EIR Daily Alert Service, November 7, 2017 Tuesday

 

EDITORIAL

Prospect of New China-U.S. Economic Ties in a ‘New Era’ Sends London Crowd Ballistic

Nov. 6 (EIRNS)—At of the end of President Trump’s visit in Japan today—the first of visits to five nations on his Asian tour—word has leaked out on some of the economic content anticipated for Trump’s meeting Thursday with Chinese President Xi Jinping; and the very prospect is anathema to the London/Wall Street axis, bent on retaining its failed monetarist system of looting, geopolitics, and war, at any cost.

After visiting South Korea tomorrow, and activities in China Wednesday, Trump will join Xi Nov. 9 in Beijing’s Great Hall of the People, where, it is said, an announcement will be made that the Chinese sovereign wealth fund China Investment Corp. (CIC) will form an entity with Goldman Sachs, for Chinese funding of investments in American physical economy. This was reported, without sources, in today’s Wall Street Journal (which, otherwise, griped and moaned about China not opening itself up enough for Wall Street to come in).

Announcements of other memoranda of intent for China-U.S. business relations are expected, for deals in energy, agriculture, transportation, and so on. Commerce Secretary Wilbur Ross is en route to China, with a delegation of executives from 29 U.S. firms.

For the CIC-Goldman Sachs project, an investment amount of $5 billion was put out, without corroboration. However, the investment target areas are said to include high-tech manufacturing, rail, highways, and other such non-real estate categories. The U.S. opportunities in these areas are vast, given the desperate need for infrastructure-building in the storm and fire disaster zones, plus in critical zones across the nation, of decrepit infrastructure, such as New York/New Jersey’s transportation system, the aged Great Lakes and river locks and dams, and so on.

What is required on the U.S. side, beyond a “kick-start” entity as exemplified by the CIC-Goldman initiative, is a nation-serving national bank, to receive and direct huge amounts of investment and credit, in a Glass-Steagall-reorganized banking system. Chinese investments, including conversion of holdings in existing U.S. debt, to backing for infrastructure-related debt, are more than welcome.

What is at stake this week in Beijing, is the concept of “China-U.S. Ties in a New Era,” reported Xinhua today, referring to the presentation on a New Era by President Xi at the recent 19th CPC National Congress. Xinhua notes that, “China-U.S. ties are crucial to the new type of international relations and the community of shared future for humanity. Since Trump took office, the two leaders have maintained close contact, including face-to-face meetings, phone conversations and sending messages…. [This week’s] meeting is of great significance to Sino-U.S. relations and to peace, stability and prosperity in the Asia-Pacific region and the world.”

This favorable context makes clear the timing of the unleashing of a wild Russia-gate attack on Wilbur Ross, the leader of the U.S. business delegation to join Trump in China. The operation against Ross has a classic British dirty-tricks M.O. Over last weekend, charges were issued in British and German media that Ross has clandestine, incriminating Russian business connections, based on data in newly-surfaced records called the “Paradise Papers.” It is a replay of the 2015 “Panama Papers” hit operation, conducted against targetted individuals. Today, the smear is all over the U.S. media, featuring British “experts,” such as the London Guardian’s Jon Swaine, guest on National Public Radio. Today’s Washington Post headline is, “Leaked Files Link U.S. Commerce Secretary to Putin Allies.” Ross condemned the attack as “totally wrong,” speaking to CNBC yesterday, on the eve of departing to China.

The reality is that the potential is alive and well, for moves to a “New Era,” from Trump’s Nov. 8-10 time in China. He will then meet with Russian President Vladimir Putin at the time of the APEC Summit in Vietnam, and Indian Prime Minister Narendra Modi, on the sidelines of ASEAN/East Asia Summit in the Philippines.

U.S. POLITICAL AND ECONOMIC

Possible Joint Chinese-Goldman Sachs Fund for Investment in the U.S.

Nov. 6 (EIRNS)—Goldman Sachs and China’s sovereign wealth fund are to announce a multi-billion-dollar fund to invest in U.S. manufacturing and other sectors, during President Trump’s visit, the Wall Street Journal reported on Monday morning, citing “people familiar with the matter.”

The figure of $5 billion is reportedly “targetted” for this co-investment partnership between Goldman and China Investment Corp. (CIC), with the Journal writing that “how much capital Goldman and CIC will each contribute to the fund is still being worked out, one of the people said.” The proposal reportedly was initiated by the CIC as it “casts an eager eye at U.S. high-tech manufacturing, highways, rail lines and other projects,” in order to get beyond its current U.S. investments, largely limited to publicly-traded securities, real estate and private-equity assets.

The fund is expected to be announced when President Trump is in Beijing, one of “a number of agreements U.S. and Chinese businesses are expected to announce on Thursday in a ceremony presided over by Mr. Trump and Chinese President Xi Jinping in Beijing’s Great Hall of the People,” the Journal reports.

It mentions planned deals in aviation, LNG, and soybeans as among those on the table, while expressing its disgruntlement at these deals, putting into the mouth of unnamed “U.S. business groups” Wall Street’s concern that China is offering these deals to “deflect” from demands that they open up their economy to foreign interests.

Commerce Secretary Ross Slams Paradise Papers as ‘Totally Wrong’ before Departing for China

Nov. 6 (EIRNS)—Secretary of Commerce Wilbur Ross, speaking yesterday on the eve of his departure to China to lead the U.S. business delegation, denounced the new Russia-gate charges against him from the Paradise Papers operation, as “totally wrong.” Meantime, major U.S. media are keeping up the attacks, abetted by British “experts.” A string of Democratic senators began a new drum beat on Russia-gate/Trump-gate over Ross, by demanding that Ross come clean on his supposedly hidden, “non-reported” Russian connections—the specific charges attributed to a reading of the Paradise Papers.  Sen. Richard Blumenthal (D-CT) tweeted Sunday that Ross concealed information, and “Americans are owed answers on this Cabinet’s troubling failure to disclose links to Russian interests.” Angus King (I-ME) tweeted, “I’d like to see Wilbur Ross testify about ties to Putin-connected company.”

Ross, before leaving for Asia, spoke Sunday to CNBC, denouncing the charge of “non-reporting.”  He said that his Cayman Islands holdings investments were reported to Congress on “Form 278” during confirmation. Ross said, “There is nothing wrong with anything that was done. A company not under sanction [referring to the Russian SIBUR petrochemicals firm] is just like any other company, period. It was a normal commercial relationship [between SIBUR and Navigator Holdings shipping company] and one that I had nothing to do with the creation of [he has indirect investments in Navigator], and do not know the shareholders who were apparently sanctioned at some later point in time” two years later. They are SIBUR shareholders Gennady Timchenko, a Russian billionaire who is considered part of Putin’s inner circle and is under personal Treasury Department sanctions; and Leonid Mikhelson, whose other company, Novatek, has been under Treasury sanctions since 2014. Kirill Shamalov, husband of Vladimir Putin’s daughter Katerina Tikhonova, is a SIBUR shareholder.

The Commerce Department said Ross’s disclosure of his indirect investment in Navigator is also posted on the Office of Government Ethics website.

Various U.S. media today joined the frenzy of coverage in Europe over the weekend, to focus on Ross and “Russia” taint, in the hours before the Trump-China visit. National Public Radio this morning hosted an “expert” guest, Jon Swaine of the Britain’s Guardian, on Ross and Russia. The Washington Post story today is headlined, “Leaked Files Link U.S. Commerce Secretary to Putin Allies.” It leads big, with a daring misstatement: “[The] Paradise Papers created more Russia-related problems for the Trump Administration Sunday, showing that Commerce Secretary Wilbur Ross holds business investments in companies tied to Russian President Vladimir Putin’s inner circle.”

The International Committee of Investigative Journalists (ICIJ) certainly did not claim that the files showed that, but rather that they show a twice-removed, through two other companies, “relationship,” also displaced in time (refer to the Nov. 6 briefing). Reporter Carol Loennig, known as a “hit-woman” for the Post, also adds the claim of non-reporting to Congress by Ross.

Also of note in this media warfare against the prospect of Trump and friendship with China, is the Washington Post op-ed today, titled, “Watch Trump Turn against China.” Writer Josh Rogen asserts the Trump Administration is said to be filling up with anti-China Republicans who will impose a “traditional” anti-China policy.

In fact, Wilbur Ross has been keeping trade fights with China outas Commerce Secretary; he has promoted the U.S.-China dialogues on trade, and has even spoken positively of the Belt and Road Initiative. Leave aside his long-ago musings on Glass-Steagall, which are no longer here nor there. So, although he’s being attacked with “Russia,” the issue is China.

Abe-Trump Summit Commits to Joint Regional Infrastructure, but BMD Sales, Too

Nov. 6 (EIRNS)—Announced at the conclusion of President Trump’s two-day visit to Japan is an agreement to “offer high-quality United States-Japan infrastructure investment alternatives in the Indo-Pacific region,” in the words of the White House read-out on the summit. Trump himself said it was “to invest in bold, new infrastructure projects.” This is to be concretized on Tuesday with the signing of a Memorandum of Understanding between the U.S. Overseas Private Investment Corp. (OPIC) and the Japan Bank for International Cooperation, the White House reports.

Likewise, a Memorandum of Cooperation on a Japan-United States Strategic Energy Partnership “to promote universal access to affordable and reliable energy in Southeast Asia, South Asia, and Sub-Saharan Africa,” was signed today between the U.S. Trade and Development Agency and Japan’s Ministry of Economy, Trade and Industry.

The two leaders get along famously, including continuing the tradition of “golf diplomacy” started by Abe’s grandfather and President Eisenhower. Abe was effusive, saying at their joint press conference that he believes “that there have never been such close bonds intimately connecting the leaders of both nations as we do now in the history of Japan-U.S. alliance of more than half a century.” Trump spoke also of his “extraordinary” relationship with Abe, and was emphatic that negotiations to reduce the U.S.’s “massive trade deficit” with Japan will be done “in a very friendly way,” and that he is sure it will be successful. He invited Japanese businessmen to build more factories and expand existing ones in the U.S.

The summit was colored, however, by an emphasis by Abe and by the official White House reports on their discussions—more than by President Trump himself—that the two nations will ally against China and the Belt and Road Initiative, albeit without ever naming “China.” Abe spoke of ensuring a “free and open maritime order based upon the rule of law [as] a foundation of the stability and prosperity of the international community,” and a “free and open” Indo-Pacific, where “high-standard rulemaking” reigns in the entire Asia Pacific region—codewords for BRI.

Their joint emphasis on a hardline anti-North Korea stance, discussion of increased trilateral military interoperability, and exercises among Japan, South Korea, and the United States, and President Trump’s big push for Japan to make “massive” purchases of U.S. military equipment, feed the warhawks’ intent to keep alive a geopolitical approach to Asia. In particular, the announcement that Japan will be purchasing not just F-35A fighter planes from the U.S., but greater enhanced Aegis ballistic missile defense capabilities, reportedly against North Korea, will be viewed by China and Russia as part of the warhawks’ efforts to surround both with BMD missile capabilities aimed at them.

Trump said, however, at their joint press conference, that he has “also developed some great friendships” with other leaders he will be visiting, where he is also sure “we’re going to work to straighten a lot of things out, including trade, including military problems.”

Leave it to the New York Times to use the occasion to push explicitly for conflict with China! Correspondent Mark Landler asked President Trump: “You’ve spent the last two days reaffirming the U.S.-Japan alliance, and you’ve begun sketching out this vision of a free and open Indo-Pacific. But in two days, you’re going to travel to China, a country that is neither free nor open. So my question is, how can the U.S. be a force for freedom and openness in this region without inevitably coming into conflict with China?”

To which Trump replied that he has an “excellent” relationship with President Xi.

“I like him a lot. I consider him a friend. He considers me a friend. With that being said, he represents China; I represent the United States. His views are different on things, but they’re pretty similar on trade.” He spoke of the “very unfair trade situation” with China, which he hopes to resolve through “reciprocal trade,” as he does with many countries, not just Japan and China.

Texas Mass Shooting at Sunday Church Service Leaves 26 Dead

Nov. 6 (EIRNS)—On Sunday morning Nov. 5, at a small Baptist church in Texas, attended by some 50 worshippers, a crazed gunman opened fire, killing 26 people. The locale is Sutherland Springs, population 700, some 30 miles ESE of San Antonio. Authorities have identified the shooter as Devin Patrick Kelley, who is also dead. The details so far show a young man, with a past of rage and violence. He was dishonorably discharged from the Air Force in 2014, after serving “bad conduct” time in the brig for having beaten his wife and children. More recently, he was arrested for beating a dog. The latest speculation, is that Kelley, who lived in the San Antonio area, went to the church, because he had a conflict with his mother-in-law, who attends there. He was armed with a military-grade, autoloading Ruger AR-556 rifle; and there are reports he had other weapons in his car. It is said, that the Air Force accepted him, despite knowing of his mental health problems.

Gov. Greg Abbott says that Kelley had been denied a permit for a gun by the state of Texas and should not have legally been allowed to own a firearm. Abbott demanded to know how Kelley, “slipped through the crack” in acquiring an assault rifle, given that he was “a powder keg waiting to go off.”

LaRouchePAC spokeswoman in Texas, Kesha Rogers, pointed out today that “conditions for creating monsters” are spreading in the United States. She referred to the economic and social collapse, in which people sense there is no mission for the nation, and no apparent purpose to life. Young people come back from military service, and they have no future. Plus, there are anti-U.S. operations to induce fear and distract the population.

Helga Zepp-LaRouche, Schiller Institute Chairwoman, concurred with this, in discussion today. She noted that mass shootings are prominent in the United States, where there is the availability of weapons. But in Germany, too, there is also a marked increase in violence. People are turning to knives, and ramming into crowds. When people have no future, they can go insane.

STRATEGIC WAR DANGER

Saudis Escalate against Iran

Nov. 6 (EIRNS)—Events in and around Saudi Arabia over the past 48 hours show a Saudi escalation against Iran, adding further conflict to the region. The immediate focus was a Houthi missile fired towards Riyadh on Saturday night (Nov. 4) which was reportedly successfully intercepted by Saudi air defenses. The Saudis responded by blaming Iran.

“Iran’s role and its direct command of its Houthi proxy in this matter constitutes a clear act of aggression that targets neighboring countries, and threatens peace and security in the region and globally,” the Saudi-led coalition said in a widely reported statement. “Therefore, the coalition’s command considers this a blatant act of military aggression by the Iranian regime, and could rise to be considered as an act of war against the Kingdom of Saudi Arabia.”

On a Saturday phone call, Crown Prince Muhammad bin Sultan briefed President Trump. A White House read-out yesterday said that Trump agreed with the Saudi claims on the attack.

“A shot was just taken by Iran, in my opinion, at Saudi Arabia. And our system knocked it down,” Trump said, referring to the U.S.-made Patriot missile batteries that the Saudis used.

The Islamic Revolutionary Guard Corps (IRGC), a unit of the Iranian military, has angrily rejected the Saudi-U.S. accusation. “The claim that the missile was delivered to Yemen by Iran is baseless,” IRGC Commander Maj. Gen. Mohammed Ali Jafari told reporters in Tehran Sunday. The allegations are unfounded because, basically, the Islamic Republic does not have access to Yemen to transfer such missiles, he said, reported Tasnim. “These missiles have been manufactured by the Yemenis and their military industries,” the commander stressed.

The Saudi-led coalition has also responded to the missile attack by announcing that it will temporarily close all air, land, and sea ports to Yemen, supposedly to stem the flow of arms to Houthi rebels from Iran, though they claim that humanitarian work will be allowed to continue. Al Masdar News reports that Yemeni Minister of Transportation Zakaria al-Shami said today in Sana’a that the closure of the port of Hodeida, Yemen’s only deep water port, “would mean the death of the Yemeni people.”

The Houthi missile strike, which a Houthi military spokesman said, “was in response to the massacres committed by the U.S.-Saudi coalition in Yemen,” followed by only hours the resignation of Saad Hariri as prime minister of Lebanon, who was speaking from Riyadh.

Most commentary reviewed by the news services indicate that Hariri is a Saudi asset and that his resignation was forced by the Saudis as part of a scheme to bring pressure on Hezbollah.

“The Saudis want to create a situation of political crisis, to break the political stability in Lebanon so that Hezbollah will be more busy in Lebanese internal politics than in Syria,” Hebrew University scholar Yusri Hazran told the Jerusalem Post. “But I’m not sure this will be achieved.” Israeli Prime Minister Benjamin Netanyahu, during an appearance on the BBC’s Andrew Marr Show on Nov. 5, clearly indicated that he is aligned with the Saudi view of Iran. “I think this is a wake-up call for everyone … the attempt of Iran to conquer the Middle East, to dominate it and subjugate it. We should stop this Iranian takeover,” Netanyahu said in reference to Hariri’s resignation.

In the middle of all of this, stands Defense Minister and Saudi Crown Prince Mohammed bin Salman, whose weekend purge of at least 11 princes and other powerful figures in the Saudi hierarchy appears to be an effort to solidify his own power as the heir to the throne. Prince Mohammed led Saudi Arabia into the now two-and-one-half-year-old war in Yemen as well as the diplomatic/economic assault in Qatar.

A major opponent of Prince Mohammed died in a helicopter crash late Sunday night, in Saudi Arabia, near the Yemen border. Killed along with seven officials, Prince Mansour bin Muqrin was the son of Prince Muqrin bin Abdulaziz, who had been crown prince between January and April 2015, at which time, he was set aside by Prince Mohammed’s father King Salman.

THE NEW GLOBAL ECONOMIC ORDER

‘Spain China Project’ Launched in Madrid

Nov. 6 (EIRNS)—Some 800 representatives of Chinese and Spanish companies and institutions met in Madrid’s Royal Theater on Oct. 30 for the first meeting of the “Spain China Project” (name is in English). The project is to serve as a public-private platform for “marketing” Spanish products in China and generating opportunities for collaboration of mutual benefit, organizers said.

The project is the initiative of HenKuai, a five-year-old company which describes itself as “the leading consulting firm on communication and relations between Spain and China.” Its CEO, Carlos Sentis, who now also heads the Spain China Project, spoke of the importance of uniting the efforts and resources of large companies and institutions of both countries to attract tourism, trade, and investment in each other.

“China is one the two great superpowers of the world, and should become a priority for Spanish companies and institutions,” Sentis said.

The Economics and Trade Attaché from the Chinese Embassy, Wang Yinqi, told the meeting that Spain is “the best friend of China in the European Union,” and spoke on China’s commitment to increase ties with Spain.

SCIENCE AND INFRASTRUCTURE

China’s Help to Ivory Coast’s Hydropower Achieves a Milestone: One New Dam, Another To Start

Nov. 6 (EIRNS)—Ivory Coast on Nov. 2 inaugurated the Chinese-built Soubre hydroelectric power station, the largest of its kind in the West African country. “The 4.5-km-long hydropower dam at Naoua Falls on the Sassandra River, with an installed capacity of 275 MW, is expected to increase hydropower in Ivory Coast’s energy mix and cement the country’s status as a key power producer and supplier in West Africa. Following the Soubre inauguration, a foundation-laying ceremony was held at the same site for the 112 MW Gribo-Popoli project, a dam 15 km downstream of Soubre, to be built also by Sinohydro, Xinhua reported.  The four-turbine Soubre dam was financed in part by a loan from China’s Export-Import Bank.

Ivory Coast President Alassane Ouattara, who inaugurated the Soubre dam, said “the government of Ivory Coast is very satisfied with the quality and speed of the construction of the Soubre hydroelectric dam.” Ivory Coast aims to push its power production capacity to 4,000 MW by 2020. The inauguration of the Soubre plant adds to the nation’s existing capacity of around 2,000 MW. The Chinese Embassy described the initiative as “emblematic” of bilateral cooperation.

COLLAPSING WESTERN FINANCAL SYSTEM

Lord Adair Turner, Financial Expert, Writes on China Defiance of ‘Washington Consensus’

Nov. 6 (EIRNS)—The Chinese are thumbing their noses at the Western “neo-liberal” dictates of how to run a successful modern economy, and doing just fine in the process, says Lord Adair Turner, and their success may overturn many hard-held beliefs of western economic thinkers. Turner, who headed the U.K. Financial Services Authority during the dark days immediately following the Lehman Brothers bankruptcy, titles his piece, “China vs. the Washington Consensus” (Oct. 23, on the Project Syndicate site).

Turner notes that while Western capital markets may have momentarily cheered after President Xi Jinping declared a “decisive role” for the market in 2013, the Chinese have largely achieved their spectacular growth by following the “state-driven infrastructure investment” models of Japan and South Korea (and Lyndon LaRouche, he might have added). If their growth continues, he warns his readers, “longstanding assumptions about the optimal balance of state and market mechanisms in driving economic development will be severely challenged.”

He said, “Japan and South Korea got rich by ignoring most of this [neoliberal] policy prescription. Finance was kept on a tight leash; credit was directed or guided to support specific government-defined industrial objectives; and domestic industry was nurtured behind tariff protection, while being forced to compete aggressively for overseas markets….”

While China has given the nod to the private sector, he said, it is more likely that they are merely tolerating it.

“Huge state-driven infrastructure investment—in excellent subway systems and high-speed rail, for example—creates a powerful platform for modern economic growth within rapidly expanding and well-connected cities. And through the ‘Made in China 2025’ program, China’s leaders are seeking to use state-defined objectives to drive Chinese industry toward higher technology and value-added.”

Even if, in the unlikely chance that China does experience a “slowdown” in growth, Turner says, such a relapse will be much easier to control, because, “most corporate debt is owed by state-owned enterprises to state-owned banks.” That’s how it is, in their “hybrid socialist market economy.”

Turner concludes, “If China had more comprehensively embraced the policy prescriptions implied by the Washington Consensus over the last 10 or 20 years, its economic growth would have been considerably slower. The economic theories that underpinned those prescriptions must reckon with that fact—and with China’s likely continued success.”

 

 

 

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