EDITORIAL
The Science of Ending Poverty and Geopolitics
March 25 (EIRNS)—In the current world environment of sometimes frenetic discussion of geopolitical measures and countermeasures, of trade sanctions and retaliation, of cabinet and other personnel shifts in leading world governments—side-by-side with the manifest potential for dramatic change, as evidenced in President Trump’s recent unscripted call to President Putin—it is useful to step back and return to some basics, starting with a half-century of fundamental discoveries by Lyndon LaRouche, especially in the science of physical economy.
The only way to put an end to the current geopolitical nightmare of the British Empire’s system and establish the political foundation for a durable peace, Lyndon LaRouche wrote back in March 1984 (“The LaRouche Doctrine: A Draft Memorandum of Agreement between the U.S. and U.S.S.R.”), is by ensuring: “a) The unconditional sovereignty of each and all nation-states, and b) Cooperation among sovereign nation-states to the effect of promoting unlimited opportunities to participate in the benefits of technological progress, to the mutual benefit of each and all.”
One critical reflection of such progress, is the elimination of poverty and the inclusion of growing layers of the population in technologically progressive forms of production. Here, China has been leading the world over the last 35 years, reducing its poor population from 875 million in 1981, to 30 million today. Back in 1981, China had 46% of all of the world’s poor within its borders; today that percentage has been reduced by an order of magnitude, down to 5%.
That process accelerated beginning in 2008, when the policy of constructing a network of high-speed rail corridors got underway in China, bringing industrialization and technological progress to every corner of the country. One result has been that poverty in China was reduced by a stunning 85% between 2008 and 2017—less than a decade.
With the launching of the Belt and Road Initiative by President Xi Jinping in 2013, that same driving force of development has now begun to radiate throughout the planet—the spread of the Spirit of the New Silk Road to which Helga Zepp- LaRouche frequently refers.
It is useful to consider China’s achievements in light of the opening lines of Lyndon LaRouche’s November 21, 1993 work “On LaRouche’s Discovery” (reprinted in EIR, Aug. 11, 2017):
“The central feature of my original contribution to the Leibniz science of physical economy, is the provision of a method for addressing the causal relationship between, on the one side, individuals’ contributions to axiomatically revolutionary advances in scientific and analogous forms of knowledge, and, on the other side, consequent increases in the potential population-density of corresponding societies.”
A similar approach—albeit without the depth of scientific and philosophical rigor provided by LaRouche—is in fact the basis of China’s achievements. As President Xi Jinping presented his marching orders for the economy in a June 9, 2014 speech:
“Unleash to the greatest extent the huge potential of science and technology as the primary productive force … and development supported by science and technology and oriented towards the future, and speed up the pace of building an innovative country.”
Thus, one might well characterize China’s approach today as the application of the American System of Economics with Chinese Characteristics, an approach which has led to unparalleled success in the development of the potential relative population-density of China, and more recently with the Belt and Road Initiative, of the entire world.
It is time for the United States to re-adopt this policy as its own, and thereby finally put an end to poverty throughout the planet and simultaneously drive a stake in the heart of British geopolitics.
STRATEGIC WAR DANGER
Nauert: Administration ‘Considering Options’ in Solidarity with U.K. over Skripal Case
March 24 (EIRNS)—State Department spokeswoman Heather Nauert told TASS news agency yesterday that the Trump administration is “considering a range of options to respond to Russia’s outrageous actions in the U.K., both to demonstrate our solidarity with our ally and to hold Russia accountable for its clear breach of international norms and agreements.”
Earlier this week, Nauert, who seems to have emerged from the same banshee mold as UN Ambassador Nikki Haley, shrieked on Twitter that the U.S. and U.K. were right to boycott the March 21 Russian Foreign Ministry briefing on the Skripal case for foreign ambassadors, as there was no reason to listen to Russia’s “wild accusations and implausible denials…. Russia was responsible for the nerve agent attack.”
No specific actions have yet been announced, but several media accounts push the idea that an announcement is expected March 26, and may include the expulsion of Russian diplomats. Bloomberg News cites the ubiquitous “people familiar with the matter” who caution that no decision has yet been made, and, moreover, that President Trump’s decision “may not be final.” There is clearly an internal battle raging within the White House which, according to Bloomberg, intensified this past week, especially after Trump called President Putin to congratulate him on his electoral victory, ignoring “written guidance” which advised him not to do so.
Bloomberg also reports that officials are working through the weekend to develop a “coordinated strategy” with the Europeans. Among European countries expected to announce expulsion of Russian diplomats next Monday are Lithuania, Latvia, Estonia and the Czech Republic, according to numerous media accounts.
Yesterday, Trump spoke with U.S. Ambassador to Moscow Jon Huntsman, FBI Director Christopher Wray, Treasury Secretary Steve Mnuchin, Defense Secretary James Mattis, Deputy Attorney General Rod Rosenstein, and Director of National Intelligence Dan Coats.
Russia Embassy in U.K.: London ‘Confirmed’ That Porton Down Developed Toxic Chemicals
March 25 (EIRNS)—A spokesman for the Russian Embassy in London charged today that a statement issued by the head of Britain’s Porton Down, Gary Aitkenhead, in fact confirms that they are engaged in developing military-grade toxic chemicals. Aitkenhead, asked by BBC two days ago if there was any way the nerve agent Novichok could have been taken from Porton Down, responded: “We would not be allowed to operate if we had lack of control that could result in anything leaving the four walls of our facility here.” To which the Russian diplomat responded: “Actually, the British side has confirmed that development and research into new military-grade poisonous substances are underway at that secret facility. Furthermore, Aitkenhead did not deny there was a stockpile of chemical weapons, allegedly including the A-234 nerve agent, which in line with official assurances of the British side, had been used to poison the Skripals….”
According to TASS, the Russian Embassy’s press secretary reminded that British Foreign Secretary Boris Johnson hinted the U.K. had such samples, in response to a March 19 question as to whether Porton Down had any “samples” of Novichok to compare the evidence with. Johnson replied, “They do.”
“These statements leave us no choice but to reinforce our demands that we should be given full information about the inquiry and that the program to produce military-grade agents in Porton Down should be made public,” the Russian Embassy diplomat said.
COLLAPSING WESTERN FINANCIAL SYSTEM
High-Level U.S.-China Contact on Trade Tensions
March 25 (EIRNS)—U.S. Treasury Secretary Steve Mnuchin called Liu He, President Xi Jinping’s top economic advisor who was just promoted to Vice Premier and member of the Politburo, to discuss trade tensions between the two countries. According to Xinhua, Mnuchin initiated the March 24 call to brief Liu on the latest on the Section 301 trade sanctions being taken against China. Liu responded that the Section 301 report violates international trade rules, and is detrimental to the interests of all parties. “The Chinese side is ready and capable of safeguarding its national interests, said Liu,” according to Xinhua, while expressing his hope that the two sides “will stay rational and work together to maintain the overall stability of their economic and trade relations.”
China has made it clear that it has no desire for an escalating trade war with the U.S. As an article in the Financial Times reported: “Chinese government officials are confident that a carefully calibrated response to punitive tariffs outlined last week by President Donald Trump will help contain the fallout from a Sino-U.S. trade dispute, as they focus instead on longer-term strategic goals outlined by Xi Jinping. China’s President in October spelled out his vision of the country becoming one of the world’s strongest and most prosperous nations by the middle of the century.”
But neither is China willing to be pushed around on these matters. An editorial in the March 24 Global Times, headlined “China Is Ready for Both a Trade War and Talks,” stated that “Mnuchin called Liu and both sides agreed to maintain communications over the issue. We hope that Mnuchin’s phone call at this critical juncture can make the U.S. side more rational, instead of leading to more high stakes.”
Should that not be the case, and a trade war erupt, the editorial continued, then China will have the upper hand for a number of reasons. “First, Chinese society will be more united than American society in the face of the trade war. Most Chinese will firmly support every countermeasure the Chinese government makes…. The U.S. is already divided on the issue. This opposition will rise when the U.S. suffers more form the trade war.” The editorial concluded: “China doesn’t support a trade war, but it is determined and prepared not to be the defeated side. To have a trade war or talks, that’s the U.S.’s call.”
A commentary in Xinhua further contended, “Trade is not a zero-sum game, something that Washington ought to realize. If not, all parties will be dragged into the abyss of a conflict where no one emerges a winner.” That editorial said that if there is a trade war, however, “China is capable of turning a crisis into an opportunity for further economic progress.”
Punitive, Not Protective Tariffs Announced; Negotiation Possible
March 23 (EIRNS)—The Trump Administration took multiple tariff actions March 22; bringing into effect previously announced steel and aluminum tariffs; provisionally exempting many countries from them; and announcing a target list for 25% tariffs, of about 50 Chinese finished-goods exports to the United States whose total export dollar value is about $60 billion of China’s $500 billion annual exports to America.
This last action was met by the Chinese government publishing a target list of 128 U.S. product exports to China, whose export value totals just $3 billion of America’s roughly $170 billion exports to China.
The Trump Administration list has a purely punitive character—to attempt to get reparations, in effect, from China for allegedly stealing from the United States in the past, the technologies by which America used to make these products. Its second purpose is to reduce China’s trade surplus with the U.S. This puts these tariffs outside the sphere of “American System” protective tariffs; their purposes do not include protection.
The “reparations” character was confirmed repeatedly by Trade Representative Robert Lighthizer in testimony to the Senate Finance Committee March 22, particularly to precise questioning by Sen. Ron Wyden (D-OR). Lighthizer stated that he had recommended two things to President Trump: targeting a list of Chinese products according to “an algorithm” incorporating many factors of trade; and targeting products on China’s priority list for its “Make in China 2025” program, in which it aims to gain technological self-sufficiency at a leading edge of technology. This means, for example: computer-driven robotic machine tools; aircraft avionics; railroad equipment and rail stock; shipbuilding machinery; pharmaceutical and medical equipment; semiconductors.
Instructions to tighten up in stopping Chinese company acquisitions in these fields accompanied the tariff proposals. The United States has not produced some of these, such as the machine tools, and rail equipment and rolling stock, for decades, importing them from Japan, South Korea, and European countries for much longer, and to a much greater degree, than from China.
In most cases on the U.S. list, the difference between China’s and America’s existing tariffs on the same product is less than 5%; in a few cases America’s existing tariff is already higher. The difference is that in China, government credit and/or tax support is given to the development of these industries—the Hamiltonian method of productivity development.
By contrast, the Chinese target list for tariffs of 15-25%, includes no critical U.S. exports, such as soybeans and aircraft.
As of March 22, many countries have been provisionally exempted, pending agreements of one kind or another, from 25% tariffs on aluminum and steel which went into effect. The major nations not exempted, were China, Japan and Russia.
The new product lists are recommendations, subject to final decision by the Trade Representative and the President at some near future point. China has immediately proposed a new round of negotiations to avoid this, which are likely to start soon.
The Federal Reserve and the Infrastructure Projects
March 23 (EIRNS)—With the Federal Reserve’s increase of its Federal funds rate to 1.75% on Wednesday, and two more rate hikes planned, it has been calculated that the Fed will pay interest on excess reserves (IOER) of $37 billion in 2018, to banks continuing to hold excess reserves at the Fed. These are overwhelmingly the Wall Street megabanks, London and other European megabanks, and the large U.S. regional institutions; and they still have nearly $2.0 trillion in excess reserves at the Fed in the form of U.S. Treasury securities.
Thus the Fed will pay them $37 billion this year not to lend out those excess reserves, but to continue using them as collateral instruments for speculative dealings.
That $37 billion would be enough to fund both the entire Gateway Project and the Poe Locks replacement all the way to completion; or, a new Baltimore Harbor rail tunnel and the entire Texas coastal flood protection and water management plan awaiting funding since 1968.
The Federal Reserve instituted IOER for the first time during the 2008 financial crash. Even the two Republican leaders of the House Financial Services Committee, Jeb Hensarling and Patrick McHenry, repeatedly threaten Fed chairs at the Committee, that if it does not cease this practice, Congress will force it to. But the Fed ignores them. Wall Street still needs this “support,” and Congress has not tried to act on those threats.
The average interest rate offered to savers buying bank CDs is still lower than 1%, at 0.91%, according to American Banker.
NEW WORLD ECONOMIC ORDER
Siemens Establishing a Belt and Road Headquarters in Beijing
March 24 (EIRNS)—The German industrial and engineering group Siemens will set up an office in Beijing to boost international cooperation under China’s Belt and Road Initiative, the company said on March 23. The move will help intensify Siemens’ cooperation with Chinese and international companies and expand business opportunities beyond cooperation the company already has with China.
Siemens said it had already partnered with hundreds of Chinese companies in overseas projects and could help them adapt to and expand business in Belt and Road countries in sectors such as power, oil and gas, chemicals, mining and building materials. The company will also hold an international forum on the Belt and Road Initiative in June.
“We are fully committed to promoting the Belt and Road Initiative,” said Cedrik Neike, managing board member of Siemens AG. As of last year, Siemens had 32,000 employees in China and made €7.2 billion ($8.8 billion) in revenue from China, according to the company.
Portugal Organizes for Its Proper Role in Belt and Road
March 24 (EIRNS)—Portugal’s Association of Friends of the New Silk Road (ANRS), with the support of the Costa government, held an international conference on “Belt and Road Financing” in Lisbon yesterday. Portugal’s rightful role in the global Belt and Road Initiative project, as a strategic crossroads where the Eurasian Silk Road Economic Belt meets the Atlantic route of the 21st Century Maritime Silk Road, was presented to an audience of bankers, businessmen, politicians and students from the University of Lisbon’s School of Economics and Management, which hosted the event.
“Portugal aspires to contribute to a new Maritime Silk Road,” Foreign Affairs Minister Augusto Santos Silva declared in opening the conference. Portugal’s deep-water port on the Atlantic, Sines, will be essential for completing the Belt and Road, he argued, because it is situated at the confluence of the North Atlantic, the Mediterranean and the South Atlantic, and the port takes on added importance after the expansion of the Panama Canal. He pointed to the Portuguese government’s recent launching of bidding for the construction and modernization of a key section of its rail system, so as to efficiently connect the Sines port by rail to Spain’s high-speed rail system, and thereby to the entire Eurasian rail network, from the Atlantic to the Pacific.
Netherlands Seminar: China’s Belt and Road Gives It Ability To Lead in Higher Education
March 24 (EIRNS)—Addressing the international seminar on the Belt and Road Initiative and higher education at Utrecht University in the Netherlands on March 19, Prof. William Kirby, who teaches China studies at Harvard Business School, said: “In infrastructure [China] is leading the world, in higher education it surely has that capacity as well,” University World News reported yesterday. Kirby pointed out that “from the beginning the research and innovation dimension of the Belt and Road initiative has been built into this process, in particular through a plan for international technology.”
Another academic, Wim van den Doel, an executive board member of the Netherlands Organization for Scientific Research, was quoted as saying, “It could be the building block for a global research area, because it includes countries not always included…. [The Belt and Road] can connect China to the world.”
Currently the Belt and Road Initiative’s main activity in higher education is providing scholarships for students in countries along the routes of its two components—the Silk Road Economic Belt and the 21st Century Maritime Silk Road—to study in China. Some 10,000 scholarships were available for students from Belt and Road countries last year, most of them from developing countries. China has also stepped up language training courses within China for Southeast Asian and other languages where Belt and Road projects are being promoted.
Argentine Ambassador to China Urges, It’s Time To Hop on the Belt and Road
March 25 (EIRNS)—In a wide-ranging and optimistic interview published in Xinhua on March 15, in which he was asked to comment on the Belt and Road Initiative (BRI), the results of the 19th Communist Party Congress and the recently-concluded “Two Sessions,” Argentina’s Ambassador to China Diego Guelar praised the BRI as a global project that China “shares with the world,” and stressed that Argentina and other Ibero-American countries should hop on board “the high-speed locomotive” of the Belt and Road.
Guelar said that Deng Xiaoping’s opening and reform policy of 40 years ago was “extraordinarily important,” but that today, these are being “renewed and revitalized” by a new generation. He particularly singled out China’s success in eradicating poverty, and recommended that humanity “follow China’s example” in this area; if poverty is eradicated, problems such as terrorism and drug trafficking become solvable, he predicted.
As for the BRI, he said. “There’s nothing regarding the Belt and Road that requires a complex decision; we just have to put it into practice. Hook up to the locomotive and work intensively!” The only challenge to the BRI, he underscored, is whether “we can live up to this proposal that China has made to the world— win-win, a plan for connectivity and infrastructure development, through the Belt and Road.”
U.S. POLITICAL AND ECONOMIC
Trump Dumps McMaster, Hires Bolton as National Security Advisor
March 23 (EIRNS)—President Trump has replaced General H.R. McMaster (ret.) as National Security Advisor, with John Bolton. The announcement was made yesterday, effective April 9. Bolton, an attorney, diplomat, and general commentator, is well known for his super-war hawk stances, which he states emphatically on his BoltonPAC, but he is widely covered in the media as having explicitly promised to be compliant in his new position, and to carry out Trump’s wishes.
Sources have informed EIR that McMaster has for some time opposed the cordial relationship between Trump and Russian President Vladimir Putin. Further, German radio Deutschlandfunk reported this morning that McMaster opposed Trump’s March 20 phone call to Putin; this media account comes amidst coverage of the White House leak of National Security Council briefing notes prior to the call, advising Trump not to congratulate Putin on his re-election as President.
A White House official told media, that Trump and Bolton “have been discussing this for some time. The timeline was expedited as they both felt it was important to have the new team in place, instead of constant speculation. This was not related to any one moment or incident, rather it was the result of ongoing conversations between the two.”
Representative Nunes Escalates Against Mueller’s Operation… and China
March 25 (EIRNS)—This morning, Devin Nunes (R-CA), chairman of the House Intelligence Committee, advised Robert Goodlatte (R-VA), chairman of the House Judiciary Committee, both guests on Fox News “Sunday Morning Futures” program, to initiate immediate contempt proceedings against the responsible FBI and Justice Department officials if they continue to withhold 2.5 million subpoenaed documents relating to the Hillary Clinton email investigation, beyond the current congressional recess.
On the same program, however, he also announced that his committee is launching an intelligence investigation of China’s global operations. This includes its alleged building of military “fire power” around the world, theft of intellectual property rights, and influencing the United States and other nations through cultural and other contacts, as well as by building infrastructure and aiding in their development.
Nunes warned that China’s base in Djibouti on the Red Sea, combined with the Chinese “takeover” of the South China Sea, give China control over world trade. He also warned that Chinese “theft” of secrets from Silicon Valley will make China the go-to power in software design in the near future.
The same broadcast interspersed remarks by Sen. Lindsey Graham (R-SC) in support of a confrontation with China, along with his calls for slashing Social Security, Medicare, and other entitlements.
SCIENCE & INFRASTRUCTURE
Congress Does Its Job, Increasing Budgets for Space Science and Fusion Energy
March 23 (EIRNS)—Late last night, the Senate passed the Omnibus budget appropriations bill for fiscal year 2018, which had been passed earlier by the House. The bill adds more than $1 billion to NASA’s budget, from FY17, bringing it to more than $20 billion. The bill restores funding to programs that had been slated for cuts by the Office of Management and Budget, including the next-generation astrophysics observatory and planetary exploration, reinstates the Office of Education, and supports Earth science missions that had been cancelled.
The appropriations bill also provides a life-saving increase in the magnetic fusion budget, to $532 million, as compared to $380 million in FY17. U.S. funding for the International Thermonuclear Experimental Reactor (ITER), based in France, is $122 million, as compared to the U.S. contribution of $50 million in last year’s budget. For the domestic fusion programs, which have been savaged for the past few years, the funding is $410 million, as compared to $330 million in FY17.
The Congressional budget restores funding for earthquake research in the ShakeAlert program, to provide advance warning for earthquakes, and provides for increases in medical research and other science programs.
