by · Published · Updated

WEDNESDAY, AUGUST 24, 2016

Volume 3, Number 01

EIR Daily Alert Service

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

EDITORIAL

The World Urgently Needs a New Financial Architecture and a New Paradigm of Thinking

Aug. 23 (EIRNS)—China’s President Xi Jinping has made it clear that he intends to keep the focus of the upcoming G20 heads of state and government summit in Hangzhou on the urgent need for a new global financial and economic architecture. In fact, the entire dynamic of the world has already shifted to Asia, where long strides are being taken to put that new financial architecture in place. The official China media, joined by top Russian analysts, have made clear that any such new and viable system must include the United States—and this means that the U.S. must ultimately abandon its delusions about ruling over a unipolar world that no longer exists, and never should have existed in the first place.

One particularly insightful call by Andrey Kortunov, Director General of the Russian International Affairs Council, appeared today in Xinhua, in which he warned that “The longer those reforms are postponed, the higher the risk of new crises and instability in the world economy.”  There is widespread belief that Europe is on the very edge of financial blowout, with severe global implications.  Bloomberg reported Tuesday that Deutsche Bank, Barclays, and Credit Suisse combined are sitting on $102.5 billion in “Level 3” assets that are illiquid and could not be dumped on short notice in a crisis. The Economist has headlined its Aug. 20-26 issue “Nightmare on Main Street,” warning of the blowout of the $26 trillion U.S. housing market, with a mountain of derivatives and other non-bank securitized gambling paper built up once again on top.

Kortunov concluded by urging that “Both Russia and China should consistently seek common ground with Washington, and avoid crises, without making concessions on matters of principle.”

A second Xinhua commentary assailed the “overreliance on monetary policy” and the focus on “markets” as opposed to “nations”—at the expense of policies aiming for real physical economic growth, based on technological innovation. “China will use the conference to spur dialogue among developed and developing countries around the potential to foster growth through reforms and innovation,” Xinhua announced.

The foundations for such a new global financial and economic architecture have been well-established, through the growing integration of Eurasia; through cooperation among the nations of the Eurasian Economic Union; the Shanghai Cooperation Organization; and ASEAN. China’s One Belt, One Road initiative, based on Lyndon and Helga LaRouche’s original mid-1990s concept of the Eurasian Land-Bridge, is the principle upon which this Eurasian development is premised.

At a Kazakh-Polish business forum in Warsaw, on Tuesday, Kazakh President Nursultan Nazarbayev called for a trilateral agreement between Russia, Poland and Kazakhstan, to build up transport corridors through the Caucasus region, as another piece of the overall Eurasian transport/development corridors.  The new emerging cooperation between Russia, Turkey, Iran, and India, accelerated this past week by a string of diplomatic meetings, has a similar focus, centered on the North-South Corridor, running up from the Persian Gulf through Russia into Europe, with spirals into both the Black Sea and Caspian Sea regions.

Such “win-win” ideas demand nothing less than a new paradigm in thinking—an abandoning of the old, dead British imperial concepts of divide-and-conquer geopolitics—concepts that brought the world a century of two world wars and a 50-year Cold War.

In the United States and Europe, the bankruptcy of the entire financial and monetary system is so advanced that the only remaining solution is the immediate reinstatement of Glass-Steagall full bank separation in the United States and the passing of identical laws in Europe.  Glass-Steagall is but the first, indispensable step towards the kind of new financial and economic architecture that Xi Jinping is going to put on the table at Hangzhou on Sept. 4-5.

STRATEGIC WAR DANGER

U.S. Military Tries To Declare a De Facto No-Fly Zone over Eastern Syria

Aug. 23 (EIRNS)—Reeling from the setbacks administered by Russian President Putin’s strategic initiatives across Southwest Asia, the Obama administration is scrambling to get back in the game. Through a series of Pentagon statements, the U.S. has, in effect, tried to declare a no-fly zone over Syria’s Hasakah province, even if it won’t call it that.

“It’s not a no-fly zone,” Pentagon Press Secretary Peter Cook told reporters yesterday. “But,” he continued, “the Syrian regime would be wise to avoid areas where coalition forces have been operating. And we will continue to defend them, and, if need be, we will send aircraft again to defend our forces.” Cook refused to say whether U.S. planes were now flying regular combat air patrols (they may well be) where U.S. forces are deployed. However, “We are going to tell the Syrians and anyone else who may threaten our force in that area that we will defend them, and they have a right to defend themselves as well,” Cook said.

Completely disregarding the simple fact that American forces are on the ground in Syria in the first place, in violation of that country’s sovereignty, and that American warplanes are in Syrian airspace also in violation of international law, Cook suggested that his warning will apply to other areas of Syria where U.S. forces may move in the future.

“We will continue to defend our forces in our fight against ISIL … and as our forces move in Syria and continue their partnered operations, we will do what we need to do to protect our forces.” Cook stopped short of threatening to shoot down a Syrian or Russian plane that might threaten U.S. forces, saying: “We’re not going to get into our rules of engagement.”

Al Masdar News’ Paul Antonopoulos put the matter simply in an article today: Cook is making demands for the Syrian government to not operate within its own sovereign airspace.

Cook also used the occasion to throw cold water on the ongoing Kerry-Lavrov talks: “Contrary to recent claims, we have not finalized plans with Russia on potential coordinated efforts. Serious issues must first be resolved before we can implement the steps discussed in Moscow last month,” Cook said. Lt. Gen. Stephen Townsend, the U.S. Commander in Baghdad, also was negative on cooperating with Russia, admitting that the decisions in that regard were for the Obama Administration to make, but “as a soldier, I’m fairly skeptical of the Russians,” he told Associated Press.

U.S. Secretary of State Kerry and Russian Foreign Minister Lavrov are scheduled to hold talks on Aug. 26-27 in Geneva.

Obama’s Latest Illegal War: Libya

Aug. 23 (EIRNS)—Those who argue that there’s no point in removing Obama from office now, since his remaining time is short, should look at the new wars Obama is launching.

The latest atrocity is that U.S. Marines are now flying strikes in Libya, purportedly against ISIS, using Cobra attack helicopters. The strikes over the weekend marked the first time defense officials have disclosed using the AH-1W Cobras for strikes in Libya, Defense News reports. AFRICOM said the strikes were conducted “at the request of, and in coordination with, the Libyan Government of National Accord,” or GNA, the dubious body manufactured at U.S. and British specifications.

Like all of Obama’s wars, this one also is a violation of national sovereignty and of international law. The Libyan Parliament met yesterday, and voted no confidence in the GNA. Out of the 101 members present, the Washington Post reports, 61 voted against the government; 39 abstained, and only 1 voted in favor of the government. The vote apparently triggered an internal dispute over its legitimacy, as well as international consternation: “The vote can potentially throw the whole unity process up in the air,” said Mattia Toaldo, senior policy fellow at the European Council on Foreign Relations in London.

NEW WORLD ECONOMIC ORDER

Yemenis Turn the Tide against the Anglo-Saudi-American War

Aug. 23 (EIRNS)—The Yemenis have turned the tide against the Saudis in the ongoing genocidal war in that country, by establishing a national unity government among the army, the Houthis, and Ali Abdullah Saleh’s party, and of course by fighting back against the Anglo-Saudi-American war of aggression. Now they are moving to the point of becoming the real “legitimate” government, rather than the clown Abd Rabbu Mansour Hadi, in the Riyadh five-star hotel.

The move in the direction of Russia by Saleh and others is a reflection of the shift in the whole region towards accepting Putin’s strategy. Their reported offer to the Russians of a military base inside Yemen has not been confirmed, and is questionable in that it would place Russia in direct military engagements fighting Saudi jets and British and American special forces and mercenaries on the ground. However, Saleh understands that the Russia policy is recognized as the winning policy, especially as the Iranian-Russian coordination is very tightly knit, and now Turkey is moving in the same direction. Even Egyptian President Abdel Fattah el-Sisi has abandoned his Saudi-friendly silence concerning Syria, and has now openly expressed his view on the necessity of supporting the Russia-American coordination on Syria. Most importantly, el-Sisi called for protecting the unity of Syria; disarming all the militias and terrorist groups; revitalizing the role of the central state, and launching national reconstruction.

The Saudis are going berserk and bombing the hell out of Yemen right now. But that did not prevent the multi-million demonstration in the capital Sana’a on Aug. 19 in support of the new Houthi-Saleh government of the Supreme Political Council.

The days of ISIS in Iraq (Mosul) and Syria (Raqqa and Deir Ezzour) are numbered. The only thing which is delaying the final attack is that the different forces are pulling in different directions, due to the Obama Administration’s games that are prolonging the life of ISIS. The Turks are also contributing to the delay, due to their policy of supporting the terrorist groups around Aleppo and Idlib. Their excuse is that they want to keep the Kurds in check, but they are in reality supporting Al-Nusra and other terrorist groups with the hope that a U.S.-Russia political solution will include safe havens for their Islamist militias inside Syria.

Turkish Expert Excited by China’s G20 Strategy

Aug. 23 (EIRNS)—Altay Atli, the coordinator of the Asian Studies Center at Bogazici University in Istanbul, told Xinhua today that China’s decision to expand the participants in this year’s G20 summit is key.

“A large presence from the developing world is very important…. The world’s problems are collective; they impact all of us, and this is why they require collective solutions…. Instead of being a ‘rich men’s club,’ the G20 should act as a facilitator for creating solutions to global problems by bringing representatives from different parts of the world together,” he emphasized.

Atli happily expects that after the Hangzhou summit, “China will have an elevated status and influence within the G20 and in global governance in general.”

Indian Envoy Meets with Assad: Growing Indian Interest in Syria

Aug. 23 (EIRNS)—Indian Minister of State for Foreign Affairs Mubashir Javed Akbar’s visit to Syria, Iraq, and Lebanon started with his promising meeting Lebanese Prime Minister Tammam Salam and Foreign Minister Gebran Bassil. His subsequent meeting with Syrian President Bashar al-Assad on Aug. 20, however, drew most attention. In that meeting, President al-Assad “sought India’s help in the reconstruction of his country’s economy, and discussions were held on upgrading security consultations. India’s role in the fight against terrorism also figured in the talks,” the Indo-Asian News Service reported today. Akbar’s visit comes seven months after the visit of Syrian Deputy Prime Minister and Foreign Minister Walid al-Moallem to India, where he sought India’s economic and political support.

In New Delhi, a similar view was also expressed by Syrian Ambassador Dr. Riad Abbas in an interview with The Hindu that appeared today. He said, “The Syrian government has given priority to friendly countries like India, all the BRICS states, and Iran to come to Syria for reconstruction projects. I have been trying to convince infrastructure businesses here to come and take part in these projects. And I am happy to say that next month I will be taking a delegation to Syria to take a tour of the area and discuss possible projects with them.”

Akbar’s rather sudden visit to Damascus has created a bit of a stir in the Organization for Islamic Cooperation (OIC). But it is nonetheless consistent with the recent efforts by Prime Minister Narendra Modi and External Affairs Minister Sushma Swaraj, who in the last two years have visited Saudi Arabia, Egypt, the U.A.E. and other Islamic countries to strengthen India’s Southwest Asia policy. Modi is scheduled to visit Palestine and Israel before this year is over and it is evident that New Delhi is in the process of enhancing its ties with Syria, Lebanon and Iraq prior to Modi’s visit.

Russia, China, and India Could Shape the Eurasian Land-Mass

Aug. 23 (EIRNS)—An special op-ed yesterday by Alexander Korolev, a Junior Research Fellow at the Center for Comprehensive European and International Studies (CCEIS) at the Higher School of Economics, Moscow, in Russia Direct, and reprinted today in Russia Beyond the Headlines, maintained that Russia’s recent efforts to make inroads into the ASEAN open up the possibility of Russia, China, and India coming together to shape the future of greater Eurasia. Korolev’s op-ed concludes, “It is vital to note that Russia has every intention to become a true Asia-Pacific nation; it seeks to reevaluate past approaches and its current resources. … How integrated Russia will be into the Asia-Pacific economic region will depend on how productive Russia’s dialogue is with the main decision-makers.” The “main decision-makers” are ostensibly China and India.

Korolev wrote that Russia’s lack of economic presence in greater Eurasia stems not only from “the presence of U.S. influence in the region, relatively weak level of infrastructural development in Russia’s eastern territories, and Russia’s limited export potential to the countries in the region,” but also from the Euro-centric outlook of Russian elites. “The elites did not wish to see that the socio-economic rise of Asia made land beyond the Urals much more relevant in world politics.”

However, Korolev suggested that the situation is now ripe for Russian participation: “Following the 2015 announcement of cooperation in integrating the two projects of the Eurasian Economic Union (EAEU) and the Silk Road Economic Belt, Russia’s political elite was able to strengthen relations with partners in Southeast Asia. The May 2016 Russia-ASEAN summit, which was held in Sochi, marked the emergence of a strategic partnership between sides that resulted in the cooperation agreement between the Eurasian Economic Union, the Shanghai Cooperation Organization (SCO) and ASEAN. … The promotion of these flagship initiatives is a symbol of Russia’s turn to the East. It sets the stage for a greater Eurasia with new economic and geo-strategic goals, in which Russia, along with China, India and Iran must play a leading role. This format is universal and serves the interests of all major parties.”

SCIENCE & INFRASTRUCTURE

China Advances Toward Its 2020 Mission to Mars

Aug. 23 (EIRNS)—China’s space leaders have released new artists’ drawings and more details about the Mars mission they plan to launch in 2020. Andrew Jones reports in GBTimes media that in a press conference today in Beijing, the chief architect of the mission, Zhang Rongqiao, described it as “complex and ambitious”; which is, in fact, an apt description of all of China’s deep space missions. This will be China’s first mission to Mars, and rather than follow the path of other countries, which carried out a succession of increasingly complex Mars projects, China plans to deploy an orbiter, a lander, and a rover all on the first mission.

The purpose and scientific goals of the mission are very broad: To use a suite of instruments to study the Martian topography, soil, atmosphere, and water ice. The rover will have a ground-penetrating radar, similar to that on lunar rover Yutu, and will examine the internal structure of the planet. Lunar mission scientist Ye Peijian reports that the Mars rover is being developed by the team that carried out the Chang’e-3 lunar lander/Yutu rover mission.

China’s State Administration of Science, Technology, and Industry for National Defense has opened a public competition to name the mission and create an “iconic” logo for it. Jones reports that Zhang said that this ambitious mission will also be a demonstration of the technology needed for a Mars sample return mission around 2030.

The series of Mars missions that are planned would be ripe for international cooperation. During the favorable 2020 launch opportunity, a Mars mission will be launched by the U.S., and by Russia for Europe. Japan will launch a small craft for the U.A.E. NASA and ESA missions in the works will gather samples on Mars as the first step to eventually returning the rocks and soil to Earth in the future. China has the same goal.

Russia’s New Spacecraft Will Upgrade Space Station Cargo Delivery

Aug. 23 (EIRNS)—Russian engineers are finishing the design of a new unmanned space cargo vehicle which will replace the venerable Progress ships that have been delivering supplies to Russian space stations since 1978, and to the International Space Station since it went into operation. The new vehicle will increase, by one ton, the seven-ton cargo capacity of the Progress, Russian space expert Anatoly Zak reports. This increased payload capacity will allow Russia to reduce the number of resupply missions to the ISS from four to three per year, Zak says. Russia has been looking for ways to cut its ISS costs and increase efficiency, and recently announced that its three-man crew will be reduced by one. This reduces supplies needed on the station, and the number of Progress flights. But that is just a temporary measure.

Zak says the planned new vehicle features a “radical new design.” It will be more efficient, with a simplified design, and combine some now-separate functions, such as delivering propellant to the station, and carrying the fuel the Progress itself needs in the same fuel tank, rather than separate tanks. The new ship will be able to remain docked to the ISS for a year, as compared to the half-year limit on its functioning now. When emptied of supplies, the Progress craft are packed with trash from the ISS, and the vehicle burns up in the Earth’s atmosphere.

Zak reports that “even with all the shortcuts and the streamlined design, the new ship is not expected to reach the launchpad until 2020. Thus, it would be available for what will likely be the last four years of ISS operations, up to 2024, and for follow-on space stations after ISS is retired.

Russia is in the midst of rebuilding and upgrading its space technology base and advanced manufacturing and mission capabilities, with a new series of launch vehicles, cargo ships, crew vehicles, and plans for deep space missions with international partners.

COLLAPSING WESTERN FINANCIAL SYSTEM

Financiers Scrambling over Imminent Derivatives Blow-Out

Aug. 23 (EIRNS)—Wall Street’s Bloomberg news service reported yesterday that the financiers are desperately trying to “unwind” the so-called “Level 3” assets shown on the books of the casino banks. Bloomberg named three European giants: Deutsche Bank, Credit Suisse, and Barclays, as its greatest concern, which had $102.5 billion in financial derivatives on their books at the end of June. That’s “more than half their combined shareholders’ equity,” Bloomberg wrote.

“Level 3” assets are financial derivatives to which the a bank assigns whatever value its officers choose, because the derivatives have no “market” valuation, since no one is willing to buy them. In an interview with Bloomberg TV on Monday, Royal Bank of Scotland Chairman Howard Davies acknowledged that so-called Level 3s “are hard to unwind…. It’s not that they are not performing,” he lied, “but if a bank needs more capital, they are impossible to realize, as there just isn’t a ready market for them.”

New shocks to the derivatives bubble are projected from the Sept. 1 deadline for the big casino banks to meet new collateral requirements and other regulations on derivatives, imposed by the U.S. and Japan in a futile effort to make “more secure” the over-the-counter derivatives market which the bankers estimate at no less than $493 trillion globally. The new rules were supposed to be imposed also by the European Union, Singapore, Hong Kong, and Australia, but those nations extended the deadlines, for fear of the results.

U.S. POLITICAL AND ECONOMIC

Campaign Escalates To Block Obama’s New Arms Sales to Saudi Arabia

Aug. 23 (EIRNS)—California Congressman Ted Lieu, a colonel in the Air Force Reserves, along with Code Pink and other activists, are leading an “11th hour” mobilization to block the unconscionable U.S. $1.15 billon arms sale to Saudi Arabia for its genocidal war against Yemen. President Obama announced the arms sale on Aug. 9—when Congress was out of session. Congress has a 30-day period after that announcement to block the sale, but it doesn’t return to session until Sept. 5.

“I taught the law of war when I was on active duty,” Representative Lieu told The Intercept yesterday. “You can’t kill children, newlyweds, doctors and patients—those are exempt targets under the law of war, and the coalition has been repeatedly striking civilians,” he said. “So it is very disturbing to me. It is even worse that the U.S. is aiding this coalition…. By assisting Saudi Arabia, the United States is aiding and abetting what appears to be war crimes in Yemen. The administration must stop enabling this madness now.”

Democrat Lieu is the co-sponsor, along with Rep. Ted Yoho (R-FL), Rep. John Conyers (D-MI), and Rep. Mick Mulvaney (R-SC), of H.J.Res.90, a bill that would bar the transfer of air-to-ground munitions from the U.S. to Saudi Arabia. The Common Dreams website reported today that those four congressmen will be sending a letter on Aug. 25 to the Obama administration, calling for a delay in the sale, citing the latest bombings of hospitals, schools, and residential areas in Yemen by the Saudi-led coalition. Additional signers are being organized.

A companion bill, S.J.Res.32, was introduced in the Senate by Sens. Chris Murphy (D-CT) and Rand Paul (R-KY).

Correction: Yesterday’s Alert misidentified Iain Duncan and Duncan Smith as two different people. The single individual, Iain Duncan Smith, is the former leader of the U.K. Conservative Party, and former Secretary of State for Work and Pensions.
 

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