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EIR DAILY ALERT SERVICE

THURSDAY, JUNE 30, 2016

Volume 2, Number 222

EIR Daily Alert Service

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

EDITORIAL

Schiller Institute Berlin Event Defines Pathway to the Future

June 29 (EIRNS)—The June 25-26 Berlin conference of the Schiller Institute drew together leaders from four continents to set forth a pathway to a bright future for mankind, and at the same time spelled out in stark terms the immediate danger of thermonuclear war of extinction, if the Obama Administration, the British and NATO are not forced to end their provocations against Russia and China. That conference provided a way out from the danger of thermonuclear extinction.

To reiterate the comments of Lyndon LaRouche at that conference, reported in paraphrase:

We as a people, can agree about ideas of peaceful resolution to the crisis facing us, which is essential. Send out a clarion call, spread the word. We are not looking for war. There is a solution to being victimized by war again.

The next issue of Executive Intelligence Review will feature the in-depth report on the Berlin weekend events, with transcripts of the proceedings. Above all else, the Berlin gathering made clear that there are leadership forces around the globe who are prepared to launch the kind of scientific renaissance that mankind so desperately needs at the present punctum saliens.

Events of the past 48 hours illustrate that there are still Western leaders who are totally deaf to reality. After the Brexit vote of no-confidence against the Brussels dictatorship, European Commission President Jean-Claude Juncker persisted in the idea that Brussels will impose a new free trade deal with Canada and the United States—with no consultation with sovereign governments and parliaments of the 27 remaining European Union countries. And while NATO is preparing for the July 8-9 Warsaw heads of state and government summit, centered on plans to deploy NATO “tripwire” forces to the Russian borders in the Baltics and Poland, the impact of the Brexit vote on the very future of NATO is still a very real question. Already, some sane European leaders, typified by German Foreign Minister Frank-Walter Steinmeier and even Czech Army Gen. Petr Pavel, Chairman of the NATO Military Committee, are bluntly calling for NATO and Washington to end the war provocations against Russia and renew the partnership with Russia.

As the Berlin events should have made clear, there is no future for Europe or the United States aside from full integration into the Eurasian development plans being advanced by China through President Xi Jinping’s One Belt, One Road program. And Putin’s visit to China was equally unequivocal, that Russia is fully on board with what the Russian President himself called the “greater Eurasian plan.” Putin and Xi Jinping’s vision of a Eurasia free and whole should remind some of the trans-Atlantic region’s brain-dead so-called leaders that there was a JFK-de Gaulle-Adenauer axis in the 1960s that had precisely this vision. It is time for a revival of that sanity in Europe and the United States. Russia, China, India and now Japan are ready.

STRATEGIC WAR DANGER

Brexit Will Make NATO-EU Cooperation More Difficult

June 29 (EIRNS)—U.S. and NATO officials are falling over themselves to assure the world that (in their view) nothing has changed despite the Brexit vote in Britain. NATO is as important as ever, and the U.K. is a vital part of that. The U.S.-U.K. special relationship will chug on, as it has for the past 70 years, and so on.

“We still intend to be the strongest nation in NATO that we possibly can be. The nature of our relationship with the U.S. has not changed one iota,” an unnamed British official told the Washington Post. A similarly anonymous American official suggested that the widespread concerns about Brexit were overblown. Nonetheless, the vote had “stunned” officials at the Pentagon and it is expected to dominate discussions at the NATO summit in Warsaw.

In Brussels, NATO Secretary General Jens Stoltenberg met with his EU counterparts, where everybody assured each other that efforts at closer NATO-EU cooperation will go on without let-up.

“Cooperation between the European Union and NATO was important before the U.K. vote. It has become even more important now,” Stoltenberg said. The difference, now, is that “We have to work even harder,” he said. EU foreign policy chief Federica Mogherini, for her part, said Europe needed “to guarantee that this uncertainty, this chaos [now engulfing Britain], is not extended to the other EU member states.”

Despite the public statements, there seems to be an underlying fear that closer NATO-EU cooperation is, in fact, threatened.

“Things are going to be a lot harder,” a senior Western defense official involved in EU-NATO cooperation told Reuters. “NATO planned on linking itself up to a stronger European Union, not being the default option for a weakened, divided bloc.” And then, there are those looking forward to the EU without Britain. Some hope, Reuters adds, that, without London blocking EU plans, France and Germany could lead what Berlin calls a “common defense union” to develop and share assets. France has pushed the idea of an EU military headquarters, independent of NATO, to run missions.

In Moscow, they’re watching all this with great interest.

“I don’t think Brexit might have any immediate impacts on the Alliance,” Russia’s ambassador to NATO, Alexander Grushko, told TASS. “But in any case, it is obvious that it means a rather serious geopolitical change not only in the European, but also in the Euro-Atlantic architecture, which will entail serious consequences for both NATO and the entire system of coordinates of Western institutions,” he said. “Of course, it is difficult today to assess all possible impact but, nevertheless, we would like to draw attention to the fact that many NATO officials in their statements call on Great Britain to keep on as a pillar of NATO unity.”

Putin and Erdogan Move To Normalize Ties

June 29 (EIRNS)—In a 45-minute telephone discussion held today, Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin agreed to normalize ties between the two countries, which have been in a state of tension since Turkey shot down a Russian warplane last November.

“Our President and Putin, President of the Russian Federation, have emphasized the importance of normalizing bilateral relations between Turkey and Russia,” said a written statement issued by Erdogan’s office on June 29, after the long phone conversation which was described as “positive and productive” by Presidential sources according to the Hurriyet Daily News.

They also agreed to the importance of cooperation in regional political, economic, humanitarian crises, and to fight terrorism, according to the statement, which further said Putin condemned the terrorist attack at Istanbul’s airport on June 28 and shared his condolences with the people of Turkey.

A statement from the Kremlin said that President Putin will order his government to start negotiations to restore bilateral trade cooperation with Turkey, and said that the Russian President had told Erdogan during their phone conversation that “Russia could lift the restrictions on Russian tourists visiting Turkey.”

The Hurriyet Daily News was quick to point out the timing of the terrorist attack on Istanbul just as Turkey took an important initiative to normalize relations with Russia, Israel, and Egypt. Hurriyet, which is not a pro-government paper, wrote, “Regardless of the identity or goals of the terrorist group behind the airport attack, it leaves no room for doubt that the bombing targets Ankara’s peace efforts—if it is not a direct response to it.”

In addition to the initiatives to normalize relations with Russia, Hurriyet points out that in less than a day before the attack, Turkey and Israel signed an agreement to normalize ties after a six-year break stemming from an Israeli commando raid on the Mavi Marmara aid flotilla in May 2010 that killed 10 pro-Palestinian Turkish activists who were attempting to breach Israel’s Gaza blockade. The director-general of Israel’s Foreign Ministry Dore Gold, and the Turkish Foreign Ministry Undersecretary Feridun Sinirlioglu, signed an accord to re-normalize ties. The accord calls for Israel to pay compensation while all claims against Israeli soldiers in Turkey will be dropped.

The Turkish side said that the Israeli embargo on Gaza would be relaxed, but according to Netanyahu the “defensive maritime blockade” will not be lifted. Turkey’s agreement to construct a new power station and a desalination plant for drinking water was also among the deals agreed upon.

Also, just a day before the attack, Turkish Prime Minister Binali Yildirim announced that Turkey was ready to normalize ties with Egypt which were, in effect, broken by Turkey after Egyptian President Abdel Fattah el-Sisi ousted President Mohammed Morsi, an asset of the Muslim Brotherhood, in July 2013.

The next step in normalization of Russian-Turkish relations with be a meeting between Turkish Foreign Minister Mevlüt Çavusoglu and his Russian counterpart Sergey Lavrov on July 1 at the Black Sea Economic Cooperation meeting (BSEC) in Sochi.

Hurriyet Editor-in-Chief Murat Yetkin wrote in today’s edition that talks between Turkish and Russian representatives, including Turkish businessmen with significant business channels in Russia, had played a role in the countries’ rapprochement since last month. Representatives of the Turkish and Russian intelligence services—the MIT and FSB respectively—which are especially concerned with the fight against terrorism, mainly against the activities of the Islamic State in Syria, were also involved.

How Long Has Paris, Brussels Bomber Worked for the British?

June 29 (EIRNS)—The London Sunday Times of June 26 published a stunning revelation—that the mastermind of the Paris and Brussels Islamic State terrorist assaults has been working for the British security services. The Times report dated his work for the British MI5 or MI6 to after his capture in Brussels in April, following the March 22, 2016 Brussels bombings. The 31-year-old man, Mohammed Abrini, was caught on closed circuit TV at the Brussels Airport, walking with the two suicide bombers just moments before they blew themselves up, killing 32 people. In November 2015, two days before the Paris massacre, Abrini was also captured on closed circuit TV driving into Paris with Salah Abdeslam, another ringleader of the Paris-Brussels terror cell. That attack resulted in 130 deaths.

The Sunday Times reported that Abrini has been cooperating with British authorities, providing key information about terror plots in Britain. But the Daily Express reported that Abrini traveled to England in July 2015 and met with a dozen Islamist radicals in London, Manchester, and Birmingham, raising a question of when he started working for the British authorities.

U.S. POLITICAL AND ECONOMIC

Sen. Elizabeth Warren Introduces Derivatives Protection Act

June 29 (EIRNS)—Sen. Elizabeth Warren (D-MA), Sen. Mark Warner (D-VA) in the Senate and House member, Rep. Elijah Cummings (D-MD), the ranking member on the House Committee on Oversight and Government Reform, today introduced the “Derivatives Oversight and Taxpayer Protection Act” into Congress.

This legislation is not Glass-Steagall—which already is a bill with multiple sponsors in both houses; its purpose is to strengthen Federal oversight of the multi-trillion-dollar derivatives market, and to ensure that financial firms, and not taxpayers, as happened in 2008, are liable for derivative losses.

This legislation provides for the securities firms to pay fees to fund the Commodity Futures Trading Commission’s oversight of derivatives. Perhaps most importantly, the Act repeals the favorable treatment of derivatives in bankruptcy.

The Dodd-Frank Act enacted in 2010 was said to fix these problems, but Wall Street’s influence on Congress made Dodd-Frank worthlessly complex at 1,000+ pages, when legislation like Franklin Roosevelt’s 37-page Glass-Steagall Act passed in 1933 was needed.

The Warren-Warner-Cummings bill will strengthen derivatives oversight by:

  • Directing the Commodity Futures Trading Commission to collect users fees to cover its budget, as the Securities and Exchange Commission is funded;
  • Giving it more enforcement authority so that it can impose civil penalties on firms that break the law;
  • Closing the cross-border loophole, which currently allows big financial firms with operations abroad to circumvent many key CFTC requirements;
  • Ending the exemption of certain foreign exchange swaps from CFTC jurisdiction, and
  • Increasing data sharing between financial firms and the CFTC, and between the CFTC and financial regulators.

The act also protects taxpayers by ending the favorable treatment of derivatives in bankruptcy, thereby creating an incentive for private parties to better assess the risk of the derivative contracts they enter; strengthening the CFTC’s margin rule, by requiring the posting of an initial margin in inter-affiliate swaps; banning the use of closeout netting for purposes of calculating minimum capital requirements, and requiring the CFTC and other financial regulators to issue a report addressing concerns about derivatives clearing-houses.

Puerto Rico Bill Poised To Pass Senate, as the Island Government Plans a July 1 Default

June 29 (EIRNS)—It appears that the Senate will pass the Puerto Rico Oversight Management and Economic Stability Act (PROMESA), which the Obama administration claims is the only way to prevent catastrophe on the island. Today, a cloture vote of 68-32 passed and a final vote is expected to take place no later than tomorrow afternoon. Because many Democrats have reservations about the bill, Treasury Secretary Jack Lew was frantically twisting arms on Capitol Hill yesterday to convince holdouts that this bill was “the best you’ll get.” As the New York Times editorialized today, it’s “a bitter pill,” but go ahead and swallow it.

Catastrophe in Puerto Rico arrived long ago, however, as Gov. Alejandro García Padilla has documented time and again, and the PROMESA bill does nothing to address it or offer any solutions for real economic development and job creation.

In an opinion piece published by CNBC today, the Governor announced that on July 1, Puerto Rico will default on more than $1 billion in General Obligation (GO) bonds, which are the island’s senior credits “protected by a Constitutional lien on revenues.” This is the first time the government has defaulted on GO bonds. He warns that austerity measures he’s imposed over the past two years have wreaked havoc, jeopardizing public health and safety, and can’t be sustained.

What Puerto Rican government and elected officials have desperately clung to in the PROMESA bill, are its provisions for debt restructuring and a stay on all litigation, while accepting Jack Lew’s line that there is no alternative to this “imperfect” but necessary compromise.

The bill is in fact an obscenity. It denies impoverished Puerto Ricans increased Medicaid/Medicare benefits (even though rates charged are the same as on the mainland), denies workers access to federally guaranteed overtime, while establishing a $4.25 hourly wage for young people between the ages of 18-24, because the federal minimum wage is “too high” and “discourages employment.” The financial control board it establishes with seven unelected members appointed by the U.S. President, will impose draconian austerity, just as the Big MAC operation it is modeled on, did in New York City in the 1970s.

NEW STRATEGIC PARADIGM

Incoming Philippines Defense Minister: Fighting Terrorism More Important than Confronting China

June 29 (EIRNS)—On Wednesday, a day before taking office, the incoming Philippine Defense Minister Gen. Delfin Lorenzana (ret.), said that crushing Islamist militants in the Philippines will take precedence over territorial disputes in the South China Sea, and that spending on military hardware would reflect that.

Ongoing kidnappings and the recent beheading of Western hostages by Abu Sayyaf rebels, who have sworn allegiance to ISIS, were hurting the country’s reputation, and incoming President Rodrigo Duterte was frustrated by the failure to rein in the terrorist group, Lorenzana told Reuters. ISIS released a video last week calling on Southeast Asian Muslims to go to the southern Philippines to fight with Abu Sayyaf, as a target for a new “caliphate.”

Lorenzana said the military would invest in more speed boats and helicopters to help flush out the group based on the southern Jolo island, rather than divert funds into maritime security regarding territorial claims with China in the South China Sea. He said the defense budget should be winning security at home rather than buying fighter jets to protect its waters, as the Philippines would not be going to war with any country. However, he said sovereignty was still a key issue.

“We cannot ignore the West Philippine Sea (South China Sea) because that is in our mandate,” he said. “It’s both a resource and a sovereignty issue.”

“Our focus will be the Abu Sayyaf issue,” Lorenzana said. “Next will be to support the police in their all-out war against crime and drugs.”

Earlier, President-elect Rodrigo Dueterte and his economic team gave an overview of the proposed 10 point agenda of his economic plans in a two-day forum last week, where he highlighted the importance for Chinese investment. He called for China’s assistance in constructing railways, telling Filipino businessmen, “Can you match the offer? Because if you cannot match the offer, I will accept the goodwill of China.”

Since China introduced the One Belt, One Road idea, it has yet to launch substantial collaboration with the Philippines. The inauguration of Duterte will provide a critical opportunity to implement the grand vision in this nation.

COLLAPSING WESTERN FINANCIAL SYSTEM

Brexit Turns British Politics Upside Down

June 29 (EIRNS)—The aftermath of the Brexit vote has turned the British political landscape upside down, as Great Britain’s exit from the European Union is now inevitable. Both the Conservative and Labour Parties are being torn apart as party leadership struggles have been launched, and speculation on the possibility for early elections is now in the air. The issue is not who will try to keep Britain in the EU, but who will negotiate Britain’s exit.

On the Tory side, Prime Minister David Cameron announced he is stepping down as party leader, which will automatically lead to a party leadership election. The issue is who will lead the exit. The leading candidate appears to be Boris Johnson, former Tory mayor of London, who was one of the Conservative leaders for Brexit. He is being seen as a sort of British Donald Trump and an “anybody but Boris” campaign has been launched.

Another leading contender is current Home Secretary Teresa May, who is said to have strong support as the better choice to manage the Brexit. Her position on immigration is for Britain to leave the European Convention on Human Rights. Others include Work and Pensions Secretary Stephen Crabb, who despite campaigning to remain in the EU, now says he is the best choice to assure that Britain leaves the EU.

On the Labour side a “coup attempt” against party leader Jeremy Corbyn was attempted via resignations of most of the Shadow cabinet, followed by 172 Labour MPs voting “no confidence” in the leadership of Corbyn; 40 MPs voted for him.

The anti-Corbyn bloc is composed mostly of Tony Blair supporters. Although no one has said so yet, publicly one wonders whether bomber Blair is planning a comeback.

As expected, Corbyn said he is not going, and is prepared for another leadership vote, which under current rules he would most likely win. “I was the democratically elected leader of our party for a new kind of politics by 60% of Labour members and supporters, and I will not betray them by resigning. Today’s vote by MPs has no constitutional legitimacy,” the Guardian quotes Corbyn as saying. “We are a democratic party, with a clear constitution. Our people need Labour Party members, trade unionists, and MPs to unite behind my leadership at a critical time for our country.”

The Shadow chancellor of the Exchequer, John McDonnell, a top ally of Corbyn’s, told the anti-Corbyn MPs that they must accept his leadership if he sees off the challenge. Even the Guardian writes, “While his Westminster colleagues are lined up against him, the leader appears confident he still commands sufficient support among the wider membership to emerge victorious once again. Crucially, he also appears to enjoy the support of trade union chiefs.”

The situation is such, reports the Guardian, that top Blairite and former Foreign Secretary Margaret Beckett shed tears in a TV interview as she begged Corbyn to resign or risk splitting the Labour Party.

A Labour leadership election can be called if a party MP collects 51 nominations from MPs and Members of the European Parliament (MEPs).

The reality is that there is no other Labour Party leader who is capable of challenging Corbyn, let alone winning a general election.

The other reality is that Brexit sentiment was just as high within the Labour Party, especially among the trade unions, as it was among the Conservatives, despite Labour’s official pro-EU policy. In fact, a poll taken after the referendum revealed that 24% of the Labour Party voters would not vote for the party because the party did not support Brexit. The charge against Corbyn is that he did not fight enough for Britain to remain in the EU. Furthermore, both Corbyn and McDonnell are supporters of Glass-Steagall banking reform, which could become a key issue if general elections are held.

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