elections approah, including from President Trump himself. The expansion of a global NATO, designed to defend the interests of a trans-Atlantic financial oligarchy, is the stuff of which World War III will be made. It is illusory to think that the Chinese leaders can be intimidated by military threats into giving up their successful economic policy and ending international cooperation under their Belt and Road Initiative. As for Russia, despite the hardships involved, it will continue to pursue the modernization necessary to ensure the defense of the country. President Putin, however, has again made the case for an urgent meeting of the leaders of the five permanent members of the UN Security Council to discuss global security and economic concerns (cf. below). The agenda required for any such summit will be debated at the upcoming June 27 Schiller Institute event. Time for Germany to Leave NATO! In an article written on June 19 for Neue Solidarität , Helga Zepp-LaRouche notes that now that President Trump has officially announced the withdrawal of 9,500 U.S. troops from Germany, and that sanctions are threatened against not only companies involved in the Nord Stream gas pipeline, but also state authorities, “it is time to reflect on what German interests are in a complex, rapidly changing world.” While one might welcome a troop reduction per se, as it would reduce tensions in Europe, she wrote, “if these troops are relocated to Poland and other East European countries, to become part of the encirclement policy of Russia,“ it would only escalate the potential for conflict. Given the importance of Germany as a base for projecting U.S. military operations in Africa and Asia, and given the fact that the Pentagon has ignored Trump’s promises to end the endless wars and take the troops out of different countries, it is highly unlikely, in Zepp-LaRouche’s view, that the US air base in Ramstein, the largest in Europe, would be shut down, or that American nuclear weapons stationed in Germany would be withdrawn. But the real danger she focuses on are NATO’s plans for global expansion (cf. above). In fact, since the collapse of the 

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Soviet Union and the dissolution of the Warsaw Pact, the Altantic Alliance has lost its entire raison d’être, and should have been dismantled long ago. As for the supposed complete divergence of interests between the United States and Germany on all important issues, which a number of German observers in now proclaim, that is hardly the case, Helga Zepp-LaRouche points out. The defenders of the neoliberal paradigm and the war party on both sides of the Atlantic, “are united in their hostility toward Russia and China”. On the other hand, “the true interests of the sovereign nation states of America, Germany, Russia, China, and all other countries are incompatible with the structures of a world government that only serves the interests of the oligarchy.” Therefore, she concludes: “It is time for Germany to cancel the so-called Status of Forces Agreement and membership in NATO. A new security architecture that considers the interests of all countries on this planet is long overdue.” The European Union Again Proves Itself Morally Unfit to Survive On June 18, the European Central Bank proceeded with the largest money injection in its history, providing banks with €1.3 trillion of three-year loans at a rate f between -0.50% and -1% under its Targeted Long Term Refinancing Operations (TLTRO). The next day, the European Council made clear that no EU money for the productive sector will be available 2021, i.e. too late. These two actions show that the EU, as Lyndon LaRouche would have said, is “morally unfit to survive”. Bankrupt banks involved in financial speculation are given money to refinance their worthless paper with a premium on top (due to the negative interest rates), while nothing is done to prevent the shutdown of large parts of the productive sector and the loss of millions of jobs in member states, as the EU Council failed to agree on a recovery facility. Those are ingredients for social explosions in Europe in the next weeks. At this point, it is to be hoped that the German central bank, the Bundesbank, will act on the mandate given it by the Constitutional Court (GCC) and pull out of the ECB asset purchase programs, causing the Eurosystem to crash altogether. Before concluding that we are calling for financial and institutional chaos, the reader should bear with us to the end. There is a real possibility that the Bundesbank could pull out by the Aug. 5 deadline set by the GCC. Consider the report released by the Scientific Service of the Bundestag in late May at the request of FDP member Gerald Ullrich. It concludes that “if the German government and the Bundestag fail to fulfill their obligations deriving from the GCC decision, then (unless the ECB autonomously reports on the proportionality of its measures) the consequence determined by the GCC sentence comes through,” i.e. the Bundesbank must exit the ECB PSPP program at the end of the threemonth term, and on top of that, must re-establish its balance by selling assets bought under that program. Eventually, Bundesbank President Jens Weidmann supported that standpoint in a written answer to FDP finance expert Frank Schäffler, noting that should the ECB fail to demonstrate the proportionality of its PSPP program, the Bundesbank will have to end its participation. He makes 

perfectly clear that the Bundesbank is not an implementing body of the European Central Bank, but is subject to German law. If the Bundesbank pulls out of the ECB programs, the Eurosystem cannot survive. But it cannot survive under the current paradigm either. To prevent a chaotic resolution, plans must be made for a smooth transition to a viable alternative system. As we have often indicated, this could be a system in which the euro is kept as an accounting unit of a monetary system among sovereign currencies, whose parities are fixed but adjustable – not by the markets but by sovereign governments. Such a system could be the basis for national credit and ad hoc multilateral programs. A Stock Market  Bubble  Is Not an Economic Recovery The late American economist Lyndon LaRouche often stated that, just as money is not a measure of real value in an economy, neither is an appreciation of stock valuations a sign of a healthy economy. The euphoria over daily or even hourly stock market jumps is a sign of wishful thinking, or just plain idiocy, but unfortunately, it characterizes most economic and financial commentary. A serious review of the bubbles in stock and bond valuations since 1987, which inflated and then popped, when contrasted to the ongoing decline of physical goods production, especially in machine tools and heavy industry, makes clear that the rise of stock values has been driven by something other than real economic growth. This has been especially true since the 2008 crash. The steady rise of stock prices came largely as a result of increasingly cheap credit from the Federal Reserve, beginning with the post-crash bailouts, and followed by Quantitative Easing. When a new crash began last September, the Fed had to step in to take over overnight lending in the “Repo markets”, as leverage ratios skyrocketed, and the volume of uncollectible debts reached unsustainable levels, threatening a chain-reaction collapse unless fresh liquidity was provided. The “liquidity crisis” nonetheless continued, and was only  rescued temporarily when, during the Coronavirus lockdown, the Fed promised to provide at least $4 trillion in virtually free money to speculators, with more to come, if necessary. Some of the programs are designed to keep some firms in business, but there have been no provisions for a credit policy which would revive manufacturing and goodsproducing industries. The Dow Jones average, which had peaked at 29,551 on Feb. 12, had fallen to 20,188 by March 16, but then reached 25,871 as of June 21, leading many analysts to say that this appears to be a sign of the hoped-for V-shaped recovery. Not so fast, said Federal Reserve chair Jerome Powell, in a statement last week. He announced that since there is “significant uncertainty” about a bounce back, the Fed decided to keep interest rates at their present low rate through 2022. By uncertainty, can one assume that Powell realizes that feeding a stock bubble through cheap interest rates will not help the vast majority of Americans who are living, at best, from paycheck to paycheck. This now includes between 40 and 50 million jobless who lost their jobs since mid-March. A survey published by the credit bureau TransUnion showed that there may soon be a “tidal wave of defaults and evictions” when the delays in payment on various loans granted 

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under the Coronavirus relief bill, are over. A “V-shaped recovery” in the stock market will have little benefit for most of the millions of people presently protected by these programs, who lack the resources to invest in stocks! What is needed is a program to rebuild the real economy, with productive jobs and good wages, such as will be discussed at the Schiller Institute video conference on June 27. John Bolton: The Memoir  of an Impenitent Warmonger After President Trump announced last September (cf. SAS

 38/20)he had fired John Bolton as National Security Adviser, he tweeted that had he not done so, “We’d be in World War 6 by now.” His quip was most insightful. Bolton has long been known for his willingness to push for military solutions against any nation which challenges the London-Washington consensus. And he is always ready to risk American lives and tax dollars to destroy any regime which refuses to sacrifice its population to remain in good favor with the City of London‘s global empire. It was Bolton who delivered the fake yellow cake uranium story to the Bush administration from Tony Blair and his MI6 chief, Sir Richard Dearlove, which was used to stoke the war drive against Iraq. And it was Bolton who sided with the Mujahedin-e-Khalq (MEK) against Iran, even though it had been on the State Department terrorist list, and continued advocating regime change in Tehran when he joined Trump’s national security team. He also sabotaged President Trump’s effort to achieve denuclearization by North Korea, when he threatened them with the “Libya treatment” during the Trump-Kim summit in Hanoi in February 2019, insisting that sanctions would not be lifted until there had been a full, verified denuclearization, which led to a breakdown of talks. Today, as a result of that failure, sparks of war are flying between the two Koreas. It should not be surprising, therefore, that Bolton’s longawaited memoir would serve as a way for him to try to even the score, by thoroughly trashing Donald Trump, just as the 2020 election campaign is taking shape. While there are a number of good reasons to criticize Trump’s policies, they are not the ones given by Bolton. He claims that Trump lacks “the competence to carry out the job” of President, that he  can be played “like a fiddle” by Russian President Putin, and was “willing to trade away our most cherished democratic values for the empty promise of a flimsy trade deal with China”, while pleading with President Xi to help him win the election. What really shocks intelligent people, is that anyone would care what Bolton says. It is a sign of the dysfunction of American politics that the Democrats, having failed to remove Trump through more than three years of bogus allegations and an impeachment vote in the House, would rally around such as a notorious war monger in their zeal to win back the White House in November. The release of John Bolton’s book now is designed as Phase III of the coup drive against President Trump. It comes during a period of great destabilization of the country, over the handling of the Covid-19  pandemic, which has taken more than 118,000 American lives (as of June 21), the sharp collapse of the economy (which began well before the Coronavirus), and the violence and unrest which followed the murder of George Floyd by police in Minneapolis, Minnesota. 

Many Democrats who in the past correctly attacked Bolton as a liar and a war criminal are so desperate today to protect the confrontational geopolitical doctrine -- which has been challenged explicitly by Donald Trump – that they are attesting to Bolton’s credibility! This says less about the alleged “unfitness” of Trump than it does about how the war hawks have hijacked both political parties and the mainstream media and pundits, and will stop at nothing to protect their failing and collapsing system. Vladimir Putin: to Avoid a New World War, The P5 Leaders Must Meet As promised last year, Russia has now released all Soviet Union documents regarding World War II, and President Vladimir Putin has presented his own analysis of the causes of that horror, as well as his proposals for urgent measures today to prevent the current crisis from ending in a similar disaster. His essay, “The Real Lessons of the 75th Anniversary of World War II” was published in English in the American journal The National Interest , in time for the Red Square parade commemorating that anniversary of the victory in Europe President Putin was in part driven to take these steps by the revival of overtly fascist movements in Europe, in particular  the violent “Maidan revolutionaries” who overthrew the elected government of Ukraine in 2014 (with unabashed support from George Soros and the Obama Administration), openly displaying their swastikas and carrying portraits of Hitler’s cohort in Ukraine, Stepan Bandera. Along with this fascist revival, there has been the effort to re-write the history of the war on fascism, by claiming that both Germany and the Soviet Union were responsible for launching the war, by ignoring the 1938 Munich Pact between the UK’s Lord Chamberlain and the Nazis, and by giving the impresion that the United States and the United Kingdom alone defeated Nazism, with no mention of the heroic, decisive role of citizens of the Soviet Union, 27 million of whom perished on the Eastern Front. While we cannot go into the historic details here, the conclusions that Vladimir Putin draws for today are certainly pertinent. He notes that the world “is going through quite a turbulent time,” and that while in the past, “shifts of such magnitude have almost never happened without major military conflicts”, the system of international relations created after World War II has made it possible to avoid such extremes, but urgently needs to be improved. The Russian President had already called for an extraordinary summit of the five permanent members of the UN Security Council a few months ago (cf. SAS 5/20). In his recent essay, he notes that Xi Jinping, Emmanuel Macron, Donald . Trump and Boris Johnson have all “supported the Russian initiative to hold a meeting of the leaders of the five nuclearweapon States, permanent members of the Security Council. We thank them for this and hope that such a face-to-face meeting could take place as soon as possible.” He proposes they discuss “the issues of preserving peace, strengthening global and regional security, strategic arms control, as well as joint efforts in countering terrorism, extremism and other major challenges and threats.” A special item on the agenda of the meeting, he adds, should be “overcoming the economic crisis caused by the coronavirus pandemic.” 

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It must be noted that no such meeting of the P5 has been scheduled. The Schiller Institute fully  supports Vladimir Putin’s initiative, as a complement to its own campaign, launched following the financial crash of 2008, for an emergency summit of the leaders of Russia, China, India and the United States (the “four powers”). China-Africa Summit Addresses Covid-19 and Debt Crises The Regional Director of the World Health Organization for Africa, Matshidiso Moeti, has warned again of the spread of Covid-19 throughout the continent. Of particular concern is the spread from capital cities, the entry points for merchandise and travelers, to the hinterlands, where access to healthcare is sorely lacking. While Egypt and South Africa are the most severely hit countries for now, she said, the pandemic is clearly spreading at an accelerating rate. The means to address the health crisis was at the center of the virtual China-Africa summit that took place on June 17 which was keynoted by Chinese President Xi Jinping.  China has already ensured the supply of 30 million testing kits, as well as at least 10,000 ventilators and 80 million masks each month for Africa, and is continuing its pledge to build 100 hospitals and clinics across the continent, launched in 2015. The video-conference was joint-organized with the African Union, now headed by South African President Cyril Ramaphosa, and the Forum on China Africa Cooperation (FOCAC), chaired by Senegalese President Macky Sall. Also attending were UN Secretary General Antonio Guterres, and WHO Director-General Tedros Adhanom Ghebreyesus, a native Ethiopian. Xi noted that both China and Africa face “the formidable task of combatting the virus” while stabilizing the economies and protecting people’s livelihoods. In that context, China has decided to launch construction of the Africa CDC headquarters this year, ahead of schedule, and will create an Africa Medical Supplies Platform, to make accessible diagnostic and therapeutic supplies to all nations for the next six months. Xi promised that once development of a Covid-19 vaccine is completed, African countries “will be among the first to benefit”. Moreover, China will also work to uphold the commitments made under the Belt and Road Initiative for Africa’s infrastructure development and will cancel the debt of relevant African countries in the form of interest-free government loans that are due to mature by the end of 2020 (cf. below). He also promised to work with the global community to further extend the period of debt suspension. New Report in United States  Debunks the Chinese “Debt Trap” Myth The Johns Hopkins School of Advanced International Studies (SAIS) released a report on June 18 entitled “Debt Relief with Chinese Characteristics”. The conclusion of the researchers, after examining over Chinese 1,000 loans to African nations, is that agreements seem to “have been easier to reach with Chinese lenders than with private creditors.” Since 2000, it is estimated that Chinese state-owned entities have loaned over $150 billion to Africa (the amount from “private” lenders is much higher), of which $3.4 billion has actually been “cancelled.” Over that 20-year period, Chi

na has also “restructured and refinanced” $15 billion in debt. Even more striking, the researchers report, is that in harsh contrast to the “debt trap” hype, they found no evidence that China had ever seized any assets for non payment, nor used arbitration courts to enforce payments or applied penalty interest rates. Lebanon vs. the Old Paradigm:  The Straw to Break the Camel’s Back? Over the past two weeks, Lebanon has been poised to join the “new paradigm” in international relations and economic cooperation, as reflected in China’s Belt and Road Initiative (BRI) and Russia’s intervention to end the endless wars and regime changes in West Asia. This tiny country, with a collapsed physical economy and bankrupt state and banking systems (with 1,5 Syrian refugees for 5 million citizens), could also become the most significant battlefield between the  local agents of Anglo-American geopolitics and those who strive to chart a new path for the country, this time eastwards. On June 17, the United States began implementing the Caesar Syria Civil Protection Act, which imposes new sanctions not only on Syrian individuals, but on all those engaging in trade with Syria. That targets Lebanon directly as the main trade outlet for Syria, and puts the leadership in the position of accepting to be complicit in the mass murder of the Syrian population, or suffer the wrath of the U.S.  It was in this context that the leader of the Lebanese Hizbollah, Hassan Nasrallah, made a televised speech on June 16 to denounce the Caesar Act and vow to fight it. However, the two most important aspects of his speech were: 1. ending the negotiations with the IMF, 2. seeking help from China to rebuild the productive economy. Since 2018, Lebanon has been in negotiations with international “donors” to resolve the government financial crisis. The IMF is proposing draconian measure to privatize what is left of state-owned enterprises. On China, Nasrallah reiterated that Chinese companies were willing to invest tens of billions of dollars in Lebanon in infrastructure, industry and agriculture, including building a modern north-south railway, as well as new power plants and ports. The power sector in Lebanon costs the state 2 billion dollars annually in subsidies and lost revenues. The Chinese embassy in Lebanon responded that “the Chinese side is ready to carry out practical cooperation actively with the Lebanese side on the basis of equality and mutual benefit in the framework of joint work to build the belt and the road”. Chinese companies, it went on, are following the opportunities to cooperate in infrastructure and other fields. 

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