EDITORIAL
Italy: Did Putin Do It Again?
Dec. 5 (EIRNS)—Unlike the hysteria still continuing in the United States, no one is claiming that Russia fixed the voting machines for Italians’ overwhelming defeat of a referendum handing over their laws, courts, and legislature to the European Union. But the promoter of the referendum, Italian Prime Minister Matteo Renzi, is just as surely defeated and resigning.
As Russian President Putin observed on the same day in a television interview, “We now live in different times…. The global balance is gradually being changed.” Obama has lost again; another leader on whom he had lavished praise has conceded defeat by “the new paradigm.”
That new paradigm rejects the old one—ultimately of British financial imperialism—which Obama has served: Sacrificing economies to global financial markets and institutions; sacrificing industries to “free trade” treaties; removing unwanted “dictatorial” governments by constant wars. Ironically it was the British electorate which began the rejection, now spreading throughout the trans-Atlantic countries, of this “globalization” paradigm.
The new paradigm is epitomized by the nearly 70 major new infrastructure projects China is involved in funding, and in building, in the nations of Eurasia, Africa, and South America—potentially, in North America when Obama is out of the way.
It could soon be expressed by the way Putin is forcing a resolution of the attempted regime-change war in Syria; and by China’s New Silk Road development thrust coming into the Mideast as well. The European Union itself has bent to this “changing balance,” and today offered a Plan B in which it will help fund the reconstruction of Syria and give up the demand for Bashar al-Assad’s resignation.
Donald Trump’s election is an opening for the fight for this new paradigm in the United States—he was elected by rejection of old globalization policy, and shares some aims of the new.
But the America- and Europe-wide hope for this new paradigm, is the campaign for Lyndon LaRouche’s “four economic laws to save the United States,” which begins immediately with the passage of Glass-Steagall by this Congress.
NEW WORLD ECONOMIC ORDER
EU Oligarchy Goes Down in Flames in Italian Referendum
Dec. 5 (EIRNS)—This report was published in the EIR European Alert Service:
The smashing defeat of pro-EU oligarchies in the Italian constitutional referendum of Dec. 4 opens up a new phase in European politics and bears global implications. This is the third shock delivered by the worldwide revolt of the forgotten citizen against a political establishment responsible for an economic crisis and wars which are driving millions of people into poverty, despair and death. Not by chance, the highest percentages of the “No” vote came from southern regions, such as Sicily and Sardinia, which have the highest rates of youth unemployment and poverty levels, and from the northeastern region of Veneto, hardest hit by the post-2008 industrial desertification and a high rate of suicide among small industrialists.
With a voter participation of nearly 70% domestically (66% with voters abroad), Italians gave a lesson of wisdom by rejecting 60-40 a Constitutional reform dictated by the European Union and by investment bankers. If approved, the reform would have turned the Parliament into a mere executor of dictatorial power, based not in Rome but in Brussels and Frankfurt (EU Commission and European Central Bank). In fact, the introduction to the Constitutional reform bill states that its aim is “to exhaustively rationalize the complex multilevel system of governance, articulated among the European Union, the state, and local autonomies.” No less than four new Constitutional Articles established that EU law was on the same level as Italian constitutional law.
Now a turbulent new phase is to begin for Italy and the EU. Prime Minister Matteo Renzi resigned and State President Sergio Mattarella will have to mandate a new political figure or a technocrat to form a new government. The Lega Nord and M5S opposition parties have called for early elections, but there is still a large majority in the current Parliament to support a Partito Democratico Prime Minister. Additionally, before new elections are held, a new election law would have to be approved, as the Constitutional Court has ruled that the current one is unconstitutional.
Moreover, it is difficult for Mattarella to dissolve the Parliament, when the budget law has still to be approved and the current banking crisis could get out of control.
The financial storm announced before the vote in case of a Renzi defeat (Raffaele Jerusalmi, the CEO of Borsa Italiana, the Italian stock exchange, warned of “colossal short positions” on Italy, in expectation of a “No” victory) did not occur the day after. However, time is running out for Monte dei Paschi di Siena and other banks which are expecting a solution for accumulated losses in ten years of depression and an EU-dictated “market solution” involving a bail-in for depositors is now more difficult than before. If the crisis precipitates, it will spread contagion throughout the entire financial system.
Italy will shortly face a choice: either impose financial fascism, or leave the euro and implement national emergency legislation, including a Glass-Steagall financial reform and a large-scale plan for infrastructure investments and economic recovery, in cooperation with China’s New Silk Road strategy.
Italy Banks’ Referendum Reaction May Be Just Starting
Dec. 5 (EIRNS)—Despite early-morning claims from financial media that “everything is calm, everything is fine” in the Italian banking system after the defeat of Renzi and his referendum, the “calm” did not last the day. Large losses in Italian bank stocks piled up, ranging from 4% for Monte dei Paschi (MPS), to 6% for the country’s biggest, Unicredit, to 8% for numerous other large and small banks. Their bonds also fell, with MPS bonds falling to an average of 59 cents on the dollar; and Italy’s 10-year government bond interest rate rose sharply from 1.89% to 2.03% during Monday.
Other European banks, including the CEO of Deutsche Bank, John Cryan, warned there could be a “contagious” Italian banking system crisis.
An immediate problem following from the electorate’s rejection of EU zero-growth regulations, is that the long-attempted €5 billion recapitalization of MPS, which had to be completed this month, is probably now not possible—if it ever was. An emergency nationalization of the bank, instead, would likely lead to a bail-in of MPS’ bondholders to “create” capital, and that could set off bank runs in Italy or beyond.
More generally, Mario Draghi and the European Central Bank are now in charge of maintaining the big Italian banks by buying Italian government and corporate bonds from them—as it was already doing on Monday. On Dec. 8, ECB President Draghi will almost certainly announce an extension of the ECB’s “quantitative easing” program through 2017.
But this is included in what Italian voters have just rejected decisively—European Union support for big banks at the expense of the economy and people of Italy and other EU nations. So the bigger problem for these “zombie” banks is that the next Italian elections are likely to bring the Five Star Movement to power, along with other parties which reject the euro and/or the European Union.
Then the endless Draghi bailout of Italy’s zombie banks will end; and that, hopefully, in an orderly way through the institution of the Glass-Steagall legislation which the failed Renzi government has been blocking.
Europeans Not Reassured by ‘Pro-EU’ Austria Presidential Election
Dec. 5 (EIRNS)—In contrast to the disaster suffered for “Europe” in the Italian national referendum on Sunday, Dec. 4, the victory of Alexander van Bellen (Independent) against euro-skeptic Norbert Hofer (Freedom Party) in the Austrian Presidential election yesterday, is welcomed by the Eurocrats.
But Hofer’s 48.5% brought him very close to defeating the other candidate, who did have the support of most of the mainstream media and of all the other parties outside of the Freedom Party. As the EU problems—financial and political ones alike—that have rallied so many Austrians against the Eurocrats will not disappear, van Bellen’s presidency is not expected to make the opposition go away.
Besides many populist issues, Hofer had also campaigned for Austria’s joining the Visegrad Group of Poland, Hungary, the Czech Republic and Slovakia in their strong efforts to develop their economies independently from the EU, but in cooperation with China. This idea will not fade away, Hofer’s defeat notwithstanding.
Hysterical Eurozone Finance Ministers: Italy Vote ‘Changes Nothing’
Dec. 5 (EIRNS)—The 19 euro area finance ministers, the Eurogroup, meeting in Brussels today were uniformly hysterical, if not delusional, over the results of the Italian referendum yesterday, all insisting that the vote means nothing—there is no euro crisis; this was not a Brexit, but only a “domestic” Italian matter, and things will proceed as they were. The Eurozone is “fine.”
After proclaiming that “I don’t think there is reason to talk about a euro crisis,” Germany’s Finance Minister Wolfgang Schäuble stated simply that Italy “has to continue on the path that Prime Minister Renzi has taken economically and politically,” the Telegraph reported. After all, he said, “the Italians have a lot of experience dealing with such situations, and that’s why I’m not concerned.”
Dutch Finance Minister Jeroen Dijsselbloem, president of the Eurogroup, blithely remarked that “the problems that we have today are the problems we had yesterday and they still have to be dealt with and that process will continue as far as I’m concerned, so let’s wait for the outcome of the political process.” While noting that this isn’t the moment to make austerity demands on Italy, he invited it to take the necessary steps “in the near future.”
Pierre Moscovici, EU Economic and Monetary Commissioner, insisted that the “No” vote in Italy was absolutely not an anti-EU vote. “It’s not a Brexit vote—this makes no sense.” Rather, he said, the referendum was on a purely domestic issue. “Populists in Europe are always trying to turn any vote into a pro-EU or an anti-EU vote,” he proffered, “but they are wrong.” And besides, “we have the means to resist any kind of political shock in Europe.”
Amidst their protestations that everything is fine, the finance ministers voted down a European Commission proposal to set a target for fiscal stimulus for the EU next year. Last November, the EC had proposed a fiscal expansion of up to 0.5% of GDP for the Eurozone, arguing that easing up on austerity was vital now, given the growth of populist and extremist parties that reflect popular anger, Channel News Asia TV network reported. Germany, the Netherlands, and Luxembourg, which enjoy budget surpluses, led the defeat of the EC proposal, as it would have required them to spend more.
Joint Russian-Chinese Campaign for New Silk Road in Germany
Dec. 5 (EIRNS)—In a first, Chinese and Russia diplomats to Germany appeared together prominently at a symposium on the “Silk Road Initiative,” organized by the Berlin Friday Roundtable and the Chinese Embassy. Before an audience of about 200 guests, Chinese Ambassador Shi Mingde and Deputy Russian Ambassador Yury Stetsenko discussed the opportunities offered by the economic belt developed along the Silk Road. The Roundtable is an association of students from numerous European countries who are enrolled at the Technical University of Berlin, for studies in many fields of technology.
In his keynote, Shi Mingde emphasized the long historic connection between China and Germany through the ancient Silk Road, which today is revived by the “modern economic belt” along the same route, connecting China as the second-largest national economy of the world and the economic area of Germany in Europe. With Russia entering this cooperation format, another “important economic area” is included, thereby creating the best conditions for comprehensive cooperation, Shi Mingde explained.
STRATEGIC WAR DANGER
Putin to NTV: ‘Attempts To Create a Unipolar World Have Failed’
Dec. 5 (EIRNS)—Addressing the global strategic situation in a Dec. 4 interview with Russia’s NTV, President Vladimir Putin pointed out that attempts to create a unipolar world “have failed.” This was inevitable, he said. “We now live in different times… Russia has always clung to a point that we must respect the interests of others, while defending our own. This is how we are going to build our relations with our partners,” he stated.
As reported by Sputnik, Putin discussed why the West has often turned a deaf ear to Moscow’s position on resolving military conflicts, citing as examples what he described as NATO’s “law-breaking bombardment” of Yugoslavia in 1999 and its operations in Bosnia and Herzegovina in 1995. The answer is quite simple, he said. “Only loud voices are listened to. But the situation is changing, and I think it’s not a secret for anyone that many of our partners now prefer to adhere to international law, because the global balance is gradually being restored.”
As he did last week at the Primakov Readings International Group in Moscow, Putin referred to the late former Prime Minister Yevgeny Primakov’s view on the Arab Spring in the Mideast. The negative consequences of the Arab Spring, Putin said, occurred because key nations violated the norms of international law “to satisfy their geopolitical interests.” The Arab Spring led to the overthrow of the governments of Tunisia, Egypt, and Yemen; caused civil wars in Libya and Syria, and mass disorders in Algeria, Iraq, Morocco, Oman and other countries. “Using his knowledge about the region … Primakov could see what was coming,” Putin explained. “No doubt, had his opinion been considered back then,” the situation wouldn’t have evolved as it did.
Russia, Putin said, “could not influence directly and practically the development of events, or our opportunities to influence those events were rather limited,” and key international players “preferred… to follow their own geopolitical interests.”
Russia Vetoes UN Security Council Resolution on Syria
Dec. 5 (EIRNS)—Russia vetoed a draft resolution on Syria this afternoon, that CNN claimed, in an earlier report, was intended to allow humanitarian aid to be sent into the remaining besieged part of Aleppo. The draft resolution, put forward by Spain, New Zealand and Egypt, proposed a week-long ceasefire that could be extended by further seven-day periods; it demands that all parties in the conflict allow immediate and safe humanitarian access to all of Aleppo by the UN and its partners.
Russian Foreign Minister Sergey Lavrov slammed the effort during a press conference in Moscow this morning, as a provocation aimed at undermining Moscow-Washington talks on the issue. “Considering the way previous pauses passed, we have no doubts the 10-day pause for militants will be used by the extremists to regroup and recover strength and will therefore impede the liberation of eastern Aleppo,” Lavrov said.
Lavrov reported that U.S. and Russian experts have been working on the problem of the jihadis’ withdrawal from east Aleppo since Dec. 3. Under that plan, the ceasefire regime in Aleppo will take effect only after the routes and dates of militants’ withdrawal from the city are agreed, Lavrov said. He expressed hope that Russian-U.S. cooperation on the issues would be fruitful, and the city would be cleared of militants. Russia will treat militants who refuse to leave eastern Aleppo as terrorists, and support Syrians fighting them, he said.
Syrian Army Still on the March in Aleppo
Dec. 5 (EIRNS)—On the ground in Aleppo, the Syrian army, backed by Hezbollah and other militias, keeps changing the facts on the ground. Reuters reports that the jihadi groups have lost two more districts in east Aleppo, Karm al-Jabal and al-Shaar. “The army now aims to advance and take control of Shaar district and the surrounding districts to force the rebels to withdraw toward the southeastern neighborhoods,” said Syrian Observatory director Rami Abdel Rahman. Syrian troops are also in another district. “Following yesterday’s success in the Al-Jazmati neighborhood, the army has managed to advance inside the Helwaniyeh district and knock out terrorists from the square and nearby residential compounds. Moreover, we are controlling about half of the highway, which leads to the highway to the international airport in Nayreb” Aleppo International Airport, a local militia source told Sputnik yesterday.
There are also more reports of infighting among the terrorists themselves. Some accused the Levant Conquest Front (the group formerly known as Jabhat al-Nusra) of raiding food and weapons storehouses that belonged to other groups, including Faylaq al-Sham, which receives American aid, reports the New York Times. Reuters reported an incident in November, during which Fastaqim, which is associated with the Free Syrian Army, came under attack from the Nour al-Din al-Zinki movement. Whatever the truth about these incidents, the “fear” expressed in both reports is that such infighting only benefits Bashar Assad.
COLLAPSING WESTERN FINANCIAL SYSTEM
Insane German Finance Minister Tells Greece: Either Kill Your People or Leave the EU
Dec. 5 (EIRNS)—Speaking to Germany’s Bild am Sonntag today prior to the meeting of the Eurogroup, the Eurozone finance ministers in Brussels, German Finance Minister Wolfgang Schäuble announced that unless Greece agreed to impose more draconian austerity, it will have to leave the Eurozone. Forget about debt relief, he screamed.
Statesman Lyndon LaRouche remarked today that this is tantamount to lighting matches just after the gasoline has been spread by Italy’s referendum defeat. The demented Schäuble is a pyromaniac.
“Athens must finally implement the needed reforms,” Schäuble demanded. If it wants to stay in the Eurozone, “there is no way around it,” he fumed, stating that the country’s debt level is irrelevant. Chief among the reforms demanded, Reuters reported, is labor reform—“liberalizing” the labor market, so that employers can more easily fire employees. This is the same IMF reform imposed on many Ibero-American nations, at the center of which is destruction of labor rights, unions, etc.
The Wall Street Journal reported today that the 19 finance ministers did agree to some debt relief—easing Greece’s debt load by about one-fifth—by 2060!
SCIENCE & INFRASTRUCTURE
Australia: AIIB Should Fund Nuclear, Coal, and Natural Gas—Not ‘Socially Acceptable’ Renewables
Dec. 5 (EIRNS)—Australia, a founding member of the Asian Infrastructure Investment Bank (AIIB) which pledged almost $5 billion to the bank, is objecting to the “guidelines” for the AIIB which support “socially acceptable” renewables for electric power projects. The government has noted that describing itself as a “green bank,” the AIIB has proposed in its lending guidelines that it will not fund nuclear projects. The Australian government says that the guidelines “shut out” nuclear, coal, and gas, “which are the backbone of Australia’s energy exports.” These are also the backbone resources needed to bring electricity to the 500 million people in Asia who don’t have it, as noted in The Australian.
The government says decisions on financing “green” projects “may not be economically justified.” The article rightly describes this approach as “policies that follow the U.S. and European-backed global banks’ opposition to funding nuclear, clean-coal, and gas-fired projects.” Australia Treasurer Joe Hockey stated that Australia joined the AIIB against the wishes of the U.S., expecting that it would drive increased demand for its exports, which will not materialize under a green agenda.
OTHER
Color Revolution against Philippines’ Duterte Escalates; VP Resigns from Cabinet
Dec. 5 (EIRNS)—Leni Rodredo, who won the Philippine Vice Presidential election over Bong Bong Marcos (former President Ferdinand Marcos’s son, now a Senator), today resigned her post as Housing Secretary in President Duterte’s Cabinet in a move which the Obama-ites hope will catalyze a color revolution. Rodredo is in the party of former President Aquino. Marcos contested her election victory; pre-election polls had showed him far ahead. Although Marcos was in a different party than Duterte, the two are close and would have worked together. The oligarchy clearly went to great extremes to have “one of their own” in the VP spot, with the hope (or intention) of having Duterte removed by impeachment or assassination and getting the presidency back under its control.
Duterte appointed Rodredo to the Cabinet as a gesture of collaboration. She has attacked Duterte’s war on drugs in league with Obama and the human rights mafia, and denounced his decision to have Ferdinand Marcos re-buried at the Hero’s Cemetery (there have been continuing demonstrations against that burial, which took place in November). Her resignation letter follows a message from the Duterte Administration that she should no longer attend Cabinet meetings. Her message says: “Remaining in your Cabinet has become untenable.” A separate message says that she had been “warned of a plot to steal the Vice Presidency,” and that she will “not allow the will of the people to be thwarted.”
On the Marcos burial, Rodredo said: “We have fought this battle before and won. We will never let anyone revise our history and twist it to turn evil into good.”
Making this a revival of the U.S.-run coup against Marcos in 1986 may backfire, since a majority of Filipinos have come to recognize that the ousting of Marcos was the beginning of the disaster which has befallen the nation—the destruction of their industrial economic development, the mothballing of their completed nuclear power plant, the end of their rice self-sufficiency and numerous health and welfare policies under Marcos. The country is now the basket case of Southeast Asia, rather than the industrial and economic power it was on course to becoming.
