FRIDAY, SEPTEMBER 9, 2016

Volume 3, Number 13

EIR Daily Alert Service

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

EDITORIAL

The British Empire Is Collapsing as the New Paradigm Emerges

Sept. 8 (EIRNS)—The British Empire, like all previous Empires, sustained its capacity to loot and kill around the world through “divide and conquer” operations, turning potential friends and partners against each other on religious, ethnic, national or other geopolitical means of division. This perpetual warfare policy cannot be successfully countered on a one-by-one basis. The only path to peace and development is a new global paradigm which demonstrates to one and all that being manipulated into conflict is a sure means of self destruction, while finding and implementing policies in the common interests of one’s self and that of the “others,” and of the human race as a whole.

That is exactly what is now taking place, at an incredibly rapid pace, throughout the world, as we see time itself literally speeding up. The three consecutive conferences in Asia over the past week—the Vladivostok Eastern Economic Forum on the joint development of the Russian Far East; the G20 Summit in China; and the ASEAN and East Asia Summit in Laos—have put in place a new paradigm, centered on the concept of creativity itself, as Lyndon LaRouche has long insisted (Xi Jinping has chosen to call it “innovation”), to replace the broken and destructive British Empire with a community of nations dedicated to the common aims of Mankind.

We saw in the past weeks the imperial control over Turkey broken, as Turkey saw itself threatened with chaos and destruction, turning to Russia, which is now working with Turkey to build nuclear plants, gas pipelines, universities, and of course moving to crush the terrorist scourge in Syria.

We saw in Asia the imperial control over the Philippines broken by a new government which has courageously identified the fact that peace and development with China is the only sane future, rather than Obama’s using the country as a base for military confrontation with China.

And, today we see dramatic, if tentative, steps towards bringing in even the most deadly of the British Empire’s killer satrapies—Saudi Arabia and Israel. After President Putin met with Deputy Crown Prince Mohammed bin Salman (the Saudi Defense Minister and second Deputy Prime Minister) in China last Sunday, the two nation’s energy ministers signed an historic agreement to cooperate in oil development and marketing, while Russia has offered to build 16 nuclear plants in the Kingdom. Xi Jinping has also offered the Saudis a central place along the Silk Road—but waging wars on neighbors Yemen and potentially Iran, while sponsoring terrorism around the world, will not co-exist with a real development program for the country with Russian and Chinese help.

Even in Europe and the United States, the potential for a dramatic shift towards sanity is in sight. German Development Minister Gerd Müller yesterday denounced the “primitive capitalist structures created by a globalization without limits and values,” which has created “a situation in which 10% of the global population own 90% of the property, and 20% use up 80% of the commodities and resources. That is the basis of conflicts, tensions, wars and is the cause of millions of humans becoming refugees.” Development policy is peace policy, Müller stressed.

The U.S. Congress has reconvened, as a groundswell for Glass-Steagall restoration, to end the destruction of the casino economy on Wall Street and restore productive investment, forced it onto both parties’ platforms. The Glass-Steagall bills now in both Houses of Congress must be passed immediately.

Will Obama veto Glass-Steagall? As certainly as he has created one war after another, murdered countless innocents, and supported terrorists to achieve his “regime change” goals. That is why Obama must be removed now—not after an insane election process between two tools of Wall Street. There is no time to lose, but every reason to be optimistic, as “change” has become the new normal.

THE NEW GLOBAL ECONOMIC ORDER

Russian Minister in Japan Planning Russia’s Far East Development

Sept. 8 (EIRNS)—Moscow’s Minister for the Development of the Russian Far East Alexander Galushka arrived in Tokyo today on an unannounced visit, reports Russia Beyond The Headlines (RBTH). He came to discuss Japanese Prime Minister Shinzo Abe’s eight-point plan delivered at the Vladivostok Eastern Economic Forum (EEF) on Sept. 3. At that conference Abe had said: “Let’s turn the Russian Far East into an export base for the entire Asia-Pacific region.”

According to RBTH, at Vladivostok Russia and Japan signed 20 agreements worth about $1.3 billion. There were five groups of projects, of which the first group, consisting of coal projects, the reconstruction of the Khabarovsk International Airport, and a factory to produce Mazda diesel engines in Vladivostok, are almost ready.

Also today, Russian Energy Minister Alexander Novak told TASS in an interview, “Tokyo is ready to change its legislation currently banning electric power imports in order to fulfill the Russia-Japan energy bridge construction project…. Our colleagues have confirmed their interest; moreover they have noted that they are ready to amend their legislation, as at the moment there is a ban on the import of electric power in Japan.”

Novak said that “a feasibility study of the construction project is underway now and is expected to be completed already this year. The project envisages three stages…. The first is transferring capacity in the amount of up to 200 MW, but in the future this figure could exceed 2 GW.” “The options of electricity and power routes from Siberian and Eastern Unified Grid Systems to Japan, amounting to 2 GW, have been examined recently,” said Oleg Budargin, the head of Russia’s Rosseti power company, speaking to TASS at the Vladivostok Eastern Economic Forum last week.

Russia, Saudi Arabia Say Moving Toward ‘Strategic Partnership’

Sept. 8 (EIRNS)—Russian President Vladimir Putin and Saudi Deputy Crown Prince Mohammed bin Salman met Sept. 4 on the sidelines of the G20 meeting in Hangzhou, China. After that meeting, Putin stated: “We believe that without Saudi Arabia, no serious issue in the region, of course, can be solved.” Salman, who is also the Saudi Defense Minister, in turn said that Saudi Arabia would like to work with Russia “to avoid any negative scenario in the Middle East,” emphasizing the importance of “spinning the wheel of economic cooperation even faster than now.”

The energy ministers of the two countries signed a four-point joint statement, that they would “promote cooperation … in the oil and gas industry, including deployment of new technologies, exchange of information and expertise to raise the level of technology applications in production, refining, storage, transport and distribution.” The statement also announced that the previously established Saudi-Russia Working Group on oil and gas cooperation, would hold its first meeting in October 2016.

Underscoring the strategic nature of the incipient “new era” between the countries, the Saudi Gazette reported Sept. 6 that Russian presidential advisor Yuri Ushakov had announced that Russia’s state nuclear corporation Rosatom had offered to build 16 nuclear plants in Saudi Arabia, pursuant to an earlier intergovernmental agreement dating back to June 2015. The project is valued at $100 billion, and to be completed by 2030.

The coverage of these developments in the Sept. 7 Asia Times emphasized that “Washington has been caught by surprise,” and that “a rattled Obama” had suffered a strategic blow. “Russia has outmaneuvered the U.S. on the Middle Eastern chessboard,” it wrote, and continued that both Russia and Saudi Arabia, “The two countries account for almost 40% of the world’s oil exports…. In strategic terms, too, Washington’s attempt to ‘isolate’ Russia is rendered ineffective, since Europe’s heavy dependence on Russia for energy supplies will continue for the foreseeable future.”

U.S. POLITICAL AND ECONOMIC

Senate Bipartisan Bill To Halt Arms Sales to Saudis

Sept. 8 (EIRNS)—Today a bipartisan group of U.S. Senators—Chris Murphy (D-CT), Rand Paul (R-KY), Al Franken (D-MN), and Mike Lee (R-UT)—introduced a Joint Resolution of Disapproval, S.J.Res.39, to block the United States from selling $1.15 billion in Abram tanks and other military equipment to the Saudis for use in its war against Yemen—a sale President Obama announced in August.

Murphy said that the Saudi war in Yemen, funded by the United States, “has became a disaster that is making our country less safe every day. Thousands of civilians are being killed, and terrorist groups inside the country, like al-Qaeda and ISIS, are getting stronger. Until the Saudis conduct changes, the U.S. should put a pause on further arms sales.”

Sen. Al Franken said, “In Yemen, a Saudi coalition of fighters is unjustly killing civilians while not doing enough to address terrorism.” Rep. Mike Lee noted that the American military “has been engaged in the civil war in Yemen throughout this year with very little oversight or authorization from their representatives in Congress,” and called for “a debate on the merits—or lack thereof—of our involvement in this conflict and in the broader Middle East.”

Stating that on Aug. 8, Obama notified the U.S. House of his intent to sell $1.15 billion of weapons to the Saudis, 64 House Members urged Obama “to postpone this plan” because in October 2015, 204 Members of the House, 40 Republicans and all but 16 Democrats, had voted to block the transfer of cluster bombs to the Saudis after reports of their use on civilians in Yemen. The House letter added in the last few days, a Saudi airstrike on a school had killed 10 children, as young as six years old.

The letter states that the UN Office of the High Commission for Human Rights has said that 3,704 civilians, including 1,121 children have been killed; 2.8 million Yemenis internally displaced, and 83% of the population is now dependent on humanitarian assistance.

The 64 Congressmen are asking Obama for more time for full deliberation by Congress, and to lift the “30-day rule” for Congress to object after an arms sale is announced—which in this instance, was during summer recess. Obama notified the House on Aug. 6, and by that clock, its time has expired; the Senate was notified later, and thus its time to file legislation had not expired.  See House signers are listed in a press release issue by Rep. Ted Lieu (D-CA).

Obama’s Afghan Policy Puts Insurgents in the Driver’s Seat

Sept. 8 (EIRNS)—The increasing evidence of the growing muscle of the Afghan insurgents, including the Taliban, has brought Afghanistan once more to the brink of instability, and given proof to the abysmal failure of the Obama administration policy. On Sept. 5, two suicide bombers attacked the Ministry of Defense in Kabul in broad daylight, killing at least 40 people and injuring dozens. Before the day was over, in another part of Kabul, insurgents struck the charity organization CARE’s office, killing at least one and injuring many.

The virtually non-functional Afghan government, a handmaiden of the Obama administration, put the capital under curfew.

While Kabul, which is being projected as the safest city in Afghanistan, is under the insurgents’ siege, the rest of the country is steadily slipping under insurgents’ control. Today, RT reported the Taliban has moved inside the capital, Tarin Kot, of a central Afghan province, Uruzgan. RT cited provincial spokesman Doost Mohammad Nayab saying “the insurgents’ advance has left authorities in control only of the Tarin Kot police headquarters, which the Taliban were besieging. Nayab says that all checkpoints around the city have been overrun or destroyed and appealed to Kabul for quick reinforcements.”

Tarin Kot is the third Afghan provincial capital that has come under Taliban threat recently, along with the city of Kunduz in the north and Lashkar Gah in southern Helmand province. With the rural areas in many provinces have gone under insurgents’ control, the insurgents are now heading to capture major towns and blocking the highways.

Tolo News of Afghanistan reported on Sept. 7 the concerns expressed by the members of the Baghlan provincial council over ongoing threats by the Taliban against some strategic highways in the northern Baghlan province. “The lack of government concentration and in general the negligence of local government have paved the way for the Taliban to launch attacks on Kabul-Baghlan, Kunduz-Baghlan and Mazar-e-Sharif-Kunduz highways. So far up to 10 civilians have been wounded as a result of these violent incidents,” said Mohammad Zarif Zarif, a member of the Baghlan provincial council. Both Baghlan and Uruzgan are key provinces on the way to Kabul.

COLLAPSING WESTERN FINANCIAL SYSTEM

Wall Street Shreds Dodd-Frank, Giving Billions of Reasons To Restore Glass-Steagall

Sept. 8 (EIRNS)—Financial press today are full of reports of major Wall Street and London banks using depositors’ and investors’ savings to pump up the derivatives markets, and the banks’ profits and fees in that explosive market. Dodd-Frank regulations which were claimed to be “just as good as Glass-Steagall” are being evaded with ease; the depositors and investors are losing their savings.

The Wall Street Journal’s contribution is “Wall Street Re-Engineers the CD, and Returns Suffer.” “Market-linked or structured CDs” are in fact savings accounts linked to derivatives on the performance of a basket of stocks or other assets, in ways the investors in the CDs are usually unaware of or don’t understand. “Not a CD as I understand a CD,” in the words of one Massachusetts woman whose $100,000 CD for her grandchildren fell in value to about $96,000 shortly after she bought it.

Investors are given promises of higher rates of return. The Journal reviewed the statements of hundreds of these structured CDs sold by Barclays and by BNP Paribas’ U.S. subsidiary, and found more than 60% of those which had earned a positive return, earned less than a conventional CD of the same maturity, which these days is very little indeed. A quarter of the structured CDs hadn’t yet earned any return when reviewed.

The details of how the derivatives of the structured CDs are designed to work, are too graphic and disgusting for us to show. Suffice to say that they are based on Goldman Sachs indices, and they are efficient in producing zero, and even negative returns year after year, for the savers in many of the cases the Journal examined.

The banks, however, had earned handsome fees from them. Banks’ ”fee income, in particular, has been hard hit, leaving banks looking for new products yielding more than conventional savings accounts and CDs.” In other words, the megabanks’ investment-banking units, not making profits, are grabbing fee income from depositors at their commercial bank units.

“The CDs are sold to customers of regional banks and brokerages by bankers and brokers, who receive commissions. Brokers say each month they receive lists of new market-linked CDs created by Wall Street firms, including Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Barclays and others.” And crucially, “Market-linked CDs don’t have to be registered with the Securities and Exchange Commission,” although they are clearly securities derivatives.

Bloomberg News today reports the same Wall Street megabanks have completely evaded a Dodd-Frank rule supposed to prevent their holding companies from issuing similar structured notes to investors, and they completed the evasion even before the rule takes effect! The banks have created brokerage subsidiaries by the thousands, headquartered in Delaware, which issue the notes; but the holding companies guarantee them. Some 300,000 such bank units are registered at 1209 North Orange Street in Wilmington, Delaware.

Thus, just as in the 2008 crash, the holding companies of Citibank, JPM Chase and the other Wall Street giants, which own the commercial banks where trillions in customers’ deposits lie, have “offshore” securities liabilities they have guaranteed, but which they are pretending, in their accounting, are not liabilities on their books. The 2007-08 crash and the $370 billion taxpayer bailout of Citibank, proved it was otherwise.

And proved that only an enforced Glass-Steagall Act can actually protect and regulate the depository commercial banks, and channel the savings in them toward lending to the real economy.

STRATEGIC WAR DANGER

Globalization Causes Wars and Refugee Flows, Says German Minister

Sept. 8 (EIRNS)—In the German Bundestag debate on the FY 2017 budget, Development Minister Gerd Müller yesterday denounced “early capitalism structures created by a globalization without limits and values,” which has created a “situation in which 10% of the global population own 90% of the property, and 20% use up 80% of the commodities and resources. This scissors cannot continue gaping wider and wider. That, namely, is the basis of conflicts, tensions, wars and is the cause for millions of humans becoming refugees.” Development policy is peace policy, Müller stressed.

The challenges posed by the developing sector are enormous, Müller said: In Africa alone, 2 billion new babies will be born between now and the year 2050, teachers and jobs are needed for them, and 80% of Africans today still have no access to electricity. The global economic system has to be changed, the people living in these countries count on that. The World Trade Organization must be transformed from a free trade organization into a fair trade organization, Müller said, warning again that aid for the refugees in Africa and the Mideast is urgent, and that a “Marshall Plan for Africa and the MENA [Middle East/North Africa] region” is needed.

Education for the refugee children is crucial, therefore Germany is funding 6,000 teachers at present to work in refugee camps, but much needs to be done; UN refugee aid must be upgraded, a reform of UN institutions including the UN Security Council is required.

U.S. Stages Air Confrontation with Russia in the Black Sea

Sept. 8 (EIRNS)—On Sept. 7, the United States flew three jets, with their transponders off, toward Russian territory in the Black Sea. When one was within 30 feet of the Russian area, a Russian SU-27 jet moved in to scramble it, in the customary procedure to at least identify the oncoming plane. The U.S. aircraft then withdrew, and soon afterward, the Pentagon issued a statement condemning the Russian reaction as “dangerous and unprofessional.” In fact, the United States staged the provocation, thereby increasing tension and causing danger. All the additional details make this glaringly clear.

Firstly, there are known Russian military exercises underway in the region, increasing the congestion in the airways. To fly with transponders off in these high-traffic circumstances is automatically a threat, even at a distance.

Moreover, at least one of the U.S. jets in the incident has C4ISR, the most advanced U.S. system for surveillance. The letters designate: “I” for intelligence, “S” for surveillance and “R” for reconnaissance. The “C4” is for command, control, communications and computers. This system can determine aspects of a nation’s defenses, by seeing what “lights up” when probed. The U.S. Sept. 7 action is “extremely dangerous, and it is basically a provocation for a hostile act,” explained Michael Maloof, former Pentagon official, who described the C4ISR system in an interview with RT today. Maloof thinks that Russia should file a formal complaint.

The Russian Defense Ministry has issued a statement. In it Major Gen. Igor Konashenkov states, “On Sept. 7, U.S. P-8 Poseidon surveillance airplanes tried to approach the Russian border twice … with their transponders off.” He said that the SU-27 jets which intercepted the U.S. planes, acted “in strict accordance with international flight rules.”

U.S. Air Force Lt. Col. Karen Kwiatkowski (ret.) said, in an interview with RT today, that the U.S. action is “scary” and shows a double standard. She points out that Finland, for example, has proposed that for the Baltic Sea—and this applies to the Black Sea and other high-traffic regions, all airplanes must keep their transponders on at all times. Russia and even some NATO countries are supportive. But the United States is not.

By Russia Defense Pact, Bolivia Seeks ‘Independent’ Alternative

Sept. 8 (EIRNS)—While attending the Army 2016 Forum in Russia, Bolivian Defense Minister Reymi Ferreira and his Russian counterpart Sergei Shoigu signed a far-reaching defense cooperation agreement which, as Ferreira emphasized, offers Bolivia “alternatives for technical-military support independent of the sphere of countries that have traditionally threatened or sovereignty.”

RT reported Sept. 6 that Ferreira was referring specifically to the United States, on which in the past, Bolivia has had “an absolute dependence as a source of military equipment … that limits, and has limited us,” he said. According to a blog published in Argentina’s Pajaro Rojo newsletter Sept. 6, Ferreira reported there were three major points to the agreement: technical training of Bolivian Army officers at Russian military academies, technology transfer and training in its use, and sharing of military matériel.

Ferreira also pointed out that even peaceful countries must be prepared to defend themselves, and that Bolivia had historically suffered territorial aggression by other nations seeking to grab its natural resources—“its rubber, saltpeter and oil.” Bolivia, he said, has enormous deposits of nickel and other minerals “and must be prepared to defend them.”

In the signing ceremony, Sputnik reported Sept. 6, Shoigu stated that Bolivia “is a promising partner for Russia in Latin America. Our nations are united by relations of friendship based on mutual respect and confidence”—something that is definitely absent in U.S.-Bolivian relations. In a Sept. 7 report, Sputnik quoted Ferreira’s remarks to Patria Nueva state radio, that the two governments are also discussing many other areas of potential cooperation, in trade, investment and finances.

SCIENCE AND INFRASTRUCTURE

Putin Meets Russian Military Sector on High-Tech ‘Spinoffs’

Sept. 8 (EIRNS)—Russian President Vladimir Putin held a meeting today on “the use of the defense industry’s potential in the production of high-tech civilian goods that find demand on domestic and export markets,” according to the Kremlin website.

At the meeting, which took place at the premises of the Research and Production Enterprise SPLAV, Putin stressed that the government was engaging in a “radical modernization” of the country’s armed forces, including “work on new generation arms.” But after the peak of government spending occurs, he said, “we must ensure that existing capacity is put to full use.”

Putin made it clear that he was focusing on advanced technological spinoffs into the civilian economy: “We need to take our advanced science-intensive sectors’ demands as a reference. I say this because we are investing today in expensive and highly complex equipment and we cannot then use it to simply turn out frying pans. We need to focus on demand in medicine, the energy sector, aircraft manufacturing and shipbuilding, space and information and communications technologies.”

OTHER

Brooklyn Memorial Mass for 9/11 Victims Includes Mozart’s Requiem

Sept. 7 (EIRNS)—There will be a live broadcast of the Brooklyn 9/11 memorial mass, with Mozart’s Requiem, on Sunday, Sept. 11, 2016, at the Co-Cathedral of St. Joseph in Brooklyn, New York. It will be broadcast live by the New Evangelization Television (NET) including cable and internet by www.netny.tv, beginning at 12:00 noon EDT. Anyone with access to the internet can watch the Mass, by browsing to www.netny.tv and clicking on the picture at the top of the page. New Evangelization Television (NET) is the premier Catholic TV network of the Roman Catholic Diocese of Brooklyn. (At least one re-broadcast is scheduled, on Sept. 12 at 2:30 p.m. EDT.)

The Mass is featured in the centerfold of this week’s issue of The Tablet, the Diocesan newspaper covering Brooklyn and Queens. It notes that Bishop Nicholas DiMarzio will celebrate the Mass, and notes the musical participation of The Foundation for the Revival of Classical Culture, and The Schiller Institute New York City Community Chorus. There are 1.8 million Catholics in Brooklyn and Queens.

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