STRATEGIC ALERT NEWSLETTER
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| | | The BRICS summit in Johannesburg from Aug. 22-24 is set to be a strategic game-changer, although you would never know it from following mainstream Western media. With the representatives of over 50 countries attending, in addition to the leaders of the five members of the group (Vladimir Putin by video hook-up for security reasons), it will consolidate the fast-moving shift away from the “unipolar world” and its “rules-based order” (cf. SAS 32, 33/23).
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Although no spectacular announcements, economic or political, are expected immediately, the five leaders will discuss and debate the defining issues of today, including with their guests in the BRICS Plus.
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South Africa’s President Cyril Ramaphosa indicated the main items on the agenda in a speech on Aug. 20. Among them, expansion of the BRICS in one form or another (23 countries have already formally applied for membership), a policy of strict non-alignment, enhancing the role of the BRICS New Development Bank (NDB), and building “a partnership between BRICS and Africa so that our continent can unlock opportunities for increased trade, investment and infrastructure development”.
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Just prior to the summit, President Ramaphosa hosted Xi Jinping for a state visit in Pretoria, the second for the Chinese President, with both expressing satisfaction with bilateral relations. The two leaders will also co-chair the China-Africa Leaders’ Dialogue on the sidelines of the summit.
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Russia’s representative in Johannesburg, Foreign Minister Sergey Lavrov, stressed that the discussions will focus on “strengthening the potential of the NDB and the BRICS Contingent Reserve Arrangement, improving payment mechanisms, and increasing the role of national currencies in mutual settlements”.
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India’s Foreign Secretary Vinay Kwatra confirmed his country’s interest in increasing the use of the rupee in trade and in discussing the criteria for a possible expansion of the BRICS. Delhi has already taken measures to “de-dollarize” its trade.
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The Brazilian government, too, has made it clear that they want the BRICS to address the matter of a non-dollar means of facilitating trade and development among nations. Ambassador Eduardo Paes Saboia, Brazil’s Secretary for Asia and the Pacific, had reported earlier that the use of local currencies for transactions among the BRICS countries and the possibility of establishing a BRICS unit of account are on the agenda of the closed-door meeting of the leaders. An important outline as to how to proceed was published by Brazilian economist Paulo Nogueira Batista, Jr, a former vice president of the NDB (cf. below).
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| The current President of the BRICS bank, Dilma Rousseff, will have a packed agenda in Johannesburg. In an interview to CGTN Aug. 19, she recalled that the NDB was first agreed upon in 2014 when she, as then-President of Brazil, hosted the BRICS summit in Fortaleza. She noted in the interview that infrastructure is key to development, and that her bank is ready to finance all kinds of projects. She underscored that no country can dictate to others what system they must implement, as they all have different civilizations and different histories. |
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| | | Shortly before the opening of the BRICS Summit, the chairwoman of the Schiller Institute Helga Zepp-LaRouche issued a call to on Aug. 19 to citizens of the Global North to “support the construction of a New Just World Economic Order”. Her statement begins:
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The summit of the BRICS countries, which will take place from August 22-24 in Johannesburg, South Africa despite all Western attempts to disrupt it, will demonstrate to the whole world that a new world economic order has emerged, opening a new chapter in human history. Nations of the Global South, which already represent the vast majority of the world’s population, are expressing their effective resolve to end forever the past period of some 600 years of colonialism, and to establish an economic system that encourages the sovereign, equitable development of all states of this earth, the elimination of poverty, and the creation of a decent standard of living for all. We, the citizens of the Global North, must wholeheartedly welcome this development and support it through practical cooperation!
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A correct analysis of how this tectonic change in the strategic situation came about is essential. This formation of a new economic model is not the result of the work of 'Russian trolls' or 'Chinese aggression,' as the mainstream media would have us believe. Rather, it is the result of a huge strategic miscalculation by forces primarily in the USA and Great Britain, which, after the dissolution of the Soviet Union, mistakenly saw themselves as the victors of the Cold War, and derived from this the license to impose their neoliberal economic model on a unipolar world, and to bring the various methods of 'regime change' to bear upon all governments who do not want to conform to this 'rules-based order'...
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Helga Zepp-LaRouche then reviews the historic realignment which has occurred over the ensuing decades up to today.
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Attempting to maintain the long-defunct unipolar world will almost certainly lead to World War III, to which we have come dangerously close with the situation in Ukraine, where the failure of the Ukrainian counter-offensive has exhausted the conventional dimension of the war, so that only ending the war through diplomatic negotiations, or escalating to the use of nuclear weapons, remain as options. The notion that the West must 'decouple' from China and the BRI’s sphere of influence, or engage in 'risk reduction' to use the new, ridiculous formulation, would lead not only to economic self-destruction as in the case of Germany, but this notion also leads to war. For the splitting of the world into two completely separate blocs -- a US-dominated, global NATO bloc that continues to cling to the model of the casino economy, and an economically fast-growing bloc of the Global South around the BRICS countries -- would not remain peaceful, either.
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There is only one sure way to resolve the many existential crises that exist around the world: Instead of viewing and opposing the new economic model of the BRICS countries as an antagonist, it is in the self-interest of the nations of the Global North to cooperate with this emerging New World Economic Order and to jointly tackle the daunting task of overcoming poverty and underdevelopment...
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The emergence of this new economic order, Helga Zepp-LaRouche points out, is not only long overdue for Africa, Asia and Latin America, it is also the means by which the so-called developed nations can re-launch their own ailing economies.
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| Please sign the appeal here. |
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| | | A former vice president of the New Development Bank (2015-17), Brazilian economist Paulo Nogueira Batista, Jr., penned an op-ed on CGTN Aug. 21 titled, “Is a BRICS Currency Feasible?”. He goes beyond the recently common speculations about “de-dollarization” and a new BRICS currency, to link that issue implicitly to the NDB, and to the ability of such a BRICS financial institution to issue volumes of productive credit under its new President Dilma Rousseff.
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Before going into that crucial issue, however, he first rejected as unworkable any ideas about a new currency, which essentially treat it only as a unit of account or a limited means of payment, and not as a store of value and not as a credit issuance. (Recall that Lyndon LaRouche, in agreement on this point with the first Treasury Secretary of the young United States, Alexander Hamilton, many times said that when a government issues a currency, it issues credit and it accepts and assumes a debt.)
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The new currency would be called the R5 after the fact that the BRICS nations’ currencies all start with the letter “R” - real, ruble, rupee, renminbi, and rand. And further: “The only feasible alternative … would involve making the R5 convertible into bonds guaranteed by the five countries. The R5 Issuing Bank would also be in charge of issuing R5 bonds, denominated in BRICS currency with different maturities and interest rates. The R5 would be freely convertible into R5 bonds. ‘Backed’ by assets created by the Issuing Bank itself, the R5 would actually be a fiduciary currency of the same nature as the dollar and other internationally liquid currencies. The R5 bonds would be the concrete financial expression of the guarantee that the five countries would give to the new currency.”
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| In terms of U.S. history, this idea echoes the Lincoln Administration’s issuance of the Greenback currency. The currency/bonds of such a bank, as they are bought, also become lending reserves of that bank, potentially to be issued as credit to generate “assets created by the Issuing Bank itself.” |
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| | | That the Ukrainian counteroffensive against Russia, finally launched June 4 after continuous postponements, has been a complete failure is now acknowledged by all but the most hard-core geopoliticians. But that, unfortunately, does not mean that Western political leaders, beginning with President Biden, have decided to seek an end to the senseless killing and destruction through diplomatic means. Rather, they remain committed – at least publicly -- to throwing more money and military equipment into the war.
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Thus, in a much hyped move, the White House finally approved the delivery of F-16s to Ukraine by The Netherlands and Denmark (fighter planes they were about to replace with more modern ones in any case). But the commander of U.S. Air Forces in Europe and Africa, Gen. James Hecker, told reporters on Aug. 18, that, while they were better than what Kyiv now has, the F-16s would not be a “silver bullet” allowing the Ukrainians to take out Russia’s air defense system.
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Meanwhile, the growing nervousness in informed circles in Washington over the failed attempt to use Ukraine to defeat Russia is reflected in a number of recent leaks, as the following examples show:
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- A classified assessment of the U.S. intelligence community, leaked in the Aug. 17 Washington Post, forecasts that the Ukrainian offensive is unlikely to reach its key objective of reaching Melitopol and cutting off Russia’s land route to Crimea. That “grim assessment is based on Russia’s brutal proficiency in defending occupied territory”, the Post adds, and will raise many questions in Western capitals, “about why a counteroffensive that saw tens of billions of dollars of Western weapons and military equipment fell short of its goals”.
- Politico reported Aug. 18 that an anonymous American official conceded the government may have “missed a window” to push for peace talks between Russia and Ukraine, and that Chairman of the Joint Chiefs of Staff Mark Milley “had a point”, when he offered a grim pronouncement on Kyiv’s chances for victory last year. According to this article, President Biden and Secretary of State Antony Blinken have vehemently rejected negotiations, against the suggestions of some members of the military and intelligence agencies.
- Investigative journalist Seymour Hersh cited a U.S. intelligence official on his Substack blog on Aug. 17, who said that the CIA had warned Secretary Blinken that Ukraine’s ongoing counteroffensive against Russian forces was bound to fail, and that Kiev “will not win the war”.
- Opposition is growing in the U.S. Congress, in particular among Republicans, but also Democrats, to additional military spending for Ukraine. Republican Representative Andy Harris is a case in point. Although an ardent supporter of Kyiv until now and co-chairman of the Congressional Ukraine Caucus, he said he would will not approve any more aid without oversight. Citing the danger of starting “World War III”, he called for peace talks to begin now.
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| | | The Ukrainian government is heavily financed by Western multilateral institutions, such as the EU and the IMF, as well as by generous loans and grants from individual countries. The total amount pledged by governments, including EU institutions, was over $170 billion as of May 31, 2023 according to the Kiel Institute for the World Economy. Thus, Kyiv does not need to go to the financial markets. And yet, the government is selling bonds with a yield of between 17.8% and 19.5%, depending upon maturity.
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To purchase bonds from a country that is losing a war and has no chance to recover on its own is more than a hazard. But if its debt is guaranteed by third entities, one might make a fortune. Since actions by the Kyiv government on matters of finance are decided in London or Wall Street, no need to be a conspiracy theorist to assume that this scheme was concocted by the banks to “make a killing”, and not only metaphorically.
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The Financial Times touted this opportunity on Aug. 10, in an article headlined, “Ukrainian Government Bonds Surge as Kyiv’s Cash Pile Climbs”. On Aug. 8, the Ukrainian Ministry of Finance placed war bonds worth 7,219 million hryvnias (UAH), according to a statement by the Ministry of Finance. There is some unclarity on figures, but here is what is reported by the UkraNews website, covering the bond offering:
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“The Ministry placed securities with a maturity of 1.2 years for UAH22 million ($596,595.12) at 17.8% per annum; 1.5 years for UAH2,133 million at 18.35% per annum; and three years for UAH5,064 million at 19.50% yearly.
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Who is buying such bonds? Not your grandmother or the local shopkeeper, but probably investment banks with their money. “Institutional investors including major U.S. and foreign banks—notably Citigroup—have taken their stakes in this,” SOLVE, a leading market data platform provider for fixed income securities, had reported earlier.
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On June 3, Ukrinform reported that "from the placement of government bonds, UAH240.3 billion was raised, including UAH80.3 billion in foreign currency (1,644.1 million in dollars and 504.9 million in euros), to finance the state budget”. In addition, UAH101.1 billion was attracted from the issuance of military government bonds, and UAH498.6 billion was raised from external sources.
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| Since the world financial system still works on the “Originate to distribute” model, i.e. spreading the risk globally, Ukrainian government and foreign bonds are securitized, which means they are packaged into securities with other assets, that are sold, often several times, to other parties. Don’t be surprised if they end up in the vaults of the ECB and the Federal Reserve, alongside the junk that central banks are still purchasing to keep the bankrupt trans-Atlantic system alive. |
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| | | Under the von der Leyen presidency, the European Commission has launched a hostile policy against China, first calling it a “systemic rival” in March 2019, then launching the so-called “Global Gateway” project as an anti-Belt and Road initiative in September 2021, then finally initiating a “de-risking” policy (another name for “decoupling”) in March 2023.
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In addition to the fact that dissolving economic ties with your main trade partner is a suicidal proposition, Ursula von der Leyen and her clique have reversed a EU policy, which was quite different before.
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In 2008, in fact, the Commission had issued a policy paper describing China and the EU as having the same interests in Africa, and advised member states to act to expand cooperation with Beijing in a whole series of areas. The paper is an endorsement ante-litteram of the spirit and intentions of the Belt and Road Initiative, although the latter was officially launched only later by by Xi Jinping.
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The “Communication” from the EU Commission to the European Parliament, the EU Council and other EU institutions and states, among others, is headlined The EU, Africa and China: Towards Trilateral Dialogue and Cooperation. It states that “the European Union and China are both long-standing partners of African countries,” and describes Beijing’s approach in Africa as follows: “China’s official development policy is to pursue cooperation with the focus on sovereignty, solidarity, peace and development with non-interference in domestic affairs and mutual benefit as key principles. Trade, investment, turnkey infrastructure projects and training in China (fellowships) are the main tools supported mainly through loans and in-kind operations.”
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And further: “both the EU and China have a strong shared interest in promoting stable and sustainable development in Africa”, and this reality “has been recognized by the EU and China” at the tenth China-EU Summit in Beijing on Nov. 28, 2007.
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The question is therefore “whether more can be done between the EU, Africa and China to reinforce their policy dialogue and cooperation through forms of trilateral cooperation.” The EU Commission “argues that we should begin on the basis of consensus to establish, in a gradual, but progressive way, a cooperative three-way agenda with both our African and Chinese partners in a number of areas where synergies and mutual benefits can be maximized.”
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The areas where the Commission calls for a “pragmatic and progressive approach,” a “shared approach” and “effective aid,” are: 1. Peace and security in Africa, 2. Support for African infrastructure, 3. Sustainable management of the environment and natural resources and 4. Agriculture and food security.
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On the basis of this policy, when Chinese President Xi Jinping launched the Belt and Road in September 2013, it was to be expected that the EU would welcome it with great enthusiasm, as corresponding to EU expectations. But as EU Commission President Ursula von der Leyen advanced at the EU, China’s role as a desired partner in developing Africa, vanished.
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| The explanation for that is to be found in the EU’s new colonization schemes, disguised as the “Green Deal” or “save planet” schemes, which aim above all to prevent the development of Africa and poor countries in general. China has become a threat not to “European values”, but to such imperialist schemes. |
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| | | Once again, cost-cutting bureaucrats and ecologists have joined forces in Germany to sabotage crucial infrastructure projects. The German government, relying on the opinions of “experts” who have no clue about the requirements of rapid and efficient rail freight operations, has now rejected the plan to build a 118 km long tunnel system along the Rhine, between Bonn and Wiesbaden, which covers a crucial section of the major railway corridor from Rotterdam to Genoa. . The concept for this Westerwald Tunnel had been presented by the Niemeyer engineering team more than 20 years ago, but repeatedly postponed.
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The Institute of the German Economy (IW) has documented that the entire time needed today to lay new rail tracks beyond a length of 30 km is an average of 274 (!) months. Nonetheless, there were hopes that the Westerwald Tunnel would receive the official okay.
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The Dutch-based rail freight journal interviewed Willy Pusch, the leader of the pro-tunnel citizens initiative founded in 1994, who argues against a simple upgrading of the existing routes and tunnels, which are far too narrow for modern container traffic. Instead, a new line solely dedicated to freight trains, which could travel at up to 160 km/h and double current capacity, is the only meaningful solution. This assessment is shared also by the German association Allianz pro-Schiene. “A bypass route is absolutely necessary to relieve the pressure from the Rhine Valley route”, stressed a spokesperson from the association. The old Rhine Valley route is already saturated and rail freight traffic is expected to increase even further.
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Pusch mocked the government's “assessment” that the number of trains running would have to increase tenfold, before even considering building the new line. How that might ever happen is a giant paradox, he said, as today there are roughly 600 freight trains passing through the Rhine Valley every day, with the noise particularly plaguing the inhabitants of the region at night. There is no way 6,000 trains could ever run there. “You have to think about this figure and you will realise that there were no experts at work”, Pusch concludes.
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| If the government’s decision stands, it can be expected is that the rising rail freight volumes will no longer use the German Rhine Valley route, but shift to others -- for instance, from the Netherlands through Belgium and France. The 6,000 trains daily which the German government forecasts will be running outside of Germany. |
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| | | The fire that devastated the island of Maui, one of the archipelago chain of Pacific islands that make up the state of Hawaii, is the deadliest U.S. wildfire in over a century. Environmentalists are demanding that President Biden immediately declare an unprecedented Climate Emergency, with sweeping powers. But the climate is far less a factor in this catastrophe than the deliberate destruction of agriculture, industry and infrastructure.
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(Incidentally, the wildfire points to the insanity of the European Union’s newly concocted “Nature Restoration Law”, which is supposed to “restore” nature to its original state, by prohibiting farming, forestry and fishing on at least 20% of the land and sea habitats in the European Union now considered “endangered” by human activity.)
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To grasp what happened in Hawaii, one has to go back to the way the islands were run. Pineapple plantations were established there in the 1890s, and by the early 1980s, they were sprawling, mostly under the control of the food cartel giants Dole and Del Monte. There were also large sugar cane plantations. The farmers of the plantations, mostly indigenous Hawaiians, were paid limited wages and assigned to drab housing.
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By the late 1980s, Dole and Del Monte moved most of their pineapple production out of Hawaii, to areas of of lower labor costs (Indonesia, the Philippines, Guatemala), and had abandoned it completely by the first decade of the 21st Century. The last sugar mill in Hawaii closed at the end of 2016.
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Alternative crops of nutritious food should have been planted on those abandoned plantations, and some manufacturing facilities should have been built. But nothing was done. Overall, during the last 40 years, the real value of Hawaiian farm products crashed by 50%, while the state turned toward tourism. More than 75% of the revenues on Maui come from tourism.
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USA Today, in an Aug. 9 article, cited Clay Trauernicht, a professor of natural resources and environmental management at the University of Hawaii at Manoa, who points to the need to look at “the unmanaged, non-native grasslands that have flourished in Hawaii after decades of declining agriculture, where, in reality, nothing was planted on the land”.
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| The New York Times reported on the same day on “the relentless spread of extremely flammable, nonnative grasses on the idled lands where cash crops once flourished. Varieties like guinea grass, molasses grass and buffel grass --which originated in Africa and were introduced to Hawaii as livestock forage -- now occupy nearly a quarter of Hawaii’s landmass. Fast growing when it rains and drought resistant when lands are parched, such grasses are fueling wildfires across Hawaii, including the blaze that claimed at least 93 lives.” Simultaneously, Hurricane Dora generated 100 km per-hour winds, which helped spread the flames. |
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| | | | The Schiller Institute will hold an international online conference on September 9, beginning 15.00 CET, on the theme: Let us Join Hands with the Global Majority To Create a New Chapter in World History! Please register for the conference at https://schillerinstitute.nationbuilder.com/conference_20230909. Simultaneous translation in French, German and Spanish will be available on Zoom for those who register. |
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