STRATEGIC ALERT NEWSLETTER
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| | | | The Schiller Institute will hold an urgent conference on the theme “The Age of Reason or the Annihilation of Humanity?” Please see the invitation attached, and register for the event at https://schillerinstitute.nationbuilder.com/conference_20230204. (Conference language is English, with simultaneous translation provided in French, German and Spanish for those who register.) |
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| | | Two important meetings marked week three of January: the annual World Economic Forum (WEF) get-together in Davos Jan. 16-20, and the “League for Ukraine” meeting, as U.S. Defense Secretary Lloyd Austin renamed the Ramstein conference of the Ukraine contact group that took place Jan. 20.
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In terms of results, both were a complete failure -- at least initially. Whereas very few political leaders attended the billionaires club in Davos, the Ramstein meeting ended without a decision by Germany to supply Leopard 2 tanks to Ukraine. However, according to information not yet confirmed officially, after four days of intense pressure from Washington and a threatened government crisis, Berlin reportedly capitulated and decided to send... 14 Leopard 2 tanks. And it gave a green light to a more consistent contingent from Poland and other countries (cf. below). Berlin justified this with the U.S. decision – also unconfirmed – to send some ultra-modern Abrams tanks, a precondition originally set by Berlin to join the escalation.
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It seems that the German leadership has not learned the lesson of Stalingrad, and is not listening to warnings from its military (cf. below). But beyond the farcical proposition that a few hundred modern tanks could turn the tide of the war in Ukraine, even the U.S. military is aware that the war has been lost, and is imploring political leaders to find a face-saving solution. Thus, a discussion has begun among military and strategic analysts in the West on what the situation will look like, once Russia's expected “spring offensive” has succeeded in taking over the entire Donbass territory. Some point to the Korean war, which ended with an armistice and an iron curtain at the 38th parallel, with the country remaining divided in two and armed against each other, with no peace treaty to this day, 70 years later!
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What the Davos meeting revealed, is the real dynamic behind the western push for conflict with Russia: war is needed to keep the financial system alive. Canadian Finance minister Chrystia Freeland let the cat out of the bag, by stating in a round table discussion that fueling the war will be a “huge boost for the global economy” (cf. below). Note that Chrystia Freeland is not just any participant, she is also a member of the board of Trustees of the WEF. Her statements indicate the desperate state of a global economy threatened by a collapse brought on by the monetary policy implemented by central banks to try and control inflation. They also confirm what this newsletter has always insisted: the WEF’s “Great Reset” is nothing but a modern version of a Schachtian economy, based on a green bubble and defense spending.
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The German decision to send modern tanks will be seen as crossing a red line, Moscow has warned. Duma speaker Vyacheslav Volodin cautioned that Russia will respond with “more powerful weapons”, adding: “Arguments that the nuclear powers have not previously used weapons of mass destruction in local conflicts are untenable. Because these states did not face a situation where there was a threat to the security of their citizens and the territorial integrity of the country.”
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| The difference between today and the Korean War, is that President Eisenhower was in the White House at the time, and he took the decision to end that conflict. Such a figure is lacking today. Hence, the Schiller Institute’s mobilization for a new “Helsinki”-style global security and economic development conference. Join the SI international webcast on February 4 (cf. below). |
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| | | At the meeting of the Ukraine Contact Group Jan. 20 in Ramstein, Germany, the new German Defense Minister, Boris Pistorius, responded with a “no” to the request to send Leopard 2 battle tanks to Ukraine, sparking a barrage of attacks on both him and Chancellor Scholz for “letting Ukraine lose the war”. Four days later, Berlin capitulated, agreeing to send a few Leopard 2 tanks and to allow other countries to do so. It is not yet clear how many will be sent and when, but Moscow had already signaled that it would be considered as an escalation.
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The reality is that Chancellor Scholz was isolated within his own government and was facing a majority against him in the Bundestag. Both his government allies, in fact, the Greens and the FDP, made clear that they would stand with the opposition CDU-CSU in the event of a vote.The leadership of the Chancellor's Social Democrats, on the contrary, including from Bundestag faction leader Rolf Mützenich and SPD general secretary Kevin Kühnert, had backed the refusal to send tanks.
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Thus, evidence is mounting that there are actually two governments-in-one in Berlin: on the one side, the Greens and the Liberals (FDP), and on the other the SPD. Foreign Minister Annalena Baerbock of the Greens is the most outspoken proponent of escalating the conflict, to the point of openly contradicting the Chancellor’s policy.
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His critics accuse Olaf Scholz of having “totally isolated Germany” in the West, but that is not quite the case for Switzerland, a leading producer of military equipment which has blocked the supply of ammunition produced in Switzerland for German vehicles sent to Ukraine. Zeitgeschehen, a leading Swiss journal, ran a lengthy interview on Jan. 18 with the former inspector of the German Army, General Harald Kujat, in which he denounced the absence of diplomacy to end the war. He stressed that there cannot be a solution on the battlefield, referring to similar assessments by U.S. Chief of Staff Mark Milley, and he refuted the narrative that Russia refused to negotiate, pointing out that the talks held in April-May had been sabotaged by then UK Prime Minister Boris Johnson.
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Then on Jan. 23, Switzerland's leading news daily, the Neue Zürcher Zeitung, pointed to an aspect of the debate that has been hushed in Germany’s mainstream media, namely that the depleting of the weapons stocks of the German armed forces to send them to Ukraine would be welcomed by the U.S. “military-industrial complex” as a magnificent opportunity to sell their equipment to the Germans. The French experienced this attitude of the U.S.,the NZZ writes, when the Australian government suddenly tore up its already-signed contract with France, in order to buy submarines made in the U.S. This article came one day after the Franco-German Ministers Council, where French President Emmanuel Macron clearly stated his opposition to depleting French armed forces for Ukraine, and warned against an escalation of the war.
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| Domestically, Scholz's original position was implicitly supported by an assessment of the BND Foreign Intelligence Service given to a meeting of Bundestag members in charge of defense matters. The officials said that, contrary to the prevailing propaganda, Ukraine has suffered enormous losses, which must be taken into account in any discussion on support for Kiev. This information was leaked by Der Spiegel on Jan. 20, the day of the Ramstein meeting. It buttresses General Kujat's view that now is “the best time to resume talks” on a ceasefire in Ukraine, putting an end to the bloodshed there. |
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| | | The European Commission tweeted proudly on Jan. 20: “We have imposed nine rounds of heavy sanctions against Russia, crippling its ability to finance the war.” Just three days before, at the World Economic Forum, Ursula von der Leyen spouted the same line, claiming that the EU sanctions “leave the Russian economy facing a decade of regression and its industry starved of any modern and critical technologies”.
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The mouthpiece of the City of London, The Economist, does not agree. An article in its year-end issue, titled “In 2022 Russia Kept the Economic Show on the Road”, gives various reasons why Western forecasts of a collapse of the Russian economy have failed, and concludes: “At current, the Russian economic system is in higher form than anticipated. Meanwhile Europe, weighed down by sky-high power prices, is falling into recession.” The same lament was echoed by European MP Guy Verhofstadt, a rabid “Russia-basher”, on Jan. 2 (cf. SAS 2/23).
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| Some concrete data on the Russian economy, contrasted to what Brussels expected, were summarized by Italian economist Michele Geraci in a Jan. 20 tweet: Exports +14% (EU forecast: −30%); Surplus +66% (EU forecast: −22%); Imports −9% ( EU forecast: −35%); GDP −3% ( EU forecast: −11%); ruble +15%. “Here we have a serious problem of delusion: a persistent, false psychotic belief that is being held on to despite indisputable evidence to the contrary,” Geraci commented. |
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| | | A de facto death sentence is still hanging over the head of Julian Assange, if he is effectively extradited from the United Kingdom to the United States, where he faces up to 175 years in prison if convicted. The Wikileaks founder and former publisher is accused of “espionage” for publishing classified documents on the war crimes committed by the U.S. in Iraq and Afghanistan. He has been imprisoned for the past four years in kafkaesque conditions in the high security Belmarsh prison of London.
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| To draw attention once again to this outrageous violation of freedom of speech, human rights activists held the “Belmarsh Tribunal” on Jan. 20 at the National Press Club in Washington. The guest speaker was former UK Labour Party leader Jeremy Corbyn, who demanded that elected officials speak up in support of Assange. “Your silence makes it worse for Julian”, he said. “Your silence makes it worse for democracy as a whole.” He appealed to “elected politicians in the United States: Speak up to defend democracy, speak up against the powers of the Espionage Act, and speak up for Julian Assange, because our human rights are under threat all over the world…. |
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| | | The linkage between NATO's permanent war strategy and its role in enforcing global austerity, as the “unipolar order” is facing its most profound crisis, was made explicit at last week’s World Economic Forum (WEF) in Davos. In fact, it was stated directly by Canada's Deputy PM and Finance Minister, Chrystia Freeland, who also serves on the Board of Trustees of the WEF. In her speech during a round table discussion at Davos, Freeland said that winning the war against Russia in Ukraine would be a "huge boost for the world economy".
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In supporting the calls of Ukrainian officials at Davos for maximum commitment from NATO countries to provide more offensive lethal weapon systems to Ukraine, she said this "is not about doing Ukraine a favor". Rather, “supplying Ukraine with weapons and money to win the war is in our own self-interest”. She added that while there are many things Finance Ministers cannot successfully address, such as COVID, global supply chains, inflation (!), "we can help Ukraine win”, and if we do, it would be “a huge boost to the global economy".
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That is, the war buildup not only benefits NATO's "Military-Industrial Complex", providing a "reflationary impulse" according to one commentator, but will also knock out the leading opponent of the dominant unipolar "petro-dollar" order, i.e., Russia.
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What Freeland neglected to tell her fellow Davosians, though many already knew it, is that her Russophobia long pre-dates the present Russia-NATO conflict over Ukraine. She is not only of Ukrainian origin, but the descendant of a Ukrainian Nazi collaborator. During World War II, her maternal grandfather, Michael Chomiak, was editor-in-chief of the newspaper, Krakivski Visti, working directly under Nazi propagandist Emil Gassner, an assistant to Joseph Goebbels. Under his direction, editorials appeared calling for pogroms against the Jewish population, which led to massacres of Jews and other "non-Ukrainians" by the ultra-nationalists. For example, in the Nov. 6, 1941 issue, the paper praised the results of the onslaught against the Jews: "There is not a single one left in Kiev today, while there were 350,000 under the Bolsheviks". Chomiak's paper said of the Babi Yar massacre that Kiev's Jews got their "comeuppance." The editorial call-to-arms was taken to heart by the Bandera "ultra-nationalists", the Ukrainian Nazi forerunners of today's Azov Battalion and other thugs in the Ukrainian defense and security forces – whom Freeland wants to fortify with virtually unlimited arms.
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For years, as Chrystia Freeland was rising in Canadian politics, she denied her grandfather had such an explicit Nazi connection. However, an article in March 2017 in the Globe and Mail of Toronto stripped away her cover story, by reporting on an article by her uncle, which she helped edit, which revealed Chomiak had been a Nazi propagandist.
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| Given the dominance in the NATO hierarchy of the present-day defenders of the Nazis in Ukraine, it is not so shocking that Freeland's name has surfaced as a leading candidate to replace NATO's present Secretary General Stoltenberg when he steps down. |
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| | | Following the tragic death of over 40 residents of an apartment building in Dnipro, on Jan.14, mainstream Western media immediately went into high gear, blaming the “atrocity” on Russia. From Ukraine to Washington, over-emotional calls were heard for the delivery of more and more sophisticated weapons to the Kiev regime to stop the wanton attacks on innocent civilians.
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A few hours later, an outspoken aide to the Office of the Presidency, Oleksiy Arestovych, stated that the Russian missile had been shot down by the Ukrainian air defense forces over the apartment building and exploded when falling onto it, causing the damage. The Russians have regularly denounced Kiev for positioning air defense systems in residential areas, which is prohibited by international law, precisely because of the acute danger for civilians.
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As for Arestovych, it is not clear whether he was simply making an off-the-cuff comment as to a well-known reality, or whether he meant to inject some reality into the narrative. He has a long history of making provocative pronouncements, but was nonetheless an aide to President Zelensky.
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In any case, his comments caused a firestorm of official protests, prompting him to retract his statement (“I made a serious mistake”), and then to resign from his position on Jan. 17. He was immediately placed on the notorious hit list put out by the Mirotvorets gang, accused of “aggression against Ukraine” and “undermining the moral of the armed forces”.
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But that was not all. Shortly after his resignation, a video surfaced on Twitter, in which he delivered a scathing attack on Kiev’s demonization of Ukraine’s Russian-speaking population.
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Some experts believe Arestovych is just positioning himself for a better job when President Zelensky is ousted. That may or may not be the case. What is clear, on the contrary, is that the powerful forces that actually run the regime will not brook any opposition to their narrative.
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But this was not the only worry of the Ukrainian government. On Jan. 18, the Minister of Internal Affairs Denys Monastyrskyi was killed in a helicopter crash, along with two other high-ranking officials of his ministry. An investigation is still ongoing into the cause of the crash, including possible sabotage.
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| In addition, a number of high-level officials resigned on Jan. 23 amid charges of widespread corruption, including the Deputy Minister of Defense and the Deputy Minister of Infrastructure. Zelensky’s office has indicated that a string of arrests are expected to follow. The next day, the Deputy Chief of Ukrainian President Volodymyr Zelensky’s Presidential Office handed in his resignation. Although rarely reported in the media, it has never been a secret that Ukraine has been ranked for many years among the most corrupt countries in Europe. |
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| | | The German industrial giant Siemens has just signed a €3 billion contract to build no less than 1,200 electric locomotives for Indian Railways. This is the company’s largest locomotive contract ever. At the same time, it was announced that DMG Mori, a German machine tool company, is about to finish a €400 million state of the art plant for the manufacture of CNC machine tools in Egypt, which will be the first machine tool factory to operate in Africa.
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The modern locomotives (9,000-horsepower) will service the nearly fully electrified railway network in India, which is expected to almost double freight capacity by rail. They will be one of the most powerful freight locomotives in the world, specified to haul loads of 4,500 tons at a maximum speed of 120 km per hour. It will take Siemens 11 years to deliver all the locomotives, which will be produced locally by Indian Railways personnel. Included in the contract is a cluster for 35 years of full-service maintenance by Siemens.
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Turning to Egypt, under the slogan, “Made in Africa, for Africa, by Egypt”, the DMG Mori machine tool company announced that it will complete its factory by the end of this year. Built in cooperation with the Egyptian Arab Organization for Industrialization, the factory will produce 1,000 CNC machines annually. The state of the art, fully automated and digitized factory will be housed in a 60,000 square meter plant near Cairo Airport. The contract includes CNC training together with DMG Mori Academy GmbH schools and universities in Egypt, which will provide training and jobs for thousands of young people. The machines will be marketed in Egypt and throughout Africa.
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| Siemens is also active in Egypt. Just last May, the German giant inked an 8 bn euro deal to participate in the construction of a 2,000 kilometer high speed railway there, which will be the world’s third largest high speed railway. In terms of energy, the company had completed in 2018 a 14 GW gas-fired combined cycle power station in only 27.5 months. The typical construction time for a single combined cycle power plant block with a capacity of 1,200 MW is approximately 30 months. But for the Egypt megaproject, Siemens built twelve such blocks in parallel in record time, and connected them to the grid. |
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| | | Faced with a hostile international environment, Chinese leaders have taken a sound approach to ensuring economic growth. They have decided to increase investments in major infrastructure and industrial projects to activate private capital, create jobs and boost consumption. According to Global Times, fixed-asset investments rose by 5.1% in 2022, and infrastructure investment by 9.4%.
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One major project involves building up semiconductor production and research activities in integrated circuits. To help finance it, the government will allocate the enormous sum of one-trillion-yuan ($143 billion) over five years, mainly as subsidies and tax credits. First mooted last October, the project reflects China’s assessment of its own needs, but also comes in response to the draconian sanctions announced by the Biden administration on Oct. 7, 2022, and then expanded in December.
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The first package of sanctions prohibits the sale to China of not only advanced semiconductors made in the United States, but also integrated circuits/chips manufactured in other countries with the aid of U.S. inputs (both products and software) -- which would affect most producers throughout the world. In addition, the prohibitions apply to manufacturers of the equipment used to make chips. For example, the Dutch company AMSL makes the extreme-ultraviolet lithography machines needed to print advanced computer chips (cost per machine up to $200 million). China had contracted to buy a machine from AMSL, but Washington stepped in to block it.
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The Biden Administration justifies the unprecedented harshness of the measures by claiming it is needed to “protect U.S. national security”. But they have apparently not understood how China’s dirigist economy actually works (even though it is based on the same model that transformed America at the time into an industrial powerhouse, and rebuilt post-war European economies). Beijing has now moved to become world leader in the integrated circuit industry, just as it has done in steel production and high-speed rail transport, and is on the verge of doing in space exploration.
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The two main parts of the $143 billion package of assistance to manufacturers are: exemption from corporate income tax for up to 10 years, for certain companies, so the funds can be used to to modernize their production process; and subsidies to firms that purchase domestic semiconductor equipment.
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| In 2015, China supplied 10% of the chips consumed domestically. In 2022, according to various estimates, the percentage rose to between 26% and over 30%. The current goal is to reach a level of 70% by 2025. At this point, the Chinese cannot yet produce chips as thin as those manufactured by Taiwan’s TSM, the world’s biggest microchip maker, but they are working on developing the technology required. |
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