EIR Daily Alert Service

MONDAY, JULY 10, 2017

Volume 4, Number 135

EIR Daily Alert Service

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

EDITORIAL

If Trump, Putin, and Xi Work Jointly, the World Can Move Back from the Abyss, Toward a New Paradigm

July 9 (EIRNS)—The G20 meeting held in Hamburg, Germany on July 7-8 did not produce anything resembling the kind of policy initiatives required to defeat the deadly crisis facing humanity, and the trans-Atlantic sector in particular. It did not address the global financial crisis, with its $1.5 quadrillion in bankrupt derivatives speculation. It did not discuss implementing a global Glass-Steagall policy, nor a Hamiltonian credit system, which alone can reverse the deadly collapse of the Western physical economies, as Lyndon LaRouche has conclusively shown in his Four Laws. Nor did it pose the issue of replacing geopolitics and war with a new approach to global relations. So in that sense, the G20 summit fell completely short of what it should have accomplished.

But a very positive outcome—in fact, breakthrough strategic progress—did emerge from that summit, largely as a result of a set of history-making bilateral meetings held on the sidelines of the summit, particularly the productive meeting between U.S. President Donald Trump and Russian President Vladimir Putin, despite every effort by the British Empire and its American allies to stop it from happening.

It is highly significant that the Russian news agency TASS chose to feature the evaluation of Schiller Institute President Helga Zepp-LaRouche regarding that meeting of the two Presidents, in an article headlined “Expert View: Anti-Russia Campaign in U.S.A. Failed To Block Success of Putin-Trump Meeting,” which emphasized Zepp-LaRouche’s view that the two Presidents “have similar views in their non-acceptance of wars and interventions, and interference in other countries’ affairs.”

Sharing Zepp-LaRouche’s outlook, Russia-expert and prominent historian Stephen Cohen told Fox TV that the headline he would place on the Trump-Putin summit is: “Potentially historic new détente, anti-Cold War partnership begun by Trump and Putin, but meanwhile attempts to sabotage it escalate.” Cohen said Trump had been “politically courageous,” and that “maybe today we witnessed President Trump emerging as an American statesman.”

In a discussion with associates today, Helga Zepp-LaRouche recalled that Trump and China’s Xi Jinping had held a very successful meeting in Mar-a-Lago, Florida, back in April; and that immediately prior to the G20 summit, there had been a strategic meeting between Xi Jinping and Putin in Moscow, which both sides characterized as the most important diplomatic event of the year, describing the relationship between their two countries as the best ever. Now, Zepp-LaRouche said, there has been a very promising first meeting between Trump and Putin. So if these three Presidents can indeed work together, the world will move a gigantic step, away from the abyss and in the direction of a New Paradigm.

Obviously, a lot of more work has to be done. The British Empire still has to be defeated. The Wall Street and City of London crowd—and their errand-boys in the Obama camp of the Democratic Party, and their Republican neo-cons—can be counted on to go ballistic over their failure to stop the Trump-Putin summit, and escalate their campaign to overthrow the Trump government. There is the danger of provoked wars in numerous theaters across the planet. But victory is within view.

THE NEW GLOBAL PARADIGM

Trump and Putin Agree They Have Same Goals, Different Approaches

July 7 (EIRNS)—In their first face-to-face meeting, which lasted for two and a quarter hours, instead of the 35 minutes scheduled, the leaders of the two major nuclear powers agreed on a cease-fire in Syria, and on opening a special channel of communications for Ukraine, while discussing the situation in North Korea and the fight against terrorism and cyber-security. While both Trump and Putin acknowledge they have important disagreements on all these issues, they are committed to strengthening cooperation, and agreed that it was more important to move forward on solutions for the future than to settle the disagreements of the past.

This was made clear in the separate press briefings on the summit given by Russian Foreign Minister Sergey Lavrov and U.S. Secretary of State Rex Tillerson.

Tillerson called it “an extraordinarily important meeting,” and reported that the two leaders “connected very quickly. There was a very clear positive chemistry between the two. The positive thing I observed, and I’ve had many, many meetings with President Putin before, is that there was not a lot of re-litigating of the past. I think both of the leaders feel like there’s a lot in the past that both of us are unhappy about. The perspective of both of them is that this is a very important relationship, the two largest nuclear powers in this world…. We simply have to find a way to move forward.”

He summed up the spirit of their discussions: “By and large, our objectives are exactly the same.  How we get there, we each have a view.  But there’s a lot more commonality to that than there are differences.  So we want to build on the commonality, and we spent a lot of time talking about next steps. And then where there’s differences, we have more work to get together and understand. Maybe they’ve got the right approach and we’ve got the wrong approach.”

A great deal of time was spent discussing Syria, which led to the agreement on a ceasefire. Tillerson said that the military advances against ISIS had reached a point where they can make concrete arrangements for “de-escalation. Both parties agreed on a ceasefire involving a zone in Southwest Syria near the Jordanian border. The United States, Russia, and Jordan agreed to maintain that ceasefire.”

Russia requested that a special channel be opened to resolve differences on Ukraine. In response, Trump has appointed Ambassador Kurt Volker to serve as the United States Special Representative for Ukraine Negotiations. His appointment was quickly announced by the State Department, and on July 9, he and Tillerson will travel to Kyiv.

Both also agreed to establish a working group to collaborate on cyber-security. Lavrov pointed out that this problem involves pornography and pedophilia. Tillerson referred to disruption of economic activity. When asked about Russian hacking of the election, Tillerson said that there was a lengthy discussion of this and that Trump pressed very hard on the issue, but Putin firmly denied Russia’s involvement. When asked if Putin asked for evidence, Tillerson said that he did, but “I’m going to leave that to the intelligence community to straighten out.”

TASS Features Helga Zepp-LaRouche: ‘Anti-Russia Campaign Failed To Block Putin-Trump Success’

July 9 (EIRNS)—A July 8 Russian-language article by TASS correspondent Ivan Pilshchikov is dedicated in its entirety to presenting the “expert view” of Schiller Institute President Helga Zepp-LaRouche regarding the July 7 Putin-Trump meeting in Hamburg, Germany. The article was translated into English for the Schiller Institute.

“ ‘I think it is a serious breakthrough, considering the situation during the last six months,’ Zepp-LaRouche told TASS, explaining that she meant “the contrived scandal in the U.S.A., whipped up around accusations about Russian interference in the U.S. Presidential election of 2016. Zepp-LaRouche emphasized that the media and political opponents of the new American leader had launched these attempts with one goal: To make it impossible for Trump to carry out his campaign promise to improve relations with Russia,” TASS wrote.

The wire continued:

“ ‘If the two biggest nuclear powers begin to discuss these issues, that is a giant step towards preserving peace,’ she emphasized….

“The Schiller Institute president underscored that ‘if understanding has been established on the personal level between the heads of the two strongest nuclear powers, that means the meeting was very successful.’

“She observed that it definitely appears that Trump and Putin ‘have similar views in their non-acceptance of wars and interventions, interference in other countries’ affairs, and the organization of ‘color revolutions.’ They are both outstanding leaders, despite the attempts of the leading Western media to portray matters otherwise.’ ”

TASS was clearly interested in Zepp-LaRouche’s discussions of what she called “a big ‘troika’ ”:

“Zepp-LaRouche thinks that there are several factors giving grounds to hope that, with Trump in office, ‘there will be positive cooperation among the three most important countries—Russia, China and the United States.’ She said that this is indicated, in particular, by the U.S. President’s positive meetings with Putin in Hamburg and with China’s Chairman Xi Jinping in April at his Mar-a-Lago estate in Florida.

“ ‘We cannot solve all the problems in today’s world on the basis of old models,’ emphasized Zepp-LaRouche. She noted that the trilateral relations among Moscow, Beijing and Washington, including on economic and security matters, could become the ‘new paradigm.’ ”

Putin Emphasizes Meeting with Trump Was a Good Start To Improve Relations, and Progress on Syria

July 9 (EIRNS)—Russian President Vladimir Putin gave a wide-ranging press conference at the conclusion of the G20 summit in Hamburg on July 8. In it he answered questions about his lengthy bilateral meeting with U.S. President Donald Trump, whom he described as “very different” from his television image. “He is a very down-to-earth and direct person” who “analyzes things pretty fast and answers the questions he is asked or new ones that arise in the course of the discussion,” Putin said. “I think that if we build our relations in the vein of our meeting yesterday, there are good reasons to believe that we will be able to revive, at least partially, the level of interaction we need.” Asked if Russian-U.S. relations can be pulled out of deep crisis, Putin said: “I very much hope so, and it seems to me that we have built certain prerequisites for this.”

On the infamous issue of supposed Russian “interference” in the U.S. Presidential election, Putin said: “The U.S. President asked me this question directly, and we discussed it. And this was not a single question, there were many, and he gave much attention to this issue. Russia’s stance is well-known and I reiterated it. There is no reason to believe that Russia interfered in the U.S. election process…. I answered all of his questions as far as I could. I think he took note and agreed. But it would be better if you asked him about what he thinks about it.”

Putin was very strong on the progress made on Syria, stating that the deal on the southern de-escalation zone “is one of the breakthroughs we have made in our work with President Trump. This is a real result of cooperation, including with the United States…. The fact that active military operations have ceased, the fact that we are now discussing de-escalation zones is a huge step forward.”

President Trump Meets with President Xi on the Sidelines of G20

July 9 (EIRNS)—President Trump and Chinese President Xi Jinping held a substantive bilateral meeting at the end of the G20 in Hamburg. The meeting was very friendly and lasted an hour and a half, and was only cut short by President Trump’s departure schedule.

Speaking to reporters at the beginning of their talks, President Xi said, “I am glad to meet with President Trump again in Hamburg. We had a very successful meeting in Mar-a-Lago in early April. After that, we had several phone calls, we built a close contact. For the past three months, our teams have worked on the consensus we reached and have pushed for exchange and cooperation in order to attain new progress. We started the first round of the China-U.S. Diplomacy and Security Dialogue. And the 100 Days Economic Action Plan has achieved early results. Both sides also keep close communication regarding the international and regional issues. Of course, we also see the sensitive issues remain in China-U.S. relationship. There is a lot of work needed to be done.”

While noting differences they had on a number of issues, Xi said that “by strengthening the cooperation between China and the U.S., it benefits the world peace and prosperity, and it is also in the interest of Chinese, Americans, and people around the world. We’d like to work with the U.S., and steadily stay in the right direction to develop the China and U.S. relationship. We should mutually respect each other, mutually benefit each other, and explore areas of cooperation.

In his reply, Trump said, “On behalf of the United States, I would like to just say that it’s an honor to have gotten to know you. We are developing, and have developed, a wonderful relationship. I appreciate the things that you have done relevant to the very substantial problem that we all face in North Korea—a problem that something has to be done about. And I’m sure that whether it’s on trade or whether it’s on North Korea, or any of the many things that we will be discussing, we will come to a successful conclusion.

“Trade is, as you know, a very, very big issue for the United States now, because for years, and certainly over a long period of time, many things have happened that have led to trade imbalances.  And we’re going to turn that around.  And I know that China in particular, which is a great trading partner, we will be able to do something that will be equitable and reciprocal,” President Trump said.

He also touched briefly on North Korea, where there has been considerable press hype about Trump’s alleged “disappointment” with China’s efforts to get North Korea’s leader to bring down the tension. He said in his remarks, “As far as North Korea is concerned, we will have, eventually, success.  It may take longer than I’d like.  It may take longer than you’d like.  But there will be success in the end one way or the other.

“I want to thank you very much for inviting us [to visit China this year]. And again, it’s an honor to get to know you and your wife, a really wonderful woman.  And it’s an honor to have you as a friend.”

STRATEGIC WAR DANGER

Defense Secretary Mattis: Latest North Korean Missile Launch Did Not Bring Us Closer To War

July 9 (EIRNS)—Secretary of Defense James Mattis, during an impromptu press conference at the Pentagon July 6, insisted that diplomacy towards North Korea has not failed and that North Korea’s latest missile launch has not moved the world closer to war. “I do not believe this capability in itself brings us closer to war because the President’s been very clear, and the Secretary of State’s been very clear that we are leading with diplomatic and economic efforts. The military remains ready in accordance with our alliance with Japan, with Korea,” he said. “We stand ready to provide options if they are necessary. But this is purely diplomatically led, with economic sanctions and buttress by the military position that we’re taking right now.”

When asked directly if diplomacy had failed, Mattis replied, “Diplomacy has not failed.” Despite what he described as North Korean provocations, “our self-restraint holds, and diplomatic efforts remain underway as we speak.”

The Washington Post also reported that Pentagon officials this week have sought to underscore that the intercontinental ballistic missile (ICBM) threat posed by North Korea is “nascent” and that Pyongyang has a long way to go in terms of understanding the trajectory of the missiles and reentry before they could hit North America.

While Mattis was thus moderating the U.S. response to North Korea’s missile and nuclear activities, a pair of U.S. B-1B bombers were flying over the South China Sea in another U.S. Air Force version of a freedom of navigation operation “asserting the right to treat the region as international territory despite China’s claim to virtually all of the waterway,” reports Reuters. This operation comes as the Trump Administration is trying to put more pressure on China regarding North Korea.

Chinese Foreign Ministry spokesman Geng Shuang said there was no problem with freedom of navigation or overflight for the East and South China Seas. “But China resolutely opposes individual countries using the banner of freedom of navigation and overflight to flaunt military force and harm China’s sovereignty and security,” he said.

The U.S. military also continued rattling sabers over the Korean Peninsula, flying a pair of B-1B bombers out of Andersen Air Force Base in Guam on July 8 over the peninsula for precision-strike training, to “sternly respond to the series of ballistic missile launches by North Korea,” the South Korean Air Force said. According to South Korea’s Yonhap news agency, the two bombers flew from the East Sea, northward along the DMZ and were joined by South Korean F-15K and F-16 fighters before simulating an attack on North Korean facilities.

“North Korea’s actions are a threat to our allies, partners and homeland,” said Gen. Terrence O’Shaughnessy, Pacific Air Force commander according to the Pacific Air Forces Command. “Let me be clear, if called upon we are trained, equipped and ready to unleash the full lethal capability of our allied air forces.”

Pyongyang responded by warning that such exercises could result in war. “A simple misjudgment or mistake may lead to the outbreak of a nuclear war and that, in turn, is sure to lead to a new world war,” according to Rodong Sinmun, the official newspaper of North Korea’s ruling party. “The U.S. saying it will regularly deploy strategic bombers to the Korean Peninsula is the same as a crazy act of playing fire on top of an ammunition locker.”

While there are elements of theater on all sides of these exchanges, the situation nonetheless is highly dangerous.

COLLAPSING WESTERN SYSTEM

Big Bank Leverage Too High as Interest Rates Rise

July 7 (EIRNS)—Despite major reports by the IMF and Moody’s this spring on the rising risk of widespread defaults on the U.S. corporate debt bubble, Treasury Secretary Steven Mnuchin’s recent “bank deregulation” recommendations to the White House include reducing the amount of capital banks must have relative to their assets—the “leverage ratio”). Under the Dodd-Frank Act U.S. banks are supposed to have a 5% minimum capital ratio (20:1 debt leverage) by the end of 2018, while European banks are required by regulators to have just a 3% ratio (or 33.3:1 debt leverage). Lehman Brothers, when it went under, and other U.S. investment firms had been allowed to go to 36:1 debt leverage from 2004 until the 2008 crash they triggered. Fed Chair Janet Yellen agreed with the Treasury recommendation.

A letter to the editor in the Walton Sun in Missouri, reports that FDIC vice-chair Thomas Hoenig, in a speech, warned against flirting with the European level, and said a much higher level than 5% is required. Hoenig reminds that the big banks lost, on average, more than 6% of their assets during the financial crisis, so having capital ratios of 5% or much less, they all became bankrupt.

In fact, in the most recent stress tests, five of the “big six” U.S. banks had all capital ratios significantly below even the 5% level when their derivatives exposures—very conservatively underestimated—were included. And one of Spain’s major banks, Banco Popular, just went bankrupt and was bailed out after successfully “passing” similar stress tests.

U.S. long-term interest rates have just begun to rise significantly merely in response to Federal Reserve discussion of future actions. This rise is what the IMF’s Global Financial Stability Report, 2017 warned of when it said that the result could be 20% or more of U.S. corporations defaulting, so huge and unsupported is the corporate debt bubble. Meanwhile, American Banker reported July 5 that defaults are rising rapidly in two other categories of that bubble: credit card debt and auto loans, both of which are securitized like the mortgage debt of ten years ago.

U.S. POLITICAL AND ECONOMIC

Gabbard: Our North Korea Policy Has No Credibility, as Long as U.S. Fights Regime Change Wars

July 7 (EIRNS)—In a July 5 statement Rep. Tulsi Gabbard (D-HI) charged that no settlement of the North Korea issue is possible until the U.S. abandons the policy of regime change wars. “For the past 15 years, our leaders have let the people of Hawaii and our country down, allowing the situation in North Korea to worsen to this point of crisis where we are left with nothing but bad options,” she said. Gabbard, a veteran who served two tours of duty including during the Iraq War, said that the U.S. has to take measures to defend itself against the threat represented by North Korea, but “U.S. leaders need to understand that Kim Jong Un maintains a tight grip on North Korea’s nuclear weapons as a deterrent against regime change. The Trump Administration would be far more credible in finding a diplomatic solution with North Korea if we weren’t currently waging a regime change war in Syria, and contemplating a regime change war in Iran.”

“The North Korean regime witnessed the regime change wars the U.S. led in Libya and Iraq and what we’re now doing in Syria, and fear they will become like [Muammar] Qaddafi who, after giving up his nuclear weapons program, was deposed by the United States,” she went on. “As long as the U.S. is waging regime change wars, we are far less likely to reach a diplomatic solution in North Korea because they have no reason to believe our promises.  In fact, we are far more likely to see nuclear proliferation by countries like North Korea who see nuclear weapons as their only deterrent against regime change.” Therefore, “Serious diplomacy on the Korean Peninsula will require an end to our regime change war in Syria and a public statement that the U.S. will not engage in regime change wars and nation-building overseas, including in Iran and North Korea.”

Gabbard went to Syria in January, and had an unscheduled meeting with President Bashar Assad.

Opioid Epidemic Affecting Healthcare Bills among Lawmakers

July 7 (EIRNS)—Increasing signs that the raging U.S. opioid epidemic may be knocking out the Senate Republican “repeal Obamacare” bill, and Senate GOP leader Mitch McConnell appears to being ready to abandon the bill. In a speech in his home state of Kentucky during this week’s Congressional recess, McConnell said that if the bill could not be passed, he would have to “work with the Democrats” to revise Obamacare. He did not elaborate. Republican leaders have noticed that more than half of House Democrats are sponsoring a single-payer health insurance, also called a “Medicare for All” bill.

An increasing number of Senate Republicans do not want the Obamacare taxes repealed because of the urgent need to create a large Federal fund to fight the epidemic. At the same time, a number of the most conservative GOP Senators will not support this, perhaps forming the mechanism to kill the “repeal” bill.

A new study by the Centers for Disease Control and Prevention (CDC) reported in July 7 Washington Post found that opioid prescriptions had fallen by 13% from 2012 to 2015, but that the level is so high—equivalent to opioid prescriptions for 75% of all Americans every year—that the drop may be meaningless. The annual prescription rate is still “enough to keep every American medicated around the clock for three weeks.” Some 33,000 people died from overdoses in 2015, while the New York Times estimated on June 5 that another 59,000 to 65,000 Americans died from drug overdoses in 2016, more than the 58,200 U.S. troops killed during the entirety of the Vietnam War.

Prescription opioids killed 180,000 Americans from 2000-2015, and led to the majority of opium addictions which killed another 200,000. Nearly 1% of Americans are addicted to opiates. The estimated national cost “burden” of the epidemic is $78.5 billion annually—more than the total multi-year fund to fight the epidemic being proposed by some Senators.

SCIENCE AND TECHNOLOGY

China Suffers Two Space Launch Failures, Which May Delay the Next Lunar Mission

July 9 (EIRNS)—“Setbacks are inevitable,” comments space reporter Andrew Jones in GBTimes media company July 7, referring to the recent failures of two different Chinese rockets within two weeks of each other. But the two failures are not related, said Australian space analyst Dr. Morris Jones, so the problem is not systemic, he says, the double failures were just “bad luck.” The more serious loss was the second launch of a Long March 5 on July 2, which failed to place a large experimental satellite in to Earth orbit. The Chinese will investigate the causes, make the fixes, and move on from there, Morris Jones said.

It is likely, however, space analysts agree, that there will be a delay in the launches planned for the new Long March 5, which could have an impact on the next lunar mission, Chang’e-5. That lunar sample return mission is currently scheduled for a late-November launch. This newest rocket in the Long March family can carry twice the payload as previous, operational versions, and all of China’s next-generation missions depend upon it. In addition to boosting unmanned payloads to the Moon, it is needed to launch the 20-ton modules for China’s planned space station, for its 2020 mission to Mars, and in the following decade, deep space missions, such as a robotic probe to Jupiter.

Professor Wang Jianyu, who works on China’s lunar exploration missions, agreed with the likelihood of delays. “The rocket cannot fly until we find out the problem and solve it, and that will take time,” South China Morning Post quotes him. But despite what is often portrayed in the media as an “Asian space race,” China will continue its missions, not under some artificial deadline, but when it is ready.

OTHER

China Definitely on the Mind of German Industrialists

July 6 (EIRNS)—“Africa Day 2017” was held last Thursday in Berlin, sponsored by the European Investment Bank (EIB), the Federal Ministry for Economic Cooperation and Development, and the Afrika-Verein, an organization of business and industry with an interest in Africa. With Chancellor Angela Merkel making trade with Africa, and investment in African countries, a central issue for the G20 summit, there has been a significant uptick in interest in Africa.

While there was some of the usual nonsense from the German and European speakers at the public meeting (“sustainable development,” venture capital, etc.), there was also a recognition that Germany and the EU no longer are the only game in town in Africa.  Dr. Stefan Leibing, the Chairman of the Afrika-Verein, in his welcoming remarks to the more than 400 guests, after praising digitalization as key for Africa, said there is still a big need for a “heavy” approach, of infrastructure. He brought up China, saying that there can be a “trilateral approach” to investment in Africa, with China and Germany as partners.

Germany’s Minister of Economic Cooperation and Development Gerd Müller spoke, emphasizing that while private funds are needed, public funds are essential, which is why he proposed the “Marshall Plan” for Africa.  Mueller said he discussed a German-Chinese partnership in Africa when they met on July 5.

Keynote speaker Alpha Condé, the President of Guinea and Chairman of the African Union (AU), made two main points.  First, Africa stills suffers from poverty, despite its success in recent years.  Energy and infrastructure are crucial, along with the need to develop manufacturing.  This is the goal not just for his country, but all AU member states. Secondly, he said that while Germans are welcome to come and invest, “We do not want to receive lessons from you on governance…. We don’t want to be subcontractors for German or European companies.  We are not just delivering raw materials. We don’t want to be beggars, but business partners—put Africa at ‘eye level’ with other continents.” There is a “New Africa, in which we do not accept that others dictate what we shall do.”

 

 

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