E.I.R.STRATEGIC WEEKLY NEWSLETTER
ALERT Volume 33, No. 27, July 4, 2019
Bilateral Meetings at G20 Summit in Osaka Promise New Strategic Openings The official purpose of the Group of 20 largest economies of the world is to promote international financial stability, and deliberate on economic policy worldwide. But at its most recent get-together on June 28-29 in Japan, that subject was hardly touched upon, judging from the final communique.
However, as Helga Zepp-LaRouche commented to our news- letter on July 1, although no solution to the imminent financial crash was discussed by the G20 as such, she has “quite a posi- tive assessment of a number of the bilateral meetings that took place on the sidelines”.
In particular the meetings between Presidents Trump and Putin, and between Trump and Chinese President Xi Jinping point to “a promising direction in the strategic situation”, she said, to which Japanese Prime Minister Abe could also contrib- ute (cf. below).
Indeed, the most signficant aspect of the G20 may be that Donald Trump actually did hold a summit with his Russian counterpart in spite of the frenzied efforts by the Anglo-Amer- ican war party to sabotage any such talks, as they have in the past. Trump’s renewed resolve reflects among other things the collapse of the so-called “Russiagate” investigation.
The two leaders apparently agreed to pursue talks on nucle- ar arms reduction among experts, which have been blocked, and on strategic stability overall. It was confirmed that many “burning problems” were brought up, including Iran, Syria, and Ukraine, although no details have yet been forthcoming. Trump also explicitly supported increasing bilateral trade, but with no mention of the sanctions that the United States and Europe have imposed on Russia.
In addition, to the horror of the Russia-bashers in the West, Vladimir Putin invited Trump to Moscow to attend the 75th anniversary of Victory Day in 2020, to which the American ap- parently responded positively.
However, it remains to be seen how relations will develop. Just days before the Osaka summit, NATO began exercises aimed at confronting Russia on both the Baltic and Black Sea fronts.
On the Baltic Sea, Britain’s Royal Navy is now engaged in its largest exercise in more than 100 years, leading a mission of 4,000 sailors and 44 vessels from nine nations. In addition, on June 25, NATO Secretary General Stoltenberg issued a wild
ultimatum to Russia, threatening to end the INF Treaty is Rus- sia does not destroy all its short-range SSC-8 missiles within five weeks!
On that background, Helga Zepp-LaRouche stressed to our newsletter that the discussions at the G20 among Trump, Putin and Xi and also with Indian Prime Minister Modi “came not one second too soon”, as she recalled the military attack on Iran that had been called off at the proverbial last minute, and the stark warnings issued by both Chinese and Russian leaders on the danger of war.
Such a strategic combination is needed, she noted, as Lyndon LaRouche had insisted, to establish the firm basis for peace and economic stability and growth.
Presidents Trump and Xi Agree to Relaunch Trade Talks During their meeting in Osaka, Presidents Trump and Xi agreed to break the seven-week deadlock and resume talks on trade. Trump agreed not to place additional tariffs on other Chinese exports, while Xi agreed to increase China’s purchases of US goods to reduce the trade imbalance, in particular of agricul- tural products. The usual upbeat US President called the meet- ing “far better than he expected”.
The issue of Chinese high-tech giant Huawei remains a spe- cial case. Trump tweeted after the meeting that he had “agreed to allow US companies to sell their equipment to Huawei,” pro- vided it poses “no great national emergency problem.” That decision caused immediately howls among the anti-China fac- tions in the United States, which promised to pass legislation preventing such sales, if need be.
The White House economic adviser Larry Kudlow attempted to reassure them by making clear that this was not a “general amnesty”, but just a possible easing of certain restrictions.
The Chinese have agreed on their side to greater openings for foreign investors. In that context, the state planning agency, the National Development and Reform Commission (NDRC), announced on June 30 that it had cut the number of sectors subject to foreign investment restrictions.
President Xi, in his speech to the G20 meeting, emphasized the importance of the Belt and Road Initiative in promoting the construction of high quality infrastructure to boost “inclusive development”. He reaffirmed that the initiative is open to all countries that wish to join.
Trump and Kim Hold Historic Meeting in Demilitarized Zone President Trump broke another long-standing tabu of the Anglo-American war party by becoming the first sitting US President to cross the border into North Korea, together with Chairman Kim Jong un. The two leaders then held a 50 minute meeting in the demilitarized zone separating the two Koreas. Just before traveling to the DMZ, Trump had been received in Seoul by South Korean President Moon Jae-in, who then ac- companied the US President to the border.
After the one-on-one meeting, Donald Trump said that teams from the United States and North Korea would start meetings “over the next two or three weeks” to discuss Pyongyang’s nuclear program. He stressed he was in no rush for a deal: “We’re not looking for speed, we’re looking to get it right.”
Kim Jong un for his part pointed out that he had accepted Trump’s offer to meet in the DMZ due to their “excellent re- lationship” and the significance of meeting at the border. He later said he would like to move away from the “hostile past” and maintain good relations in the future. North Korean state media covered the event in an unusually positive light, calling it “historic”, “an amazing reality” and pointing to the “great personal chemistry” between the two leaders.
While the meeting seemed to be an impromptu initiative taken by the US President during the G20 summit, it was pre- ceded by intense diplomacy over the past weeks. After Russian President Putin had received Kim for the first time in Vladi- vostok in late April, President Xi Jinping made a rather spur of the moment state visit to Pyongyang on June 20-21 to discuss denuclearization, which was followed by a cordial exchange of letters between the US and North Korean presidents (cf. SAS 26/19). On the evening before the G20 summit, Moon, a strong proponent of reunification and an easing of sanctions against the North, had dinner with Xi in Osaka, who briefed him on that meeting. Finally, Putin and Moon also held a bilat- eral meeting during the G20.
Meanwhile, the American Special Representative for North Korea Stephen Biegun has been actively engaged in diplomacy for months, and was involved in secret discussions to set up the meeting at the DMZ. One reason for the successful discussion was certainly the absence of Trump’s National Security Adviser John Bolton, notorious for his outrageous provocations of North Korea and other “enemies” of the neocons.
Banking Crisis: The BIS Again Sounds the Alarm In its Annual Economic Report released June 30, the Bank for International Settlements warns of a bank crash due to corpo- rate overindebtedness in the advanced economies – a subject the Strategic Alert has covered many times. The $3.5 trillion market in what are called “leveraged loans” – loans to already overindebted corporations that now dominate entire economic sectors such as oil/gas and retail in the United States – is greatly “overheated”, affirms the BIS report, and could lead to a bank panic just as the subprime mortgage bubble did in the 2007- 2008 global financial crash (see https://www.bis.org/publ/ar- pdf/ar2019e.htm).
Presenting the report at the bank’s annual meeting in Basel, managing director Augustin Carstens warned that “following high growth, the leveraged loan market is now some USD 3 trillion in size, comparable to the collateralised debt obligations that amplified the subprime crisis. Structured products such as collateralised loan obligations (CLOs) have surged. Credit stan-
dards have been declining as investors have searched for yield. Should the leveraged loans sector deteriorate, the economic impact could be amplified through the banking system and other parts of the financial system that hold leveraged loans and CLOs.
“There could be sharp price adjustments and funding ten- sions. These risks should be seen in the broader context of the longer-term deterioration in credit quality and the generally high corporate leverage in many advanced economies.”
What this bankers’ jargon means is that if nothing is done to reverse global monetary and economic policies, a crash of the system is as sure as the “amen” in the church, and it will be more devastating that the 2007-2008 crash.
The BIS report further warns that even though major banks insist they own only the safest tranches of the CLOs made up of these over-leveraged corporate debts, those major banks are in danger of being hit by large numbers of defaults in these sectors.
This is coming closer with the global recession underway. The big London and Wall Street banks also thought they were playing it safe with the collateralized debt obligations (CDOs) made up of subprime mortgage securities in the 2004-2007 period, keeping only the AAA or AA-rated tranches of those CDOs. When the subprime bubble imploded, Morgan Stanley infamously led the way by suddenly losing $14 billion.
US Democratic Candidates Expose Their Weaknesses in Televised Debates For two evenings last week, a group of twenty Democratic Party presidential hopefuls -- ten per night -- appeared on prime time television to present their case for replacing Donald Trump in January 2021. What was really showcased is why Trump won in 2016 and, if he continues to pursue peaceful cooperation with Russia and China as he did at the G20 summit in Osaka, why none of them has a chance to defeat him in the November 2020 election.
The Democrats on stage failed (with one exception) to address the two most pressing questions facing the United States: the danger of war, coming from the British Empire and its neocon war hawks in both parties, including most of the candidates on stage, and inside the Trump administration (for example, John Bolton and Mike Pompeo), with their commitment to defend- ing a unilateral Anglo-American geopolitical world order; and the fragility of a financial system overloaded with bad debt and a shrinking productive capacity, which is overleveraged beyond the unsustainable levels of 2008, and heading for a new crash. Instead, they all pushed a harsh anti-Trump line, oblivious to the reality that Russiagate was a fraud and is unraveling.
The one exception to the refusal to address the war danger was Hawaii Congresswoman Tulsi Gabbard, who eloquently spoke of ending the policy of regime change and the endless wars in the Middle East, which she persuasively argued have worsened national security, and threaten to lead to nuclear war. For her efforts, media pundits joined her Democratic critics in saying the positive response to Gabbard is due to “Russian bots” flooding social media, because she is the favorite candi- date of Vladimir Putin!
What the hopefuls did do was emphasize their commitment to defeating Trump, for the usual reasons: that he’s a racist, divisive, impulsive, too pro-Russian, greedy, misogynistic, etc. While most pointed to worsening economic conditions, none was able to coherently explain why the economy is devolving, and none offered a real solution.
EIR STRATEGIC ALERT WEEKLY NEWSLETTER 2 N° 27 / 2019
The most glaring weakness, however, was the demonstra- tion that all believed that the key to victory is the appeal to the special interests of “identity politics”, treating American voters as ignorant of the most important strategic issues, and only concerned with how their specific targeted group is treated.
Typical of this was Sen. Kamala Harris’s attack on Joe Biden as a racist, even though she opened by saying that she doesn’t believe he is a racist, in a formulaic blast aimed at damaging his claim to being the inevitable Democratic victor. Each can- didate tried to present him or herself as the most responsive to young voters, women voters, black voters, Hispanic voters, gay/lesbian/transgender voters, etc., as though no one in those categories is concerned with issues of war and peace, and pros- perity or depression.
That a media fix is in for the “front-runners” was clear from a comment in a Los Angeles Times article, which proclaimed that “everyone has a right to run, but not everyone has a right to be taken seriously.” In other words, the media, representing the dominant corporate interests, retains the right to choose the candidate.
Germany’s Secret Service Joins in China-Bashing The campaign against China’s economic and trade policies in Germany, as reflected in the national media, can only be de- scribed as obsessive. One of the less-known reasons for that might be the input coming from the country’s domestic intel- ligence agency, the Office for Protection of the Constitution or BfV for short. The BfV has been involved for quite some time in screening, and potentially prohibiting, foreign direct invest- ments (FDI), as well as mergers and acquisitions by Chinese investors in Germany’s infrastructure, machine tool and high- tech companies.
Already back in Oct. 2018, the agency’s official newsletter noted in respect to China that: ”If parts of the critical infra- structure in Germany are no longer under German control, this can result in threats to the free democratic basic order. For this reason, the BfV is included in the cross-departmental AWG ex- amination procedures with regard to foreign direct investment on a case-by-case basis.” The AWG directive regulates the legal basis for FDI that aim at controlling more than 10% of an asset considered as “critical infrastructure”.
The Vice-President of the BfV, Michael Niemeier, in a speech at the 7th National Cybersecurity Conference in Potsdam on May 23, warned of increased international threats of hacking, cyber-espionage and security breaches into critical information infrastructure. Citing a report by British and US authorities, he claimed that in 2018 in particular, “the intelligence and security services” of Russia and China “used cyber-attacks for espionage activities against Germany. We are very worried about cyber- attacks that can be used for sabotage -- especially against criti- cal infrastructures.”
Then, there was the “unambiguous warning” from the BfV of the Northeastern state of Mecklenburg-Western Pomerania, against cooperation with the Belt And Road Initiative. Its report was presented by the state’s Interior Minister Lorenz Caffier on June 5:
“Last but not least, the so-called Silk Road Project of China and the associated targeted purchase of key German indus- tries must be perceived as a fundamental threat to freedom and prosperity. The constitutional protection authorities are also anxious to carry out their early warning function here.” The BfV report itself makes far-reaching claims (but without providing evidence) that Chinese intelligence agents conduct
clandestine recruitment operations, disguised as scientists, con- sultants, headhunters or managers of consulting firms.
The state’s Infrastructure Minister Christian Pegel, however, told the Nordkurier that “fear of potential industrial espio- nage must not prevent business contacts that can strengthen the economic base” of Mecklenburg-Western Pomerania. Ex- tending the New Silk Road to this German state on the Baltic Sea, he said, offers economic opportunities that should not be missed.
Jared Kushner’s Economic Plan for Palestinians Is a Non-Starter The Iranian news agency Tasnim News published an interview on June 29 with EIR’s Southwest Asia strategic analyst Hussein Askary focused on the new White House plan titled Peace to Prosperity - The Economic Plan: A New Vision for the Pales- tinian People. That plan, which was presented by President Trump’s special advisor and Palestinian-Israeli peace broker Jared Kushner at a conference (downgraded to a workshop) in Bahrain on June 27, is completely devoid of any political context, in Askary’s view, and treats the Palestinian people as stateless. There is with not a single mention of the terms “state” or “Palestinian Authority”, only of the “Palestinian people”, re- garded here as a people without a country, who just happen to inhabit an area called the West Bank and Gaza.
Although some of the ideas on building infrastructure, edu- cation, healthcare, manufacturing, agriculture, etc. are useful, they are not new, Askary said. And “financing” part of this pro- posal shows clearly that the authors dismiss any Palestinian government or state. “Capital raised through this international effort will be placed into a new fund administered by an es- tablished multilateral development bank,” the document says. That “fund” will be created through donations by mainly the US and Persian Gulf countries, similar to all other failed donation operations in Bosnia, Lebanon, Afghanistan, etc. And, it will not be administered by the representatives of the “Palestin- ian people” but by a foreign agency (most probably the World Bank).
Askary stresses that although he is “a strong believer in the concept promoted by the late American political prisoner and economist Lyndon LaRouche that there could be no peace with- out economic development”, the plan as presented is intended to fail not to succeed. All the more so as the workshop was boycotted by the Palestinian Authority and denounced by all Palestinian political groups.
Jared Kushner himself admitted that he was presenting the economic part of the “Deal of the Century” because the political part is so disputed. Askary pointed out that the Palestinians consider the economic component as a kind of blackmail to get them to accept the political part. If they reject it, as Kushner knows, they will be viewed as bigots who are biting the hand which is trying to feed their people. This will justify more vio- lence by Benjamin Netanyahu’s extremist government. In any case, the Likud extremists’ philosophy is that “Jordan is Pales- tine”, which means that all Palestinians will probably wake up one morning to find themselves in Jordan.
Askary stressed that Trump personally might not support the ideology of the Likud, but he is surrounded by war hawks such as John Bolton and Mike Pompeo who are obsessed with Iran. However, if a genuine dialogue develops between Donald Trump and Vladimir Putin and Trump and Xi Jinping, Askary concluded, it could introduce a welcome element of rationality into the complex situation.
EIR STRATEGIC ALERT WEEKLY NEWSLETTER 3 N° 27 / 2019
Read the interview at https://www.tasnimnews.com/en/ news/2019/06/29/2042516/palestinians-seen-stateless-in- kushner-s-economic-plan-analyst.
Putsch Attempt Thwarted in Ethiopia On June 22, a string of assassinations as part of an attempted coup targeted Ethiopia, one of the leading partners of China’s Belt and Road Initiative in Africa. The perpetrators killed Am- hara Region President Ambachew Mekonnen, as well as his advisor Ezez Wasse during a meeting in the regional capital of Bahir Dar. The State Attorney General of Amhara Migbaru Ke- bede was also hit and died of his wounds two days later. At the same time, in the capital Addis Ababa, Ethiopian Chief of Staff Seare Mekonnen was assassinated at his home by his body- guard, who also killed Brig. Gen. Gezai Abera (ret.). Ethiopian Prime Minister Abiy Ahmed ordered Federal Defense Forces to Bahir Dar and its environs.
All of the victims killed in the coup attempt had been recently appointed to their positions by Prime Minister Abiy, who came to power in April 2018, and were considered his close allies. Ambachew, for example, was the PM’s infrastructure adviser.
The coup attempt was led by Brig. Gen. Asaminew Tsige, who was later killed outside Bahir Dar by government security forces. He had recently been appointed head of security for the Amhara region, after being released from prison in Sept. 2018 in an amnesty ordered by Abiy, in an effort at reconciliation with the opposition.
Asaminew was the co-founder and co-leader of Ginbot 7, an opposition group which, according to a US State Department assessment of 2011, espouses violent overthrow of the na- tional government. The group was based in Eritrea and had of- fices in London, Washington, and several European countries. After a coup attempt by the organization in 2009, Asaminew was imprisoned. In the days prior to this latest coup attempt, Asaminew posted a video on his Facebook page calling on the Amhara people to arm themselves and prepare for fighting against other groups.
Ethiopia, a country of over 90 million people, has become a prime target of the enemies of the Belt and Road because of its close economic cooperation with China. The government’s policy of reconciliation has not stopped an ongoing destabiliza- tion which has created serious ethnic unrest in different parts of the country, aimed at throwing the country into a civil war.
Until Ethiopia and Eritrea normalized relations last year, the Ginbot 7 and other opposition groups had been receiving millions of dollars of foreign funds channeled through Eritrea, much of it originating from Arab sources. Since the normal- ization, cooperation between the two countries had expanded greatly. Most striking is the recent agreement to develop rail- way links between the ports of Assab and Massawa in Eritrea, and the north, east and central parts of Ethiopia. This project was announced by Ethiopian Finance Minister Ahmed Shide, on June 20, who said a feasibility study had been launched and that the World Bank Group supports the project.
Prestigious Group of Italian Scientists Counters Climate Change Hysteria For the first time in Europe, a large group of scientists has taken a public position against the dogma of man-made climate change and warned of the catastrophic consequences of “decar- bonization” policies. The petition, signed by dozens of Italian scientists, is addressed to the highest state and government authorities.
CO2 in itself, states the petition, “is not a pollutant. On the contrary, like water, it is an indispensable element for life on our planet.” The man-made origin of global warming is “an unproven conjecture that has been deduced only from some climate models. These are complex computer programs called General Circulation Models (GCMs).”
Therefore, the claim that climate changes observed in the last century are man-made “is exaggerated” and the “catastrophic predictions of these models are not realistic.” Climate simula- tion models “do not reproduce the observed natural variability of the climate ” and do not “reconstruct the warm periods ob- served during the last 10,000 years.”
As for the alleged consensus on the issue, the scientists warn that scientific method demands that the facts, and not the number of adherents, make a conjecture a consolidated scien- tific theory. And in any case, no such consensus exists.
In conclusion, they write, “given the crucial importance that fossil fuels have for humanity as an energy supply, we suggest not to adopt policies of “acritical reduction of CO2 emissions in the atmosphere with the illusionary pretense of governing the climate.” The original Italian text can be read at http://www. scienzanazionale.it/2019/06/04/petizione-sul-riscaldamento- globale-antropico/
The petition was initiated by Umberto Crescenti, Professor Emeritus of Applied Geology, G. D’Annunzio University in Chi- eti-Pescara, former President of the Italian Geologic Society.
Members of the initiating committees are: Giuliano Panza, Professor of Seismology at the Trieste Uni- versity member of the Lincei Academy and of the National Academy of Sciences, 2018 International Prize by the American Geophysical Union;
Alberto Prestininzi, professor of Applied Geology, La Sapi- enza University, Rome, former Science Editor of {IJEGE Inter- national} magazine and Director of the Italian Research, Pre- vention and Geological Risks Control Center;
Franco Prodi, Professor of Atmospheric Physics, Università di Ferrara (brother of Romano Prodi);
Franco Battaglia, Professor of Chemitry and Physics, Univer- sità di Modena; Movimento Galileo 2001;
Mario Giaccio, Professor of Technology and Economics of Energy Sources, Università G. D’Annunzio, Chieti-Pescara, for- mer Dean of Economics;
Enrico Miccadei, Professor of Physical Geography and Geo- morphology, Università G. D’Annunzio, Chieti-Pescara;
Nicola Scafetta, Professor of Atmosphere Physics and Ocean- ography, Università Federico II, Napoli.
The first signer is Antonino Zichichi, Professor Emeritus in Physics, University of Bologna, founder and chairman of the Ettore Majorana Center of Scientific Culture in Erice, Sicily. The second signer is Renato Angelo Ricci, Professor emeritus in Physics, University of Padua, former chairman of the Italian Physics Society and of the European Physics Society.
E.I.R. STRATEGIC ALERT www.eir.de Published by: E.I.R.GmbH, Bahnstr. 4, 65205 Wiesbaden Tel.: 0611/73650, Fax: 0611/9740935, Email: info@eir.com Verantwortl. f. d. Inhalt: Dean Andromidas, Claudio Celani Subscription: EUR 3000/ ISSN 0936-7527 © E.I.R. GmbH Alle Rechte vorbehalten, auch die des Nachdrucks von Auszügen, derphotomechanischen Wiedergabe und der Übersetzung, Printed in Germany
EIR STRATEGIC ALERT WEEKLY NEWSLETTER 4 N° 27 / 2019