EIR Daily Alert Service

EDITORIAL

Belt and Road Fireworks

July 3 (EIRNS)—This week is shaping up as one of the most dramatic weeks of international diplomacy in recent history.

First, there is the July 4 summit meeting in Moscow between Russian President Vladimir Putin and Chinese President Xi Jinping, with expected results that have led both sides to characterize the meeting as “the event of the year.” They plan to consolidate coordination between China’s Belt and Road Initiative and the Russian-led Eurasian Economic Union; they will open up new areas of scientific cooperation, including in the Arctic; and they intend to work closely together to combat terrorism, the drug trade, and other threats to global security.

As Helga Zepp-LaRouche noted today, the Xi-Putin summit is shaping up as the defining issue at this strategic conjuncture. The July 7-8 G20 meeting in Hamburg, on the other hand, is threatening to be more of a street carnival than a serious summit: U.S. Treasury Secretary Steve Mnuchin and German Finance Minister Wolfgang Schäuble have teamed up to try to ban any discussion of serious financial reform, such as Glass-Steagall and Lyndon LaRouche’s Four Laws, which alone would give meaning to the G20 summit, and make the trans-Atlantic sector fit to join the Belt and Road Initiative.

But the so-called “sidelines” of the G20 summit are looking far more productive than the formal agenda that the Merkel government has set for the summit itself. The heads of state of China, Japan, South Korea, and of course the U.S., have scheduled multiple meetings on the sidelines of the summit. Russia’s Putin has scheduled no fewer than 11 bilateral meetings on the summit sidelines—and that is without counting his expected meeting with U.S. President Donald Trump, the meeting which “is crucial and everybody has been waiting for,” in the words of Kremlin aide Yuri Ushakov.

If the U.S., Russia and China can work together, Helga Zepp-LaRouche commented, then there is a pathway out of the current breakdown crisis. That will require defusing the multiple provocations that the bankrupt British Empire is placing in their path—from Syria, to the South China Sea, to the Korean Peninsula—and they will have to address the breakdown financial crisis, which is the Sword of Damocles hanging over the West, with the only programmatic and conceptual tools that will work: those provided by Lyndon LaRouche.

THE NEW GLOBAL ECONOMIC ORDER

Xi-Putin Summit: The ‘Event of the Year’ for the Two Countries

July 3 (EIRNS)—Chinese President Xi Jinping arrived in Moscow today for two days of meetings with his Russian host, President Vladimir Putin, with whom he has met a total of 21 times. Kremlin spokesman Dmitry Peskov announced that the visit will begin with an informal dinner meeting at the Kremlin tonight, followed by the official visit on July 4, which will include “full-fledged talks” between the two leaders. Numerous agreements are scheduled to be signed worth some $10 billion, as will more than a dozen inter-governmental agreements on cooperation.

A special ceremony will be held after the talks, in which Putin will award Xi the Order of St. Andrew, for his distinguished service to the peoples of China and Russia.

A July 2 Xinhua article called the summit is “the event of the year” for the two countries, writing that “vast opportunities are seen in the pairing of the China-proposed Belt and Road Initiative and the Russia-led Eurasian Economic Union, which is also on the agenda of the upcoming talks between the two heads of state.” Another Xinhua article quotes China Institute of International Studies senior researcher Chen Yurong saying: “The close working relationship between the two heads of state and their personal friendship have become a ‘locomotive’ in the development of bilateral relations…. They can exchange views on almost everything, which reflects the high level of political trust between the two countries.”

Russia’s Minister for Economic Development Maxim Oreshkin, spoke in similar terms, in an interview with Xinhua. “China is not just our close neighbor, but also our main trade and economic partner,” he said. Russia-China cooperation covers almost all areas, he said, including energy, industry, infrastructure, agriculture, science and technology.

“There are good conditions for cooperation in creating transport corridors—railways, highways and ports—through the territory of Russia, connecting the markets of China and Europe.” China and Russia are now jointly developing the Arctic region and working on the creation of a wide-body long-haul aircraft. “Cooperation with Chinese businesses means establishment of new enterprises, creation of jobs, and investment in infrastructure,” said Oreshkin, and that, to attract Chinese investors, Russia has launched a number of infrastructure projects in the country’s Far East, close to China’s northeastern region.

Oreshkin also emphasized the significance of further integrating China’s Belt and Road Initiative with the Russia-led Eurasian Economic Union (EAEU): “We are talking about improving the transport and logistics infrastructure, creating new transport routes and logistics hubs by using Chinese investment or establishing consortia with Chinese companies.”

Xi Jinping: Sino-Russian Relations Are at the ‘Best Time in Their History’

July 3 (EIRNS)—Prior to his arrival in Moscow for his state visit with Vladimir Putin, Chinese President Xi Jinping granted interviews to several Russian media, outlining his view of current Sino-Russian relations, which he described as enjoying “the best time in their history,” and perspectives for deepening an already-strong bilateral relationship across a whole range of areas, both in the international arena and bilaterally.

Most telling was Xi’s statement, reported TASS, Rossiyskaya Gazeta, and Xinhua, among others, that “the two nations are each other’s most trustworthy strategic partners,” and that they have built a very high-level political and strategic trust.

“President [Vladimir] Putin and I have built good working relations and a close personal friendship,” Xi emphasized. He predicted that his visit to Moscow will “inject new impetus into the development of China-Russia relations…. The fast-growing pragmatic cooperation has become the locomotive in the continuous development of Russia-China relations.”

In his discussion of areas of economic cooperation—trade, energy, high-technology, and Chinese involvement in the development of Russia’s Far East—Xi emphasized that efforts are underway to “align” China’s Belt and Road Initiative with the Russian-led Eurasian Economic Union (EAEU). He cited cross-border infrastructure projects, such as the North Polar sea route, which he said would promote inter-connectivity and “inject new vigor into bilateral cooperation.”

Cooperation on combatting international terrorism is of the utmost importance, Xi said, as this sets an example for the world to follow, and is in the fundamental interests of both nations, and conducive to world peace and stability. He stressed, moreover, the need to intensify cooperation and coordination with such multilateral entities as the United Nations and the Shanghai Cooperation Organization (SCO), given that international terror groups are calling for, and planning, more attacks globally. Clearly referencing the strategies of the U.S. and some Western allies, Xi warned that some countries are using the fight against terrorism to further their own interests, and are thus applying “double standards”—i.e., those who would use the anti-terror campaign for geopolitical purposes. This has negatively affected the global anti-terror fight, Xi said.

In this regard, Xi urged that regional “hotspots” be dealt with properly. Assistance should be extended to the Middle East nations, including Syria, to restore stability as soon as possible, he said, and “long-term comprehensive policies” must be adopted to “root out the breeding ground for terrorism.”

Xi was adamant on the issue of the THAAD ballistic missile defense system deployment in South Korea, warning that it “does serious damage to the strategic security interests of all countries in the region,” including China and Russia. This deployment will not help denuclearize the Korean Peninsula, Xi said, but will provoke further tensions. Russia and China have “a similar view on the nature of the THAAD deployment,” said Xi and “will take adequate measures to ensure their national security and strategic balance in the region, both in cooperation with each other and on their own,” RT quoted him saying.  The crisis on the Korean Peninsula, Xi underscored, can only be resolved through dialogue, that will take into account the “reasonable concerns” of all parties involved. He called for a “two-track approach,” involving both gradual nuclear disarmament of North Korea and cessation of joint U.S.-South Korean military exercises in the region.

Moscow and Washington Working for Productive Trump-Putin Meeting

July 3 (EIRNS)—In a wide-ranging interview with reporters today, Kremlin aide Yuri Ushakov stressed that while both President Trump and President Putin have extremely tight schedules for the upcoming G20 summit in Hamburg, he is confident that the two Presidents will meet, and affirmed that Russia is prepared for a discussion of the entire bilateral and multilateral agenda, TASS reported.

From the Washington side, today Under Secretary of State for Political Affairs Tom Shannon met with Russian Ambassador Sergei Kislyak “to follow up on recent conversations between Secretary of State Rex Tillerson and Russian Foreign Minister Sergey Lavrov, and to address the upcoming meeting between Presidents Trump and Putin,” according to the State Department readout. Efforts appear to be underway to ensure that the current logjam in relations is broken and that the meeting between the two leaders is a productive one. It was deemed important that Shannon and Kislyak meet, despite Russian frustration with newly-imposed sanctions, which led to the cancellation last week of a scheduled meeting between Shannon and Deputy Foreign Minister Ryabkov in Moscow. Shannon and Kislyak discussed rescheduling that meeting, and to continue discussing matters of “mutual concern in our bilateral relationship,” the State Department reported.

Ushakov noted in his briefing that Putin and Trump have spoken several times by phone, but said that this is not enough, because bilateral relations “were stuck on level zero.” The meeting between them will be crucial for ensuring global stability, he said, emphasizing, “It is necessary to break the current impasse in bilateral relations. This is equally important for us, and for the Americans…. It is a meeting that should be held by all means.”

“As it seems to me,” he continued, “the very atmosphere of a future meeting can help solve many issues, including cooperation on the international scene and the issues that have remained at the bilateral level.” For example, he emphasized, there is “considerable potential” for Russia and the U.S. to coordinate efforts in the fight against international terrorism, drug trafficking, organized crime and the spread of weapons of mass destruction. “Our countries can do much together to settle regional crises,” such as the Ukrainian, Palestinian-Israeli, Yemeni, Libyan, Afghan, and others, he stressed.

Ushakov reported that the Putin meeting with Trump may also deal with issues such as arms control and strategic stability, “for whose maintenance Russia and the United States bear special responsibility as the largest nuclear powers, considering that the intensity of the dialogue in this sphere was sharply reduced by the administration of former U.S. leader Barack Obama in 2014, when it curtailed military contacts.”

STRATEGIC WAR DANGER

China Slams Latest U.S. Navy Provocation in South China Sea

July 3 (EIRNS)—The U.S. Navy carried out a so-called Freedom-of-Navigation Operation (FONOP) on July 2 through the South China Sea, when the guided missile destroyer USS Stethem sailed inside the 12-mile limit around Triton Island in the Paracels. The Stethem was trailed by a Chinese warship during its Sunday voyage, reported Fox News.

“We conduct routine and regular FONOPs, as we have done in the past and will continue to do in the future,” said Lt. Cmdr. Matt Knight, a spokesman for the U.S. Pacific Fleet, who otherwise would not confirm the operation, the second one carried out by the Navy since President Trump has been in office.

The provocative nature of the operation, however, was indicated by U.S. Pacific Command chief Adm. Harris, who said on June 28 in Brisbane, Australia, “Fake islands should not be believed by real people.” He added the claim that “China is using its military and economic power to erode the rules-based international order.”

In this case, however, Triton is no “fake island” that the Chinese built in just the last few years. Not only is Triton a real island, but the Paracels (known as the Xisha in China) are found in Chinese records as early as the Han Dynasty (206 BC-220 AD), clearly documenting their recognition, and perhaps their discovery, by the Chinese!

The Chinese, not surprisingly, are quite angry about the operation.

“China resolutely opposed the illegal entry of a U.S. missile destroyer into China’s territorial waters off the Xisha Islands, calling it ‘a serious offense,’ ” a military spokesperson said today, reported Xinhua. Wu Qian, spokesperson for China’s Ministry of National Defense, said that China had dispatched military vessels and fighter planes to warn the U.S. vessel. “The U.S. has seriously undermined mutual strategic trust and the political atmosphere for the development of mutual military relations,” Wu said.

U.S. behavior “has violated the Chinese law and relevant international law, infringed upon China’s sovereignty, disrupted peace, security, and order of the relevant waters, and put in jeopardy the facilities and personnel on the Chinese islands, and thus constitutes a serious political and military provocation. The Chinese side is dissatisfied with and opposed to the relevant behavior of the U.S. side,” said Chinese Foreign Ministry spokesman Lu Kang. “Working together, China and ASEAN member states have cooled down and improved the situation in the South China Sea. The U.S., who deliberately stirs up troubles in the South China Sea, is running in the opposite direction from countries in the region who aspire for stability, cooperation, and development.”

Former NATO Commander Urges Trump and Putin To Seek Diplomatic Solution to Syria Conflict

July 3 (EIRNS)—In a July 2 interview on “The Cat’s Roundtable” show on New York’s “The Answer” AM 970 radio station, former NATO Supreme Allied Commander Adm. James Stavridis (ret.) recommended that President Donald Trump and Russian President Vladimir Putin, discuss a diplomatic solution for the Syrian conflict, when they meet on the sidelines of the July 7-8 G20 summit in Hamburg. Stavridis has often voiced provocative policies towards Russia, making his latest remarks all the more notable.

“We ought to be exploring with President Putin how we can cooperate to end this terrible war in Syria,” Stavridis said. “This can’t be resolved on the battlefield,” he said, but instead “will require a diplomatic resolution, and only the United States and Russia working together can resolve it.”

Stavridis also noted that because of strong support from Russia, Syrian President Bashar al-Assad “is not going anywhere, so rather than end up in a situation where another 500,000 people die, I think it is time to have a political accommodation.”

The former NATO commander also recommended that Trump take on the issue of Russia’s “meddling” in last year’s U.S. presidential elections, however.

COLLAPSING WESTERN SYSTEM

U.K. Anti-Austerity Revolt Spreads to Tory MPs; Will U.S. Republicans Follow?

July 3 (EIRNS)—The British revolt against the austerity policy cherished by the past two Conservative governments, a revolt triggered by the circumstances of the June 14 Grenfell Towers inferno, has now reached into Tory ranks in Parliament, according to a report in the July 2 London Times. Coinciding with the Tory revolt, on Saturday July 1, some 10,000 anti-austerity protesters marched in central London, demanding an end to the government’s austerity policies and demanding the resignation of Prime Minister Theresa May. They were addressed by Labour Party leader Jeremy Corbyn.

Prime Minister Theresa May and Chancellor of the Exchequer Philip Hammond face a rebellion against their latest austerity budget by four Cabinet ministers and about 40 Tory MPs. These backbenchers are demanding an end to budget caps, particularly the 1% cap on public workers’ pay.

“A document prepared by senior Conservative Party officials, and leaked to the Sunday Times, shows party bosses demanding that they placate voters who are evidently frustrated and weary after seven years of strict austerity measures. ‘What does the party offer the nation’s 7 million pay-capped public sector workers?’ reported The Metro yesterday. “More than 20 MPs cornered Gavin Williamson, the Tory chief whip, last week, demanding change. Now more than double that number are threatening rebellion over the budget unless Hammond finds the money to scrap the pay cap. Jeremy Hunt, the Health Secretary, called for pay raises for nurses. He was backed by Justine Greening, the Education Secretary. Sir Michael Fallon, the Defense Secretary, has since gone public to support them.”

The phenomenon may now show itself even in the Republican Party in the United States with the trigger in this case being the raging opioid epidemic in the country—the actual number-one concern for many Members of Congress who are spending their time in Washington talking about other, partisan issues. With opioid overdose deaths and related disease and suicides as the driving factor, death rates for Americans of prime working ages are continuing to rise, to the point that now, the total age 25-44 cohort of the American population is shrinking according to data from the federal Centers for Disease Control and Prevention (CDC).

With regard to the Senate healthcare proposal, which is actually austerity against entitlement programs disguised as health insurance legislation, not only several liberal Republican Senators, but at least one leading conservative, Bob Corker (TN), have now proposed to ditch the repeal of Obamacare taxes and use the substantial revenue they produce for a national fund to fight the opioid epidemic.

U.S. POLITICAL AND ECONOMIC

Nine U.S. States Enter New Fiscal Year without Budgets

July 3 (EIRNS)—Because of continued inaction on a federal (nationwide) level—including Congressional action to reinstate Glass-Steagall—nine states of the Union are entering the 2018 fiscal year (which started July 1) without official budgets. Since states are not allowed by law to run a deficit, budget shortfalls must be met by a combination of service cutbacks, and borrowed money (through sale of bonds). According to the National Association of State Budget Officers, the states without budgets on July 1 are: Connecticut, Delaware, Illinois, Maine, Massachusetts, New Jersey, Oregon, Rhode Island, and Wisconsin.

The worst of these, Illinois—which has not had a budget for three years running—is now entering breakdown conditions. The situation is so severe it prompted the state Comptroller Susana Mendoza (an elected Democrat) to issue an emergency video message last week, warning that, because of continued inaction by the legislature and governor, “derailment is imminent.” The state now owes its vendors an astounding $15 billion in back payments, plus another $800 million in fines and penalties. In addition, a court ruling is expected on state funding backlog for its (privatized) Medicaid “managed care organizations,” which could add an extra $3.1 billion to the payments.

According to Mendoza, “social service agencies, domestic violence centers, mental health facilities, and senior and hospice care facilities” are all at risk of closure. Delayed pensions (teachers and state retirees) “are one possibility,” but also could include non-payment of current employees, and cancellation of state-aid for schools at all levels, causing them to not open on time in the fall.

In New Jersey, a vindictive Republican Gov. Chris Christie has reacted to the legislature’s inability to give him what he wanted, by closing all the state’s parks, beaches and tourist facilities just prior to the July Fourth holiday weekend, and then arrogantly head off to spend the weekend at an official governor’s residence, located inside a state park! Casinos and racetracks will not be affected, since they generate revenue.

In Maine, Republican Gov. James LePage has forced the state’s first shutdown in 26 years, after the legislature refused to bow to his wishes of a $7 billion budget without tax increases. This despite the fact that the budget included a repeal of a 3% tax on the state’s wealthiest (those making over $200,000 per year), a measure which had been authorized by 357,000 voters in a referendum last year.

Ohio Governor Slams ‘Anemic’ Funding To Treat Opioid Addiction

July 3 (EIRNS)—Speaking yesterday on ABC’s “This Week” program, Ohio Gov. John Kasich slammed Republicans who are offering to include a $45 billion fund to treat opioid addiction in the Senate healthcare bill as a “sweetener,” in what Kasich said was an attempt to “buy off” moderates, and obtain the 51 votes needed to ensure passage, ThinkProgress website reported.

“If they’re proposing to give $45 billion” in funding for addiction treatment “over 10 years, I’m getting almost $300 million, $600 million a year. That would give me a billion over ten years? Not even quite that. It’s anemic. It’s like spitting in the ocean. It’s not enough.”

“Everyone is focused on the drug problem because it’s unbelievable,” Kasich said. “It’s horrific, and we all know it. It’s not just Medicaid and the fact that there’s not enough money in Medicaid legitimately to treat people and be able to reform the program. It’s the entire bill and the entire package.”

There is wide agreement in Congress that Obamacare needs significant reform, Kasich said, but argued that President Trump’s latest call to repeal it now and replace it later is also not an option.

“You can’t do nothing, and you can’t do something that dismantles the whole program,” he said. The Senate bill shouldn’t be rushed through, he continued. “It can’t be done in a slipshod way just looking at lines on a paper, because the lines, actually, are filled with blood, the blood of people that would be affected.”

Nationwide, the opioid epidemic continues to ravage the American population. On July 1, the Washington Post reported alarming details on how the U.S. foster care and social services system is completely overwhelmed by the number of babies born to drug-addicted mothers, without the resources to provide adequate foster care and other forms of assistance. In the state of Maine alone, 1,000 babies are born each year addicted to drugs, but the system can’t manage the numbers, and this situation is replicated in every state in the country. More and more children/babies are being forced into the state system, because their drug-addicted parents have lost custody. State budgets are stretched; social workers are overloaded, and there aren’t enough foster parents available.

SCIENCE AND INFRASTRUCTURE

China’s Belt and Road Preparing To Enter the Arctic Corridor

July 3 (EIRNS)—Following a meeting between China’s Prime Minister Li Keqiang and Finnish Prime Minister Juha Sipila on June 27 in Dalian, China, during the “Summer Davos” World Economic Forum, both leaders pledged to enhance bilateral cooperation on Arctic affairs.

Asia Times reported that Finland made one of the most interesting proposals, for an €3 billion ($3.4 billion) Arctic Corridor railway that would connect Northern Europe with China and Arctic Ocean deep-water ports. The idea is being pitched by a group of Finnish academics and business leaders. It would connect the city of Rovaniemi in northern Finland with the Norwegian port of Kirkenes on the Barents Sea.

According to the Arctic Corridor website, the Arctic Corridor is a global economic region as well as a transport and development corridor. It connects Finland and Europe to the deep-water ports of the Arctic Ocean, large production areas of oil and gas, and the western end of the Northern Sea Route. The Arctic Corridor project is at an early stage of development.

The Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden) are not participants in China’s Belt and Road Initiative to date, although all five are founding members of the BRI-related Asian Infrastructure Investment Bank (AIIB). On March 31 of this year, the Diplomat reported, Finland’s Foreign Minister visited China and presented the concept of an Arctic Corridor railway project. Finland will hold the Arctic Council chairmanship between 2019 and 2012.

The Asia Times also pointed out that Finland isn’t the only prospective site for a Belt and Road railhead. Another candidate is Latvia. Bordering Russia, it has well-developed cargo-shipping and rail-freight infrastructure dating to the Soviet era. This was a factor when China opened an 11,000-km direct freight route between the terminus in Yiwu, Zhejiang province, and Riga, Latvia, last November.

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