THURSDAY, FEBRUARY 25, 2016

Volume 2, Number 132

EIR Daily Alert Service

P.O. Box 17390, Washington, DC 20041-0390


EDITORIAL

The Silk Road Can Make the Syrian Ceasefire Succeed

Feb. 24 (EIRNS)—When Israel and the Palestine Liberation Organization signed an agreement in 1993 to end the killing and establish self-government for the Palestinians, Lyndon LaRouche immediately said that the tractors must roll, immediately, if the plan was to succeed. The common benefit to both sides, based on Israeli industrial capacity and Palestinian skilled labor, must be launched without delay, he insisted. That did not happen, as the IMF and World Bank were put in charge to oversee the process.

Twenty-three years later —

The dramatic ceasefire in Syria agreed to by Foreign Minister Sergey Lavrov and Secretary of State John Kerry on Feb. 22 in Munich, and confirmed in a phone call from President Vladimir Putin to President Barack Obama, has the immediate potential of transforming not only Syria, not only the Mideast, but the entire world. The brilliant strategic intervention by Putin into Syria last year demonstrated that terrorists could be defeated, but also that the U.S. under President Obama had in fact sided with the terrorists to achieve “regime change” against uncooperative governments. That era of U.S. subservience to British imperial tyranny can be finished—if the ceasefire holds.

As with Oslo, the ceasefire will only hold if the reconstruction and development of Syria (and the region) begins immediately. Helga Zepp-LaRouche said on Feb. 23 that the Silk Road process launched by Xi Jinping can and must be brought into the region now—not next month or next year. The development program for Southwest Asia presented in the EIR report “The New Silk Road Becomes the World Land-Bridge” provides the foundation. Xi Jinping initiated the project during his visit to Saudi Arabia, Iran, and Egypt in January. There is no time to lose.

The scope of the Syria agreement is breathtaking when contrasted to the all-out effort over the past months by London, Wall Street, and the White House to demonize Putin, threatening war on Russia both in Europe and the Mideast. After the phone call between Putin and Obama, Obama issued only a brief acknowledgment of the call. Putin, on the other hand, issued a statement elucidating the details of the historic breakthrough, worked out through “intensive work by Russian and American experts.”

The agreement establishes close cooperation between U.S. and Russian “political and military officials,” all under UN oversight, who will jointly establish a hot line, and a joint working group to “promote and monitor” the ceasefire. The full- scale war on Al Nusra and ISIS will continue unabated—with significant levels of U.S.-Russian cooperation.

John Kerry’s spokesman, Mark Toner, asked on Feb. 22 what will happen to U.S.-backed opposition groups who continue fighting alongside ISIS and Al Nusra, responded: “If you hang out with the wrong folks, then you make that decision.”

The CIA, and the White House, are not pleased. The Wall Street Journal issued a report from unnamed sources, that CIA Director John Brennan, Secretary of Defense Ash Carter, and Obama’s new Chairman of the Joint Chiefs, Gen. Joseph Dunford, are doing what they can to sabotage the deal, claiming that Putin will not comply, and demanding new and increased pressure on him, to cause “real pain.” The Economist magazine, the voice of the City of London, went berserk, writing: “The only puzzle is what John Kerry, America’s secretary of state, thought he could achieve through his agreement with Mr. Lavrov—except, perhaps, to expose Russian cynicism.”

Clearly, leading figures within the U.S. institutions realized that if Obama were allowed to proceed, the world was rapidly heading for thermonuclear extinction. Now, there are those who want to dump him, as well we must. What is required to consolidate these moves, is to end the power of the problem at the source—Wall Street and the British Empire. Unleashing the global development process required, must begin by shutting down Wall Street and restoring a sane economic order.

STRATEGIC WAR DANGER

Kerry in Policy Fight on Syria against Carter, Brennan

Feb. 24 (EIRNS)—According to a report published last night in the Wall Street Journal, Secretary of Defense Ash Carter, Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford, and CIA Director John Brennan attempted to undermine the truce deal on Syria, announced this week, by seeking to jack up the pressure on Russia by a number of measures, “including expanding covert military assistance for some rebels now taking a pounding from Russian air strikes.” Carter, Dunford, and Brennan “have voiced increasingly tough views in White House meetings, calling for new measures to “inflict real pain on the Russians,” a senior administration official told the Journal. But those efforts were stalled, and sources close to the Administration have confirmed that Kerry now has unanimous Cabinet support for his diplomacy with Russia.

The emerging alliance of Russia hawks, the Journal reports, exposes discord among defense and diplomatic officials who tried to put pressure on Obama to take stronger action against Moscow. The CIA, the Journal claimed, was particularly “furious” at the Russian campaign in Syria, because groups that the agency has supported have been hit hard by the Russian air campaign and have been rolled back by the Syrian offensive on the ground. Increasing the supply of weapons to these groups from the CIA, therefore, might make little difference on the ground.

The administration official who spoke to the Journal insisted that neither Carter nor Dunford has submitted formal recommendations to the White House, but the Journal article gives a hint of the internal policy fight within the administration, with Kerry fighting back at cabinet level for the agreement with the Russians. This may have been what Kerry was referring to, yesterday, when he told the Senate Foreign Relations Committee that there have been discussions within the administration over what strategy to pursue “in the event we don’t succeed” in negotiations—a so-called “Plan B,” if the Vienna process fails. Kerry also said, however, that “this is a moment to try to see whether or not we can make this work, not to find ways to preordain its failure….”

In reality, a group of Pentagon and State Department officials, along with key intelligence community operatives, have been engaged in extensive secret work with Russian counterparts to frame the ceasefire deal. In northern Syria, both Russian and American military personnel have been working in support of the Syrian Democratic Force, a group of Kurdish YPG fighters and Sunni tribal forces. This has deepened the on-the-ground U.S.-Russian military cooperation beyond earlier “deconfliction” arrangements. This paved the way for the joint U.S.-Russian monitoring of the ceasefire that is an anchor of the entire plan, set to go into force at midnight on Saturday, Feb. 27.

While the hawks and Russia-bashers attempt to criticize the plan worked out through these elaborate secret channels, the situation has been dramatically changed.

Putin Is Organizing To Bring About the Syrian Ceasefire

Feb. 24 (EIRNS)—Russian President Vladimir Putin is busy organizing the Syrian ceasefire, the Kremlin website reported today, by contacting relevant leaders over the telephone—both those who will support the ceasefire and those who must be kept in check from sabotaging it.

In a conversation with Iranian President Hassan Rouhani, the Kremlin website said on Feb. 24: “A focal point was the Syria issue; in particular, the discussion of initiatives and proposals made in the joint statement of Russia and the United States on the cessation of hostilities in Syria.”

Putin also called Syrian President Bashar al-Assad to discuss Syrian settlement issues: “Various aspects of the Syrian crisis were discussed in the light of the tasks to implement the statement Russia and the United States made as co-chairs of the International Syria Support Group on the cessation of hostilities in Syria as of February 27, 2016.”

In his talks with another important player, Saudi King Salman, Putin laid out detailed proposals of a U.S.-Russian agreement on the Syrian ceasefire, Al Arabiya News Channel reported: “King Salman said he backed a political solution in accordance to Geneva I, an initial round of talks held in the Swiss city in 2012.”

On Feb. 22, Putin spoke over the phone with the Emir of Qatar about the crisis in Syria, and the two agreed to increase joint efforts in an attempt to resolve the conflict.

In addition, the Russian President has contacted Israeli Premier Benjamin Netanyahu, the Kremlin reported today. Over the phone, Putin and Netanyahu discussed “Russian-Israeli partnership and key issues of the bilateral and mid-eastern agenda.”

Former U.S. Senator Sam Nunn Visits Moscow on Nuclear Danger

Feb. 24 (EIRNS)—Former Sen. Sam Nunn (D-GA), co-chairman of the Nuclear Threat Initiative (NTI), held a press conference today in Moscow with Russian Foreign Minister Sergey Lavrov, opening two days of talks on nuclear cooperation between the U.S. and Russia. The meeting is co-sponsored by NTI and the Russian Center for Energy and Security Studies (CENESS), and will focus on identifying opportunities for nuclear cooperation that the U.S. and Russia could consider when political relations improve. Participants include former senior government officials, and representatives from industry and academia. The dialogue opened today with a public exchange of remarks by Senator Nunn and Lavrov.

Foreign Minister Lavrov told Senator Nunn, “We know you very well as a politician who made a very important contribution to arms control and to civilization…. Today your NGO’s initiative is even more topical than it was in the Cold War … especially because there are so many people who want to thwart and torpedo cooperation between our two countries…. Voices from U.S. allies and Washington itself said this initiative was not viable. I would like to honestly say they call to war, and not to peace. I hope all politicians will … encourage honest and just cooperation for security and stability in the world.”

Senator Nunn said he was delighted to be in Moscow, and said he wished the cooperation “between our two countries” were greater than it is, “because there are so many dangers we need to work on together.” Senator Nunn congratulated Lavrov on “the recent work you and Secretary Kerry have done together on the cessation of hostilities in Syria,” and said “the execution of that agreement, as complex as it is, is going to require good faith and follow-through by both of us, and working groups to properly execute this agreement.”

Nunn thanked Lavrov for his “leadership on the Iran agreement…. Russia played a very important role in bringing about that agreement,” which bought us 10-15 years of time in which we will not have the danger of Iranian nuclear weapons in the middle of the dangers of the Mideast.

Responding to Lavrov’s praise of the NTI’s program, Nunn said the most important element was the U.S. and Russia’s working together on real challenges: protecting nuclear weapons, nuclear materials, chemical weapons, and biological materials (after the end of the U.S.S.R.). “I salute all of those people at the ground level who made that program work here in Russia,” Nunn said.

Syrian Government, Opposition Accept Truce Deal, with Conditions

Feb. 24 (EIRNS)—Both the government of Syria and the Saudi-sponsored opposition said they would agree to the U.S.-Russia negotiated truce, although both with caveats. In a statement on the proposed cessation of hostilities, the government in Damascus stressed the importance of sealing Syria’s borders and halting foreign support for armed groups, whose activities, it said, could wreck the agreement. The Syrian military reserved the right to “respond to any breach by these groups against Syrian citizens or against its armed forces,” the government statement added.

Syrian cabinet minister Ali Haidar told Associated Press, after a meeting with International Committee of the Red Cross (ICRC) president Peter Maurer, “Violations will happen from other parties and not from the Syrian state’s side.” A Foreign Ministry spokesman in Damascus said that any group that refuses to abide by the ceasefire will be considered terrorist.

The Saudi-sponsored High Negotiations Committee (HNS) said on Feb. 22 that it consented to international efforts, but said acceptance of a truce was conditional on an end to blockades of rebel-held areas, free access for humanitarian aid, a release of detainees, and a halt to air strikes against civilians. The real objection that the HNC has, however, is the exclusion of Jabhat al-Nusra and the Islamic State. “Our main concern in the opposition is that both Russia and the regime are not serious about their commitments to the cessation of hostilities,” HNC spokesman Riyad Naasan Agha told Al Jazeera. “Excluding ISIL and Nusra can be a ploy by the regime and their allies to keep slaughtering our civilians and trying to finish off the real Syrian opposition.”

The Kurdish YPG was said by Reuters to be considering what it would do. However, a spokesman for the predominantly Kurdish Syria Democratic Forces (SDF), told AP that his group will not end its fight against the Islamic State group in northern Syria.

Kerry: We are Not ‘Hungry’ for THAAD Missiles in South Korea

Feb. 24 (EIRNS)—Asked at his Feb. 23 press conference in Washington with Chinese Foreign Minister Wang Yi, about the intense push by the U.S. for THAAD missile deployment in South Korea, Kerry replied:

“Russia and China have obviously both expressed concerns about THAAD. We have made it very clear that we are not hungry or anxious or looking for an opportunity to be able to deploy THAAD. A decision has not yet been made; it is not deployed.” He then repeated the line that they would be aimed only at North Korea.

In South Korea, it has been reported that a meeting between the U.S. and South Korea which had been scheduled for this week, has been postponed. Unnamed sources in the Korean government told the press that one reason was to see what develops out of Wang Yi’s trip to Washington,

U.S. POLITICAL AND ECONOMIC

Wang Yi Presents Kerry with the Way Out of War

Feb. 24 (EIRNS)—Chinese Foreign Minister Wang Yi, speaking at an hour-long press conference with Secretary of State John Kerry following their meeting in Washington Tuesday, made several crucial proposals which, if accepted, could get the U.S. out of the suicidal course set by President Obama for war on China.

Speaking on the Korea crisis, Wang Yi said that he and Kerry had agreed on a formulation for a UN resolution condemning the North Korean nuclear test and missile launch, to be released after review by both governments. But, he added, such a resolution “cannot provide a fundamental solution to the Korean nuclear issue. To really do that, we need to return to the track of dialogue and negotiation.”

Wang Yi said Kerry agreed on that, but added that the Chinese side had “put forward a basic proposal: that is, we want to pursue in parallel tracks the denuclearization of the Korean Peninsula and the replacement of the Korean armistice with a peace agreement. We know certain parties have different views on this proposal.”

This marks a significant intervention. The North will only discuss the peace agreement, and Obama will only discuss the nuclear program. Pyongyang absolutely cannot, and will not, give up their nuclear weapon program under the threat of war from Obama, knowing what the U.S. did to Iraq and Libya when they stopped their nuclear programs. If a peace agreement could be found which assured their security, then they could consider alternatives on the nuclear program.

Kerry stuck to Obama’s line—give up the nuclear program and we’ll consider a peace plan—but China has put a workable plan on the table.

Wang Yi also spoke to the immediacy of the crisis, saying that he and Kerry agreed that “we need to monitor the situation on the peninsula very closely in the coming two months. Various factors of instability might intertwine and have an impact, so under that situation it’s very important that the various parties have more dialogue so as to prevent the heightening of tension or escalation of the situation. In particular, we must prevent the situation on the peninsula from spinning out of control.”

On the South China Sea, Wang Yi said that despite protests from the West, the region is more peaceful than other parts of the world, and no commercial vehicle had encountered any threat to the freedom of navigation. Insurance fees had not risen a penny, he said (i.e., the free market says there is no problem!).

On the other hand, he said: “I hope friends in the media will not only see the radar [China’s radar site on one of the islands] but more importantly, perhaps, that every day the advanced armaments and equipments emerging in the South China Sea, including the strategic bombers, the missile destroyers—why people have chosen to disregard or ignore them?”

He also directly denounced the Philippines, which has broken the Declaration of Conduct (DOC) on the South China Sea, signed by all parties, “whose Article 4 stipulates that disputes will be resolved through peaceful negotiations by the directly concerned parties. China and the Chinese side has always faithfully acted to implement the DOC. And it is exactly one country—and let me not avoid mentioning the name—that is, the Philippines—has violated the stipulation.”

CCTV Asks Kerry: Are There Two U.S. Policies, Yours and Ash Carter’s?

Feb. 24 (EIRNS)—During the Tuesday press conference between John Kerry and Wang Yi, China Central Television (CCTV) posed a question directly hitting at the divergence of policies between Obama and his Secretary of Defense Ash Carter on the one hand, and those of Kerry, himself on the other.

CCTV asked: “On the U.S.-China relationship, this relationship seems to be developing on two different tracks. On the security side, you have your colleague, [Defense] Secretary [Ash] Carter, specifying China two weeks ago as the most stressing competitor, and [he] asked for more budget to upgrade America’s weaponry and capabilities in Asia Pacific. However, on the diplomatic and economic side, part of which is led by you, you have this largest trading relationship in the world and you have increasing China-U.S. partnership on Iran, on climate change, for example. So at this point, do you think the Pentagon, the PACOM, and the State Department led by you really want the same thing for this relationship?’

Kerry said that “it’s a very, very good question,” and insisted, “There is only one foreign policy in the United States, and I have expressed that policy….” He claimed that “PACOM and DOD and State Department and CIA and all of our national security team are on the same page with respect to our policy with respect to the region.”

Meanwhile, PACOM Chief Adm. Harry Harris proved otherwise in testimony before the Senate Armed Services Committee Feb. 23, saying: “I believe China seeks hegemony in East Asia. Simple as that…. China is clearly militarizing the South China Sea and you’d have to believe in the flat Earth to think otherwise…. China’s surface-to-air missiles on Woody Island, the new radars on the Cuarteron Reef, the 10,000-foot runway on Subi Reef over here, and on Fiery Cross Reef and other places—these are actions that are changing, in my opinion, the operational landscape in the South China Sea.” He railed, “I need increased lethality, specifically ships and aircraft equipped with faster, more lethal, and more survivable weapons systems. We must have longer-range offensive weapons on every platform.”

COLLAPSING WESTERN FINANCIAL SYSTEM

Standard Chartered Sails into Uncharted Waters; Could It Go Under?

Feb. 24 (EIRNS)—Shares in Standard Chartered, one of the original British drug banks in Hongkong in the 19th century, plunged today by as much as 11% after the bank reported its first annual loss since 1989. Although most reports indicate the reported loss as $1.5 billion, the Agence France-Presse headlined that the amount is $2.36 billion. Revenue also dropped by 15% to $15.44 billion for the year, short of the $15.9 billion expected by analysts polled by Bloomberg. Last November, Standard Chartered’s CEO had reported that Britain’s financial watchdog, the Financial Conduct Authority, had two open investigations related to its monitoring of sanctions and anti-money laundering compliance.

The U.K.-headquartered Standard Chartered, is heavily exposed in Asia, and almost 90% of its business is in the commodity markets. The Telegraph of U.K. said today that the bank’s “impairment losses on bad loans almost doubled to $4 billion, while regulatory costs increased by 40% to $1 billion.”

Although the 2015 loss figure may have taken the investors by surprise, it was well known that Standard Chartered was in trouble. Last October, the Telegraph reported (citing Chief Executive Bill Winters, who took the helm of the bank in June after the departure of Peter Sands) that Standard Chartered would cut around a quarter of its most senior managers in an attempt to reduce costs amid slowing growth in the emerging markets it focuses on. The number of those cited to be axed was “approximately 1,000 of 4,000 senior managers over the next few months.” A month later, the same source noted that Standard Chartered had said, “It will axe 15,000 jobs and raise $5.1 billion (£3.3 billion) in capital after posting a disappointing third-quarter loss as it struggles to return to growth.”

Today, reported the South China Morning Post, “[I]n the credit market, traders increasingly view the bank as a potential default risk. Spreads for the bank’s credit default swaps—insurance contracts that credit traders take out for the bank’s debt—have widened by 20.1% over the past day. Over the past year, spreads have widened by 273%. The wider the spread, the greater the perceived risk of default.”

Financial Control Board for Puerto Rico: ‘Government of, by and for the Hedge Funds’

Feb. 24 (EIRNS)—Should a financial control board of the kind imposed on New York City in the 1970s and Washington, D.C., in the 1990s, be imposed on Puerto Rico, it would create a new government “of the hedge funds, by the hedge funds, and for the hedge funds,” that would “destroy the Commonwealth’s ability to provide essential services to its people.” So warned Puerto Rican Sen. Ramon Luis Nieves, of the governing PPD party, in an article published in Washington daily, The Hill, today.

Nieves also faulted the Obama administration for offering only “technical assistance” and paying “lip service,” rather than providing real solutions to a dire crisis.

The argument that a control board is needed when governments are unable to make painful policy decisions, doesn’t hold water, Nieves states. The García Padilla administration has made many painful and politically costly decisions, imposing austerity, reforming the pension system, etc., in order to pay debt. The bottom line, Nieves asserts, is that “hedge funds and institutional bondholders want to get paid in full.” Given big upcoming debt-service payments, a control board “could bypass our local Constitution in order to pay bondholders, while slashing government spending on essential services.”

El Nuevo Día Feb. 23, reported that Gov. Alejandro García Padilla affirmed that he would not accept the imposition of any control board that eclipsed the rights of local elected officials to approve the budget or other fiscal measures. He repeated what he had written to House Speaker Paul Ryan (R-WI) earlier this week, that the only solution to the debt crisis is the establishment of a broad legal framework for restructuring all of Puerto Rico’s debt. He told El Nuevo Día that he’s willing to introduce emergency legislation to declare a debt moratorium, should it be deemed necessary.

NEW STRATEGIC PARADIGM

Austrian Industry’s Economic Chambers for New Silk Road

Feb. 24 (EIRNS)—Aussenwirtschaft, the export- and investment- oriented monthly of the Austrian Economic Chamber (Wirtschaftskammer Österreich, WKO), dedicates 12 pages of its current February issue to a special, portraying “The New Silk Road,” with numerous colored maps and pictures. In stark contrast to the Russia-bashing that dominates most other Western media, the WKO special states explicitly that Russia is part of the New Silk Road.

The investment boom launched by China offers plenty of opportunities to companies in Austria, the special states, covering projects and perspectives of economic development from Turkey to Southeast Asia, via Iran, Russia, Central Asia, and China. The magazine points out that each country participating in this grand project will contribute a valuable share to the whole.

The representatives of the WKO in Ankara, Tehran, Moscow, Beijing, Almaty, and Jakarta have contributed information to the special edition—which, outside of the EIR New Silk Road special report, has been the most comprehensive European publication on the issue to date. The WKO also held a well-attended seminar in Vienna on the New Silk Road at the end of 2015, with about 15 senior speakers from Austria, Germany, Switzerland, China, and Russia.

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