EIR Daily Alert Service

WEDNESDAY, APRIL 26, 2017

Volume 4, Number 82

EIR Daily Alert Service

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

EDITORIAL

United States Must Join the New Silk Road; Get the British Empire Out of the Way

April 25 (EIRNS)—We are in a very volatile situation, most dramatically shown by events regarding North Korea, but underlain by the breakdown crisis in the economy and in policy-failure among the trans-Atlantic nations. What is required is for the U.S. to cooperate with China and Russia, in the “framework of the Belt and Road Initiative”—as President Xi Jinping told President Trump in Florida April 7—to steer a course to safety, out of the geopolitical confrontations, which is the ‘British Empire’ game.

Look at North Korea, which today is celebrating its 85th anniversary of the founding of its army, with ceremony and weapons drills, amidst fierce rhetoric against the United States. Unless there is a process of talks and deliberation among the nations concerned (four party, six party, whatever), which offers a solution, the situation is beyond dangerous. The Trump Administration is activated, but so far only from the point of view of pressure and threats, even if restrained.

“Back off” both of you, was the message today from the China state-owned press, the China Daily, whose editorial is titled, “Misjudgment Is the Biggest Risk to Peninsula.” The fear is that “anything could happen at any time in the tense standoff that had developed between Washington and Pyongyang.” Of North Korea, the China paper makes clear, “judging from their recent words and deeds, policymakers in Pyongyang have seriously misread the UN sanctions, which are aimed at its nuclear/missile provocations, not its system or leadership… They need to reassess the situation so they do not make any misjudgments.” To the United States, the China Daily cautions, “Likewise, Washington should continue to exercise restraint and pursue a peaceful resolution to the issue.”

President Trump is conducting unusual steps in Washington, D.C. Yesterday, April 24, at the White House, he hosted a meeting and lunch of the 15 ambassadors to the UN Security Council, speaking of North Korea and Syria. Tomorrow afternoon, April 26, at the White House, all 100 U.S. Senators are invited to a briefing on North Korea, by the heads of the Defense and State Departments, Chief of Staff Gen. Joseph Dunford, and Dan Coats, National Intelligence Director. On Friday, April 28, Secretary of State Rex Tillerson will chair a UN Security Council meeting on North Korea. (The U.S. has the rotating chairmanship for April.)

The message in all this so far, as Trump stated it yesterday to the ambassadors, is that the UN and Security Council member nations must do more on Syria and North Korea. Treasury Secretary Mnuchin yesterday announced, unfortunately, U.S. sanctions against 270 Syrian scientists and researchers, claiming that President Bashar al Assad had gas-bombed his own people. This, despite the lack of any onsite, proper investigation. Thus, the situation remains fraught, and people suffer and die.

Now look at who is spurring on disaster: The New York Times and Wall Street Journal—direct British imperial channels. The Times (April 24) calls for action now against North Korea, because, “the country is capable of producing a nuclear bomb every six or seven weeks.” How does “The Slimes” know this? From, “a growing body of expert studies and classified intelligence reports,” all unnamed. For good measure, today’s Wall Street Journal throws in that, any investment into the One Belt, One Road is “folly,” a waste of money and effort.

Our call is to go out everywhere with the truth. French statesman and former presidential candidate Jacques Cheminade, addressed his campaign the night of the election, saying, “we took up the challenges of our time.” Looking forward, “We can become the catalyst of a real change, and inspiration. But on one condition: that you continue to fight for that…”

U.S. POLITICAL AND ECONOMIC

Jin Liqun: U.S. Can Still Join AIIB, Bank Could Be Platform for U.S.-China Cooperation

April 25 (EIRNS)—Jin Liqun, the president of the Asian Infrastructure Investment Bank (AIIB), used the opportunity of his attendance at the IMF-World Bank meetings in Washington, to make the case for the AIIB at the Atlantic Council, at an April 24 meeting. He told attendees that he had also held meetings with members of the Trump Administration during his visit here.

Jin reiterated the possibility for the U.S. and Japan to become members of the bank, noting that many of the bank’s employees were also Americans. Since its inception, China has always had the position that it would be a good thing if the U.S. joined, he said. “It should be the platform for cooperation between these two countries.”

In reply to a question from China Daily as to whether the AIIB could help finance President Trump’s infrastructure program, Jin did not answer directly. While he said that the AIIB was primarily concentrating on helping developing countries, he did say that AIIB would be open to any relevant projects by member countries.

Chinese Ambassador and U.S. Industry Urge Infrastructure as Central in Relations

April 25 (EIRNS)—At a New York event yesterday, Chinese Ambassador to the U.S. Cui Tiankai said that infrastructure could become a prime area for increased cooperation between the U.S. and China. Speaking on the sidelines of the 2017 International Finance and Infrastructure forum, Ambassador Cui said, “I think infrastructure is certainly a new area of great potential for both countries. Of course, we still have to remove some obstacles and maybe [make] some policy adjustments. But I think if both sides are committed to cooperation in this area, this could be done.”

The New York forum was co-sponsored by the China General Chamber of Commerce-U.S.A, the National Governors’ Association, and Bloomberg. Another speaker at the conference, Jim Reynolds, the head of the JLC Infrastructure Fund which he founded with former basketball star Earwin “Magic” Johnson, said he believed that collaboration between China and the U.S.—by opening up participation in the Belt and Road and Trump’s infrastructure program to companies from both nations—is an ideal way to solve the infrastructure problems facing both countries and perhaps lessen trade tension between the two.

“I think it would be a fantastic idea to get the best of both countries involved in these big projects. One Belt, One Road is a $5 trillion estimated project, and the amount of unfunded U.S. infrastructure is about $3.6 trillion. I think it would be a great marriage for the two leading economies of the world.”

STRATEGIC WAR DANGER

Russia Restores U.S.-Russia Flight Safety Memorandum over Syria

April 25 (EIRNS)—Russia has restored the Syria deconfliction memorandum for flight safety, at the request of U.S. Secretary of State Rex Tillerson, which he made on the day after his April 13 visit to Moscow, a Foreign Ministry source told Izvestia, reported by Sputnik International.

“The memorandum was signed in October 2015, shortly after Russia started its counter-terrorist campaign over Syria at the request of Damascus. The U.S.-led coalition had by then spent a year striking terrorist targets in Syria without approval by the country’s government.

“The memorandum features specific instructions for pilots which help avoid air incidents and ensure flight safety amid the two parallel campaigns. A round-the-clock communication channel was also opened between the two countries’ military personnel.”

‘Macron and His Love-Story with the Gulf Oil Monarchies’

April 25 (EIRNS)—Famiglia Cristiana author Fulvio Scaglione puts his finger on the wound: Emmanuel Macron, the former Rothschild banker, is a friend of the oil monarchies which sponsor ISIS and are bombing Yemen with the help of the French government.

“Emmanuel Macron will be the next [French] President, but we know something about him. He was Minister for Economy and Industry between 2014 and 2016 and as such, he was part of the state visit in 2015 (the third visit in the same year) led by Prime Minister [Manuel] Valls to Saudi Arabia. This was a delegation with 200 businessmen and the result was contracts for EU10 billion, including the sale of weapons. Macron, furthermore, has become a millionaire working as a banker with the Rothschilds. Therefore, you can define him ‘centrist’, or ‘Europeanist’ if you like, to make him more attractive, but in reality he is a man of that financial right wing that for years, now, has dominated European politics and, for money, has sold the soul of the continent. It will not be this banker lent to politics, who will change France’s route. With him, the love story with the Gulf oil monarchies will continue—those monarchies that inspire, organize and finance scientific, real terrorism.”

Many commentators share the view that Macron is a maquillage of the old politics, but the real challenge will be the coming parliamentary elections. Macron, in fact, has no party.

COLLAPSING WESTERN FINANCIAL SYSTEM

Wall Street, City Gnashing Teeth as Belt and Road Forum Summit Approaches

April 25 (EIRNS)—The Wall Street Journal ran an article yesterday titled, “The Folly of Investing in China’s One Belt, One Road,” by Patrick McCabe, an employee of the U.S. Pacific Command.

McCabe snidely refers to Chinese President Xi Jinping’s “star turn” at the 2017 Davos World Economic Forum, where he touted Belt and Road as an investment opportunity, reporting that “over 100 countries and international organizations have supported the initiative … and our circle of friends along the ‘Belt and Road’ is growing bigger.”

McCabe asks ominously, “What risks will OBOR recipients incur when all roads lead to Beijing?” Obviously, with the IMF in mind, McCabe asks, “How will China extract its pound of flesh from developing nations who borrow but cannot repay? Will OBOR facilitate China’s overseas military basing?”

Putting these considerations aside, McCabe jumps to other problems. “OBOR was announced in 2013, and financial assumptions made then are now unrealistic. The cash-flow projections are from a time when China’s double-digit GDP growth seemed unstoppable.” Now, it is a mere 6.9% (U.S. GDP is 0.5%).

Second, China has increased its military spending, and made politically directed investments in “excess infrastructure,” “zombie firms,” and “billions in bad loans to Bolivia, Brazil, Libya and Venezuela.”

Third, the initiative is unlikely to deliver on its promises, he blusters. A 2016 report from the neo-con Center for Strategic and International Studies states, “Chinese officials privately expect to lose 30% of their investments in Central Asia, 50% in Myanmar and 80% in Pakistan.” Even were this so, China should perhaps deploy capital in no-win wars?

In conclusion,  the Journal asks, “If OBOR is so successful, why would the Communist Party ask foreigners for help?”

Intensified Glass-Steagall Discussion Beset by Wild Ideas

April 25 (EIRNS)—The juggernaut of an imminent implosion of financial speculation and the timely introduction of Glass-Steagall bills in both the U.S. House and Senate has catalyzed much discussion, and some action, about how to handle the impending blowout. Today, Sen. Bernie Sanders (I-VT), the most popular figure in the U.S. Democratic Party, signed on as a co-sponsor of Sen. Warren’s Glass-Steagall legislation S.881.

In a sound article, “Breaking Up the Big Wall Street Banks Is Back in the Headlines,” published in their “Wall Street on Parade” blog yesterday, Pam and Russ Martens endorse John Authers’ observation in the Financial Times: “The continuing yearning for Glass-Steagall shows that the world (not just the U.S.) has not come to terms with the crisis of 2008. Justice has not been seen to be done; remedies to prevent a repeat have not been seen to be applied. Dodd-Frank has failed to instill confidence.”

But the Martenses say Authers misses the point: Hundreds of trillions of dollars of derivatives sitting on the books of the biggest Wall Street banks would not exist without the insured deposits that provide the credit rating.

The Wall Street Journal features a commentary by Stephen Hessler, a bankruptcy restructuring specialist, on whether changing the U.S. Bankruptcy Code “would be a superior method of resolution for financial companies” while preventing bailouts. He points to the Financial Institution Bankruptcy Act (FIBA) that passed the House earlier this month, to streamline Chapter 11 cases of systemically important financial institutions (SIFIs).

American Banker featured a story yesterday, titled, “BankThink: Big Banks will always be too big, Glass-Steagall or not,” by Paul Kupiec, a “scholar” from the neocon American Enterprise Institute (AEI). It concludes, “The real ‘too big to fail’ problem is … from the implicit belief among investors that the government will protect all creditors of large important failing financial institutions, not just insured depositors…. The Glass-Steagall Act of 2017 does nothing to fix the implicit government guarantee problem, and indeed, it would probably make it worse.”

50,000 Workers’ Jobs Endangered by Alitalia National Air Company Crisis

April 25 (EIRNS)—Workers at Italy’s national air company, Alitalia, yesterday rejected a plan approved by the government and by the major trade unions, for cuts and wage reductions. The plan was offered as an alternative to bankruptcy. The U.A.E. airline Etihad, which owns 49% of Alitalia’s shares, is now threatening to sell its shares to Germany’s Lufthansa.

Alitalia, after downsizing several times and the “partnership” (or better, “ownership”) with the U.A.E.’s Etihad company), has now 12,000 employees, with another 50,000 dependent on the airline. Leaders of the vote against the new downsizing plan say that the government “has found EU20 billion for the banks, it should now find EU1 billion needed to rescue Alitalia.” The government, however, has declared that it has no intentions to re-nationalize the company.

THE NEW GLOBAL ECONOMIC ORDER

China Pledges Active Role in Economic Reconstruction of Iraq

April 25 (EIRNS)—Chinese Foreign Minister Wang Yi pledged yesterday that China would continue its active role in the economic reconstruction of war-devastated Iraq. The Chinese Foreign Minister made the pledge to Iraqi Foreign Minister Ibrahim al-Jaafari in a conversation on the sidelines of the ongoing Ancient Civilization Forum in Athens, Greece, Xinhua reported.

The Chinese Foreign Minister said that Iraq has made important contributions to the world’s anti-terrorism fight, and pledged China’s continuing support for the independence, sovereignty, and territorial integrity of Iraq. Wang Yi said China will do everything it can to help Iraq. He thanked Iraq for its support of China’s Belt and Road Initiative, and affirmed that China stands ready to implement the agreement it has reached with Iraq.

Iraqi Foreign Minister al-Jaafari replied that Iraq appreciates China’s active role in the reconstruction of post-war Iraq, to assist Iraq in achieving stability and development at an early date.

Afghanistan Wishes To Link to China’s Silk Road for a Better Future

April 25 (EIRNS)—Afghanistan wishes to be part of two Chinese regional projects: The One Belt, One Road (OBOR) initiative and the China Pakistan Energy Corridor (CPEC), Ahmad Bilal Khalil reported yesterday in The Diplomat.

Historically, Afghanistan considered itself as a “transshipment point of commerce,” where “half of the old world’s roads lead to Bagram [near Kabul].”

Secondly, Khalil writes, in the past 15 years, Kabul has pushed for regional integration. Since 1980, it has tried to get full membership or observer status in regional economic, security and political organizations such as the South Asian Association for Regional Cooperation (SAARC), Central Asia Regional Cooperation Program (CAREC), the Shanghai Cooperation Organization (SCO); and most recently, Afghanistan has joined the Asian Infrastructure Investment Bank (AIIB).

The Afghan Ambassador to Pakistan Omar Zakhilwal has extended support for the China Pakistan Energy Corridor (CPEC) and showed interest in joining it. Its four main components are transit and trade, infrastructure, energy cooperation, and economic integration.

The primary steps to include and integrate Afghanistan into the Belt and Road have already been taken. Afghanistan and China signed a memorandum of understanding on the Belt and Road in 2016, and, according to an IMF report, Beijing has allocated money from one of its funds dedicated to the Belt and Road to Afghanistan.

The fusion of CPEC, CAREC, and OBOR (especially the Silk Road Economic Belt) would make Afghanistan a land-bridge between Central Asia, South Asia, Southwest Asia, and China.

African Development Will Be ‘Vital Issue’ at Beijing Belt and Road Forum

April 25 (EIRNS)—China’s Deputy Director General of African Affairs of the Ministry of Foreign Affairs Dai Bing said that Africa will play a “vital” role in the Maritime Silk Road Initiative at the upcoming Belt and Road Forum in Beijing on May 14-15. Dai highlighted this during a recent meeting with the China Africa Press Center (CAPC). “Next month China will host the Belt and Road Summit. Africa will be invited as a vital participant of the Maritime Silk Road,” he said. China will continue to focus “primarily to help Africa crack three hard nuts. Namely, lack of infrastructure, talents and funding.”

Rapid development is a top priority for China, not regime change, Dai stressed, and said that, in addition to building infrastructure, there are also plans for training some 30,000 young Africans in skills related on the projects at several engineering centers to also be created, specializing in transport and technologies.

SCIENCE AND INFRASTRUCTURE

China’s Space Day Promotes International Cooperation, with National Pride

April 25 (EIRNS)—Expressing great pride in the accomplishments of China’s space program over this past year—including tests of new rockets, the launch of experimental satellites, and the success of the current Tianzhou-1 cargo mission—China’s national Space Day celebrations yesterday highlighted some of the scientific research, and outreach to new international partners. The celebrations were centered in Xi’an, which has more than 200 aerospace research centers and enterprises, and included talks and exhibitions with a focus on space technology applications. An exhibition at Northwestern Polytechnical University attracted thousands of visitors, China News Service reports today.

An Aerospace Innovation Alliance was also inaugurated, to encourage more open cooperation with other countries. Prof. Shang Peng from the Space Biology Laboratory at the university, explained that in the past, “the school has cooperation with Germany and with Russia. We used to cooperate to improve our own standards. But in recent years, we have focused on cooperation with Third World countries, because they are not capable of doing space experiments on their own.” In that effort, China is working “with the United Nations Office of Outer Space Affairs…. Our laboratory is fully open to the world,” he said. The university’s Zhang Weihong said that through this new Innovation Alliance, they hope to increase contact with overseas partners, send students abroad, and have more foreign students come to China.

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