FRIDAY, AUGUST 5, 2016

Volume 2, Number 248

EIR Daily Alert Service

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

EDITORIAL

Helga Zepp-LaRouche Addresses Think 20 Summit:  ‘New Silk Road Becomes the World Silk Road’

Aug. 4 (EIRNS)—The following speech was delivered by Helga Zepp-LaRouche, founder and chairwoman of the Schiller Institute, on July 29 at the “Think 20” Summit in Beijing. The Summit was organized by three Chinese think-tanks: the Institute of World Economics and Politics (IWEP) at the Chinese Academy of Social Sciences (CASS), the Shanghai Institute for International Studies (SIIS), and the Chongyang Institute for Financial Studies at Renmin University of China (RDCY), with the participation of 500 think-tank experts, politicians, and representatives of international organizations from 25 countries, with a view to formulating suggestions to the heads of state and government of the G20 member countries. Mrs. Zepp-LaRouche spoke on the first panel of the two-day conference dedicated to “Global Governance: System Improving and Capacity Building.”

Since the G20 represents the most powerful combination of industrial and emerging countries on the planet, there is presently no other agency which can address the existential challenges facing civilization and implement solutions to them in time. The populations of most countries have the very real experience of being engulfed in terrifying crises—a terrorist threat out of control internationally; the migration of millions of people attempting to escape war, hunger and death; the resulting refugee crisis that is shaking the foundations of the EU; the rise of anti-establishment parties in many countries; the Brexit as a warning shot of the potential disintegration of the EU; the increasing gap between the wealthy and ever more layers of society who are losing their well-earned status as middle class or are living in poverty; the experience of the impact of “unorthodox monetary measures” on life savings and expectations for the future; the limits of social acceptability of bail-out and bail-in measures; and the growing fear that the world has entered a new cold war and a nuclear rearmament spiral. In short, a growing loss of confidence in the establishment of at least the trans-Atlantic sector.

The refusal of the upcoming G20 summit to acknowledge that situation; an effort to hide the failures of the dominant policies, in particular since 2008, behind public relations rhetoric; and failure to take the chance of the upcoming summit to present real solutions to these crises, will not have effects in the realm of virtuality, but in terms of real history and the lives and happiness of billions of people.

There are immediate solutions at hand, but they require the willingness of leading institutions to revise the axioms of current policies and return to policies that have not only proven to be effective in previous situations, but also represent a new paradigm, that can lay the basis for the next one hundred years of the human species and beyond.

In order to give hope for a better future for all of mankind, a hope which has been lost in many parts of the world, the G20 summit must come forward with a vision that offers a remedy, a pathway to overcome those crises mentioned, the establishment of a higher level of reason to realize the common aims of humanity.

1. The only “practical” expression of that vision—and that is not a contradiction in terms—is the perspective of the New Silk Road put on the table and implemented for three years now by the Chinese government. As of now, over 70 countries are participating in various aspects, and infrastructure and development projects of it. What China calls “win-win” collaboration in such joint projects is not only the only efficient way to overcome geopolitical confrontation, the root cause of two World Wars in the 20th century and of the underlying danger of a third, global war today, which, given the existence of thermonuclear weapons, would be a war of annihilation. The “win-win” perspective is also coherent with the principles of the Peace of Westphalia, according to which any successful order of peace must be based on the “interest of the other.”

The New Silk Road concept must therefore be extended to all regions of the world as a concrete offer to overcome underdevelopment, as a “World Silk Road.” If the G20 member states were to issue such a promise, with the solemn commitment to overcome hunger and poverty, and provide clean water for everyone within a few years, something which is technologically eminently feasible,— it would cause a revolution of hope and optimism in the world.

2. In order to eliminate both the reasons for mass migration from Southwest Asia and Africa and the environment for recruitment of terrorists, there must be a comprehensive industrial development perspective for both, which not only rebuilds the war-torn regions, but also puts on the table an integrated plan of infrastructure, industry, agriculture and education, to transform those parts of the world into areas of high productivity of labor power and capacities.

In general, the projects of the World Silk Road must be defined so as to have the optimal impact on the cognitive powers of the populations of the respective countries, to facilitate the best possible increase in productivity of the world economy. The focus therefore must not only be on innovation, but on qualitative breakthroughs in the understanding of qualitatively new physical principles of our universe.

Examples of this are crash programs for the development of thermonuclear fusion power, which will provide energy and raw material security for mankind, as well as the development of new water resources through the peaceful use of nuclear energy for the desalination of large quantities of ocean water, the ionization of moisture in the atmosphere, and other technologically innovative forms.

International cooperation in space research, travel and colonization defines the pathway for the next necessary breakthroughs in science and technology. It also represents the future-oriented platform for a peace order for the 21st century. And most importantly, it marks the transformation of the human species toward greater consciousness of its own identity as the only creative species known in the universe so far.

3. An uncontrolled collapse of the financial system of the trans-Atlantic sector would threaten to throw many parts of the world into chaos with unpredictable consequences. The so-called “tool-box” of financial instruments, which was decided upon after the 2008 crises rather than implementing true reforms, has been used up. The consequent “unorthodox monetary instruments,” such as quantitative easing, negative interest rates and helicopter money, have in large part produced the opposite of the intended effect.

The fact that the reintroduction of the FDR Glass-Steagall banking separation law has been adopted in the election platform of both the Democratic and Republican Parties in the United States, and the fact that there is a growing discussion in several European countries on reducing the future risk of the financial system by introducing Glass-Steagall criteria in Europe as well, create a very favorable precondition for agreeing upon a global Glass-Steagall Act at the upcoming G20 summit.

If the G20 Summit were to put the World Silk Road on the agenda, the Chinese Dream would become the World Dream.

COLLAPSING WESTERN FINANCIAL SYSTEM

German European Parliament Member De Masi Calls for Bank Separation

Aug. 4 (EIRNS)—German Member of the European Parliament Fabio De Masi (Die Linke) was interviewed by Deutschlandfunk radio Aug. 1 on the European bank stress test results. The stress tests are not credible, De Masi said, because they look at single institutions, whereas in a financial crisis they all come under stress and sell their assets. For instance, “I consider it absolutely impossible that Deutsche Bank performed better in this stress test than two years ago.” A while ago, “German Finance Minister Wolfgang Schäuble said he had confidence in Deutsche Bank. We know that when someone in politics expresses his confidence, you have to look in your pocket,” he said.

Then, questioned on the bail-in regulations, De Masi said that first we need “a separation of investment banking from serious credit and deposit activities, because you cannot just simply resolve a bank in Germany such as Deutsche Bank. In a crisis, they become nationalized because they can bring down the entire financial system. This means that we need a separation of the megabanks; only in that case can this bail-in, i.e., an involvement of shareholders and creditors, be implemented and be credible at all.”

Labour’s Corbyn Pledges £500 Billion Job Creation Program

Aug. 4 (EIRNS)—In a campaign speech, Labour Party leader Jeremy Corbyn declared he would create a £500 billion job creation program through financing infrastructure, new industries and the creation of a state-owned national investment bank. Speaking in Dagenham, East London, where he set out the principles of his leadership. He laid out a ten-point economic program to “rebuild Britain,” through creation of a National Investment Bank, a policy of expanding the economy and more efficient tax collection, the program plans to create 1 million new jobs, investing in infrastructure, high-tech industries, the construction of 1 million homes, including 500,000 council homes, renationalize the railways, and assure the continuation of the National Health Service under full government control.

John McDonnell, the shadow chancellor, told BBC Radio 4’s “Today” broadcast that a huge program of investment was needed, which is backed by business groups such as the Confederation of British Industry.

Missing from the ten-point program is a call for Glass-Steagall. While the establishment of a National Investment Bank is obviously important, it does not address the City of London’s bankrupt banks. While last year both Corbyn and McDonnell had called for Glass-Steagall, they have not made any public statement in support of it for many months.

Italy’s Prosecutor Calls Draghi’s Morgan Stanley Derivatives Illegal

Aug. 4 (EIRNS)—The Prosecutor at the Italian Court of Accounts asked Morgan Stanley to pay €2.9 billion to settle a derivatives transaction with the Italian Treasury, which the prosecutor called “improper.” The derivatives contract was bought by European Central Bank President Mario Draghi when he was director general at the Italian Treasury, and is believed to be a trick to embellish Italy’s debt figures. The contract was terminated in December 2011 when the Mario Monti government paid €3.1 billion to Morgan Stanley.

In July 2013, EIR asked Mario Draghi whether he would insist that buying derivatives contracts with taxpayers’ money was “prudent.” Draghi answered “yes,” claiming that this was to hedge exchange and interest rate risks and that he made those transactions “in the interest of Italy.” The questioner then called on the Court of Accounts to prove whether this was true.

Now, after an investigation, the Prosecutor at the Court of Accounts has established that the Morgan Stanley contract in particular contained unacceptable advantages for Morgan Stanley, including a clause allowing unilateral termination of the contract under certain conditions. The threshold, however, was so low that those conditions occurred very soon. “The procedures adopted by the ministry violated the rules of general accounting of the state” and “in several cases they seemed uniquely, and without any valid motivation, to favor the bank.” And the restructuring “was proposed by Morgan Stanley without a valid reason and was passively accepted by the ministry.”

In exchange for the termination clause, the Italian government had gotten agreement that no collateral be put up for the contract, “because the collateral would increase the deficit and debt, which instead should decrease in order to enter the euro.”

Giacomo Draghi, Mario Draghi’s son, has worked as an interest rate trader at Morgan Stanley since 2003.

STRATEGIC WAR DANGER

Deputy Defense Minister Borisov: Russian Military Have Adopted Battlefield Laser Weapons

Aug. 4 (EIRNS)—Speaking at the 70th anniversary of the Russian Federal Nuclear Center—All-Russian Scientific Research Institute of Experimental Physics in Moscow on Aug. 2, Deputy Minister of Defense Yuri Borisov claimed that “the Russian army has already adopted a number of different types of laser weapons, equipping themselves with weapons based on new principles of physics,” Sputnik reported today.

Borisov said “laser weapons are no longer a novelty for the Russian armed forces, with the military already in the process of commissioning and even adopting several types of laser-based weapons systems.” Sputnik said Borisov had indicated that “high-tech weapons systems, including lasers, would help shape the capabilities of the Russian army in accordance with the state arms procurement program up to the year 2025.”

“The best-known Soviet laser projects,” Sputnik recalled, “included a laser cannon mounted onboard the Dikson search and rescue vessel, the Terra-3 program, tested at the Sary-Shagan testing ground in the Kazakh S.S.R., the Skif spacecraft, capable of carrying a laser weapon, an air-based laser mounted onboard the Beriev A-60 airborne laser laboratory, and perhaps most famously, the 1K17 Szhatie mobile ground-based laser system.”

Syrian Forces Holding Off Jihadi Effort To Break into East Aleppo

Aug. 4 (EIRNS)—As of this writing, Syrian government forces, with backing from air strikes, have resisted a very large jihadi offensive to try to break the government’s encirclement of east Aleppo. By all accounts, the jihadi offensive is among the largest of the war. One rebel source told Reuters that about 10,000 troops, at least 95 tanks and several hundred rocket launchers had been deployed for what he described as the “great epic battle of Aleppo”—but the jihadis have not been able to capture enough ground in the southern districts of Aleppo city to break the siege.

Government forces were reported to have repelled opposition attacks yesterday, but new attacks were launched in the Al-‘Amariyah and Al-Ramouseh districts this morning, reports Al Masdar News. Those districts are in the southern approach to the city, and if rebel groups were able to capture them, they would cut off Syrian forces between there and the Castello Road to the north. The Castello Road, until last week, was the last rebel supply line into the eastern part of the city.

Moscow Condemns U.S. Air Strikes in Libya

Aug. 4 (EIRNS)—Russian Ambassador to Libya Ivan Molotkov blasted U.S. air strikes in Sirte on Tuesday, saying that they have “no legal ground,” according to Interfax. The legitimate Parliament of Libya, based in Tobruk, sent a message to U.S. Ambassador to Libya Peter William Bodde, inviting him to appear in Tobruk for clarifications on the air strikes. The Egyptian government, which backs the Tobruk faction, said that they were not informed by the U.S. government in advance.

The Italian Parliament voted in favor of a resolution to grant U.S. air space and bases in cases they are requested.

Several Italian opposition media report that the U.S. air strikes in support of the Tripoli-based Serraj government are occurring in a context in which the anti-Tripoli faction, the Tobruk-based Parliament and National Libyan Army (NLA) have been strengthened by an agreement with the Qaddafi networks. Qaddafi’s son, who was facing a death sentence, was acquitted and freed at the beginning of July, after Qaddafi’s ex-wife had been allowed by the Tobruk Parliament to come back to Libya at the beginning of the year. It is reported that former Qaddafi Gen. Ali Kanna has also joined the NLA.

Earlier in May, Moscow had been involved in negotiations over Libya and in particular in the effort to find a role for NLA head General Haftar in the future national unity government. Haftar wants to be head of the Army, which means he will have the real power. The Muslim Brotherhood-dominated Tripoli alliance and the U.S. government oppose this. Whereas no progress has been reported on those negotiations, Haftar has been in Moscow in the last days, probably discussing military and logistic support to his campaign.

THE NEW GLOBAL ECONOMIC ORDER

French Ministers Call China’s New Silk Road an ‘Historic Opportunity’

PARIS, Aug. 4 (EIRNS)—On July 24th, French Economics Minister Michel Sapin and Governor of the Banque de France François Villeroy de Galhau gave a press conference in the context of the preparations for the G20, in which they gave full approval to China’s New Silk Road.

“Fifteen years ago, France was the first European country to open a strategic dialogue with China,” Villeroy de Galhau reminded the conference. “In that dialogue, we explored several questions and created a solid basis for trust. Many exchanges, especially on political, economic and cultural questions, were carried out. In the economic domain we have constructive cooperation in sectors such as nuclear energy and other energy sources, as well as aviation. With its New Silk Road, China is opening today a new historic opportunity.”

Villeroy mentioned new opportunities of cooperation between China and the Western countries in terms of railway and highway infrastructure. He underlined in particular the development possibilities between France and the Szechuan province, and the fact that Chengdu is one of the crucial cities for the New Silk Road. Chengdu is already connected by a direct commercial flight to France and by railroad to Europe. Fields of cooperation already exist in the areas of health, services to seniors, pharmaceutical research, agricultural goods, and safety in food products.

Strong nuclear cooperation has long existed between France and China: The French built the Chinese nuclear program and proceeded to engage in technology transfer in exchange for joint development of the Chinese international market and for joint interventions into third markets, as attested by the joint EDF/China deal to build two EPR reactors in Great Britain.

This cooperation, however, is one of large deals between France and China in high technology, involving the very large CAC 40 companies, which often have no impact on the French economy because the companies have been outsourced and no longer pay taxes in France. This is not exactly the true idea of the New Silk Road policy, which is that Europe needs to go back to the Franklin Roosevelt, today, LaRouche policies, which generated the European miracle of postwar reconstruction. These are the policies that have allowed China to develop massively in the last three decades.

Russia-Japan Relations Thaw, as Japan To Join Vladivostok, Baikal Development Forums

Aug. 4 (EIRNS)—The thawing of Russia-Japan relations continues. Russian President Vladimir Putin is expected to meet Japanese Premier Shinzo Abe in the port city of Vladivostok in Russia’s Far East, on the sidelines of the Eastern Economic Forum, an annual business conference hosted by Russia on Sept. 2-3, Reuters reported today. In addition, TASS reported today that Japan will participate in the fifth international Baikal Dialogue, due to take place on Sept. 15-16 in Ulan-Ude in the Russian Federation’s Republic of Buryatia, along with participants from Russia, China, Mongolia and South Korea. “This year, the forum’s main topic will be international and trans-border cooperation in the interests of the development of the Baikal region,” the press service of Mikhail Slipenchuk, a member of the Russian State Duma and one of the forum’s moderators told TASS.

Another sign of the thawing of Russia-Japan relations is the discussion of a “power bridge” that would bring almost 4 GW of electrical power from gas-based power generation stations to be set up on Russia’s Sakhalin Island, just east of the Siberian coast, to Japan. “While the concept of a ‘power bridge’ between the two countries dates back to 2000, it became increasingly popular in the wake of the Fukushima Daiichi nuclear disaster of 2011, when Japan’s nuclear power plants were shut down and the country experienced a severe lack of electricity,” Sputnik said today.

Japan ‘Studying Investment Potentials’ in Iran’s Chabahar Port-Related Projects

Aug. 4 (EIRNS)—The Governor-General of Iran’s Sistan-Balochistan province Al Owsat Hashemi told the Islamic Republic News Agency (IRNA) on Aug. 3, that Japan is going to invest about $10 billion in his province to make Iran’s Chabahar Port-associated development a greater success and thus rejuvenate the province.

Sistan-Balochistan province, in Iran’s east, is the country’s most thinly populated and its least-developed province. In May, Iran, Afghanistan and India signed an agreement to develop Chabahar Port, in the southeastern corner of Iran on the Gulf of Oman, to facilitate trade between South Asia and Southeast Asia, and Iran, Afghanistan, Central Asia and Europe. India has committed to developing the port and investing $20 billion to build up an industrial complex and an economic zone around it. India will also help develop the 500 km Chabahar-Zahedan railway line to link Afghanistan to the planned port.

Within days of the Iran-Afghanistan-India agreement’s signing, Iran’s PressTV reported that Japan’s Ambassador Koji Haneda stated that “Japanese companies were studying the potentials to make large investments in Sistan and Balochistan…. Iran’s Sistan and Balochistan province enjoys the necessary security to host Japanese tourists and investors.” Haneda headed a high-profile Japanese business delegation to Chabahar, PressTV reported back on May 24.

According to Governor Hashemi, Japan is going to invest about $10 billion in three major projects which would include construction of an international airport, the development of Chabahar Port, and the construction of Chabahar-Sarakhs railway. Sarakhs is located in Iran’s Razavi-Khorasan province, north of Sistan-Balochistan and bordering southern Turkmenistan just north of northwestern Afghanistan. The railroad will be about 1,250 km long, and will allow cargo from the port to have an access to southern Turkmenistan.

SCIENCE AND INFRASTRUCTURE

The Consequences of Killing the U.S. Space Program

Aug. 4 (EIRNS)—NASA could be left without any way to get astronauts to the International Space Station (ISS), warned NASA’s independent National Advisory Council. At its meeting on July 28, Council member and former Space Shuttle manager Wayne Hale warned that if there are delays in the ability of the commercial crew providers to have their vehicles ready in 2018, NASA astronauts will be grounded.

This is because the contract with Russia for seats on their Soyuz rockets runs out in 2018. Since there is a long lead-time to order the vehicles, to secure additional rides from Russia requires that “a decision must be made really very shortly—before the end of 2016,” to procure additional vehicles. This, Hale said, is needed “to guarantee access to the ISS in 2019.”

 

 

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