EIR Daily Alert Service, TUESDAY, JUNE 5, 2018

EDITORIAL

Don’t Sleep the Summer; History Could Change Completely

June 4 (EIRNS)—Three events by the Schiller Institute show that the new paradigm of economic progress and cooperation among nations which has emerged from Asia, and is starting to transform Africa, can reach into Europe, into war-afflicted Southwest Asia, and can engage President Donald Trump’s America.

On May 30 the Institute joined with China’s embassy in Sweden and the China-Sweden Business Council, to gather a large diplomatic and business audience and make clear why China’s Belt and Road Initiative has grabbed the attention of Eastern Europe and offers economic revival to Western Europe as well. On June 6, the Schiller Institute and Yemen General Investment Authority present a new report on how to rebuild Yemen with the Belt and Road Initiative, even as Saudi Arabia and its “coalition” are attacking and bombing Yemen’s sole lifeline port of Hodeidah.

And on June 9 at the Schiller Institute conference in New York, its founder Helga Zepp-LaRouche will be joined by speakers from UN consulates and American leaders pushing President Trump to have a summit with Russian President Putin—indispensable for peace in the Mideast and security worldwide.

That the President’s summit with North Korea’s Kim Jong-Un next Tuesday may lead to thawing the world’s oldest, “insoluble” frozen conflict, is testimony to the new paradigm of national cooperation which has developed in Asia. China, Russia, Japan, India, of course South Korea are all working for President Trump’s success, allowing him greater freedom to change his approach to a summit process toward denuclearization.

His success will be theirs as well, because of the infrastructural connectivity breakthroughs for all of Eurasia, which can follow peace on the Korean Peninsula.

Later, a Trump-Putin summit, now being worked on against the screaming opposition of British geopolitics and its followers, could bring the same process even into the war zone of Southwest Asia.

Helga LaRouche today described the prospects of the work toward “principles of a shared destiny of mankind” as hopeful. Western Europe, she added, will either replace its current principles (of austerity toward mankind), or explode.  Even the halting signs of economic growth in America during Trump’s Presidency, have been enough to cause financial circles to decry “decoupling” with a Europe falling back again toward zero growth or worse.

And they are halting, combined with cultural and post-industrial diseases causing American life expectancies to fall and great missions like space exploration to be lost.

We will campaign for Lyndon LaRouche’s “four new economic laws” method for economic revival. Glass-Steagall to break up Wall Street, and national banking to replace it with productive credit, have already been tentatively raised in Italy’s new government. In the United States they have to lead to “science drivers,” crash programs for fusion power and exploration of the Solar System, which bring explosions in productivity.

That is the new paradigm on which the Asian powers want the cooperation of the United States.

THE NEW GLOBAL ECONOMIC ORDER

Schiller Institute Seminar in Sweden Cuts Through Disinformation on Belt and Road Initiative

STOCKHOLM, June 4 (EIRNS)—“The Significance of China’s Belt and Road Initiative for World Economic Development” was the theme of a seminar hosted in Stockholm on May 30 by the Schiller Institute, the Chinese Chamber of Commerce in Sweden, and China Eastern Airlines, with the support of the Embassy of China and the China Cultural Center and in cooperation with the China-Sweden Business Council.

On the diplomatic level, the event was addressed by the Chinese Ambassador to Sweden, Mr. Gui Congyuo; the Ambassador of Pakistan, Mr. Ahmad Hussain Dayo; and the Chargé d’Affaires of South Africa in Sweden, Mr. Duncan Moopelo Sebefelo. It drew scores of highly motivated participants, including many diplomats, as well as representatives of Swedish industries and businesses, as well as Swedish government institutions. The diplomatic presence underscored that the New Silk Road or Belt and Road Initiative (BRI) is not just about China and Europe, but is international in scope.

Mr. Gui Congyuo opened the proceedings on the significance of the BRI for global economic development, emphasizing that it is not a geopolitical project, but unites nations around a common goal of eradicating poverty and creating prosperous societies all over the world. He was followed by Stephen Brawer of the Schiller Institute in Sweden who gave a presentation on “The Strategic Significance of the BRI: Overcoming Geopolitics,” which included a strong attack on “the modern form of the British Empire.” He contrasted the aim of connectivity and integrated development promoted by China to the traditional doctrine of geopolitics, as associated with Halford Mackinder’s “Heartland” theory. Both in his presentation and in the Q&A discussion, Brawer challenged the Swedish government to act as an independent nation and join the BRI, as Austria did. He also called on the Swedish authorities to reopen the Confucius Institutes, whose license was withdrawn a few years ago, and convene seminars similar to this one.

Ambassador Ahmad Hussain Dayo welcomed the China-Pakistan Economic Corridor (CPEC), which China is building in Pakistan from the Chinese border to the Indian Ocean port of Gwadar, which will bring immediate and long-term benefits to both his nation and also open up the landlocked neighboring countries in Central Asia, while providing a shortcut into China for the Maritime Silk Road. The South African Chargé d’Affaires, as representative of a member country of the BRICS, presented a global perspective, and brought up the historical colonial past by referring to the Bandung Conference defining relations between Asia and Africa.

Hussein Askary opened the second panel with a speech on “The Potentially Transformative Impact of the Belt and Road on Sweden, Europe and Third Parties.” He presented the work of the Schiller Institute since the early 1990s in promoting the New Silk Road, and contrasted the paradigmatic shift in thinking in the West and China, by presenting LaRouche’s “Typical Collapse Function” (Triple Curve) historic forecast. Askary also presented the incredible achievements China has made at home and its willingness to share that with developing countries, focusing specifically on Africa.

Askary was followed by managers of various companies from China and Sweden. Tracy Suo, Deputy General Manager of Bank of China Stockholm Branch, presented the impact of the BRI policies on today’s economy. Two Swedish consultants presented ways and means to develop business, especially production and infrastructure, between China and Sweden.

During the discussion period, Ulf Sandmark, a leader of the Swedish Schiller Institute, brought up the model of Swedish Chinese industrial cooperation experience from the Volvo Cars success story, calling for extending this model of Swedish-Chinese innovative industrial cooperation to the BRI projects in Africa.

This seminar came amidst a major mobilization in the media and think tanks against the BRI, describing China as a new hegemon in the world. An unprecedented number of seminars on the theme have been, and will be held around on June 4th, when a new state-backed think tank, the New Silk Road Observatory, will be established amid a lot of fanfare. The Schiller Institute Seminar is the only one with a positive and constructive tone. In answering questions, the Chinese Ambassador told the audience to ask the Schiller Institute if they had questions about the Belt and Road, because they have the best knowledge of it.

Chinese-language coverage from Green Post includes embedded video clips in English of the seminar.

Reports Highlight Advance of China, and New Paradigm in Africa

June 4 (EIRNS)—A McKinsey Africa Report on the New Silk Road paradigm in Africa (“Dance of the Lions and Dragons: How Are Africa and China Engaging, and How Will the Partnership Evolve?” June 2017) concludes that “China’s growing involvement is strongly positive for Africa’s economies, governments, and workers”; and that “there is considerable upside for Africa if Chinese investment and business activity accelerate,” according to an article on McKinsey’s website.

The 84-page report finds that China’s investment in Africa has grown at an extraordinary 20%/year throughout this century, and is the largest source of construction financing for “Africa’s most ambitious infrastructure projects in recent years,” as well as that China is the largest source of aid. Roughly 10,000 Chinese firms in Africa employ as many as 3 million workers—89% of them African—and provide skills training and apprenticeship programs to many of them, McKinsey’s report finds. Moreover, these firms concentrate on the African markets rather than export markets, and account for 12% of African industrial production and 50% of contracted construction.

Comparing China to the United States, Germany, France and India, the report concludes that “No other country matches this depth and breadth of engagement.”

There is no finding here of “debt entrapment” nor any mention of geopolitical pressure on the most engaged countries—South Africa, Nigeria, and Ethiopia, which Bloomberg last week called “the China of Africa” because of its rapid growth and government committed to the general welfare.

McKinsey’s report bears similarities to the Schiller Institute’s November 2017 report, “Extending the New Silk Road to West Asia and Africa,” in its findings though not its recommendations.

The Washington Post on June 3 published a report by a team of authors on the advance of science research in China, which will surpass the United States this year as the leading nation in investment in scientific research, including R&D spending, papers published in scientific journals, and doctoral degrees in science and engineering. Mentioning China’s breakthroughs in radiotelescopy, supercomputers, quantum computing in space, magnetic fusion, and others, the article focuses on American-trained Chinese, as well as young U.S., European and South American scientists moving to Chinese scientific institutes though a program called Thousand Talents in China.

An expert in Chinese science at Missouri University of Science and Technology is quoted, “There seems to be a sea change in how people are talking about Chinese science,” she said, with foreigners, in particular, “are rather in awe of what the Chinese policies have accomplished.”

STRATEGIC WAR DANGER

Trump Takes Lead on North Korea Denuclearization

June 4 (EIRNS)—President Trump has taken the leadership on North Korea after members of his administration, particularly Vice President Mike Pence and National Security Advisor John Bolton, expressed a hard-line stance insisting that Pyongyang give up all its nuclear programs and weapons before the United States moved to relax any sanctions.

On June 1, following his meeting with Kim Yong-chol, North Korea’s second-most-powerful official, Trump told reporters that the developing relationship with North Korea is a process, that it won’t be just the June 12 summit, clearly indicating that it will take time. “You’re talking about years of hostility; years of problems; years of, really, hatred between so many different nations,” he said. “But I think you’re going to have a very positive result in the end. Not from one meeting, but you’re going to have a very positive….”

Referring to Kim Yong-chol’s delegation, Trump told reporters, “I told them today, ‘Take your time. We can go fast. We can go slowly.’ But I think they’d like to see something happen.”

Secretary of Defense James Mattis, for his part, said during a sideline meeting he had with the Japanese and South Korean defense ministers at the Shangri-La Dialogue on June 3, that North Korea can receive sanctions relief after taking “clear and irreversible steps” to end its nuclear program, not implying that complete denuclearization had to precede any U.S. reaction. He did say the United States remains committed to the UN sanctions regime against North Korea.

Trump had also suggested, during his June 1 remarks, that steps could be taken to bring a formal end to the Korean War of 1950-53. He confirmed that he and Kim Yong-chol did, indeed, discuss that possibility. This prompted speculation in the South Korean media that South Korean President Moon Jae-in might then join the summit in Singapore.

U.S. POLITICAL AND ECONOMIC

Ambassador to Moscow Huntsman in U.S. To Work on Trump-Putin Summit

June 4 (EIRNS)—Fox News, CNBC, and other press are now reporting that U.S. Ambassador to Russia Jon Huntsman is back in the United States to work on a summit between U.S. President Donald Trump and Russian President Vladimir Putin.

On June 1 the Wall Street Journal put out its story that a Trump-Putin summit was in the works; now more details have come out in an interview with Ambassador Huntsman. On Sunday morning, June 3, he appeared on “Fox and Friends” broadcast anchored by his daughter, Abby Huntsman. She asked, “Some news leaked out a few nights ago that a summit is ‘possible’ between Vladimir Putin and President Trump. What’s the reality of that ultimately happening?”

The Ambassador replied: “As it relates to any potential meeting, it would be a ways off, and the President at the right time will say what needs to be said, and the White House will issue an announcement. But I think the President has said before he’d like to get together with President Putin at some point and solve some of the issues between us, and that’s a good thing…. To make all that happen, you have to have both sides willing to meet and I think we’ve got both sides that would look favorably on that. You have to have a place, you have to have a time, and you have to have an agenda. … It’s inconceivable to conclude that you could settle down the Middle East without the United States and Russia, dealing with this hornets’ nest of an issue called Syria. And it’s inconceivable that you could deal rationally with strategic stability and nuclear weapons when both of our countries possess 90% of the nuclear weapons.

“Isolation doesn’t fix things, it’s coming together. But you have to have deliverables and results,” Ambassador Huntsman said.

There are reports that Huntsman may have been in the U.S. working on a summit for a month. He was scheduled to speak at the St. Petersburg International Economic Forum May 25, but cancelled.

Trump Steel Tariffs ‘Make Sense,’ But Don’t Make Productivity

June 4 (EIRNS)—President Donald Trump will encounter strong opposition from Europe and Japan to his steel and aluminum protective tariffs at the June 9 G7 summit, after virtual “days of rage” against them at this weekend’s G7 foreign ministers meeting. Meanwhile Commerce Secretary Wilbur Ross had what he described as “friendly and frank” discussions in China toward an agreement to avoid punitive tariffs on “Made in China 2025” high-technology products; but China said its earlier promise to increase agricultural imports from the United States, depends on the success of these discussion between now and June 15.

Some leading Senate Republicans are also opposing Trump’s steel and aluminum tariffs on its “allies,” with the argument—stated by former Bush U.S. Trade Representative Carla Hills—that Trump should have ganged up with “allies” against China instead.

In fact, Trump’s aim, which is to achieve 80% capacity utilization in a U.S. steel industry responsible for more than 2 million jobs, is fully compatible with China’s aim to reduce its steel (over)production very substantially, from 900 million tonnes (more than half of all world production) to 700 million tonnes total annual production. China is already just 30 million tonnes away from this goal, and expects to meet it this year, having shifted to the most modern large-scale steel production technologies and closed down older coke-oven and smaller scrap-steel induction technologies. It has been willing to eliminate 1.1 million industrial jobs in the modernization process, even while it creates 12 million new jobs/year overall.

The Trump Administration’s goal has been to stop Canada, Mexico, Brazil and some European companies from importing and re-exporting Chinese steel to the United States; and as China reduced its production, from exporting more of their own produced steel in place of the transshipments from China. Failing to do that by quota negotiations during the period all those “allies” had steel tariff exemptions, Trump ended the exemptions and imposed the 25% tariff.

Trump’s and China’s objectives are compatible, but: China has rising steel demand, at home and in the Belt and Road projects; U.S. steel consumption has been stuck at 100 million tonnes/year for more than 15 years. Even the shrunken U.S. production of 85 million tonnes/year comes close to meeting it.

Where would increased steel demand come from? Some 70% of all steel consumption is for a) buildings and infrastructure (“public construction” but also including commercial real estate) b) mechanical equipment (Deere, Case IH, Caterpillar, etc.), and c) rail/transport construction. So it would have to come from national credit for new U.S. infrastructure building and joint projects with Asian countries on the New Silk Road. That would result in higher-productivity employment of an actually increasing steel-related skilled workforce.

Secretary Ross Creates ‘SPACE Administration’ at Commerce Department

June 4 (EIRNS)—Wilbur Ross is creating a “SPACE Administration,” where the acronym stands for “Space Policy Advancing Commercial Enterprise,” in the Commerce Department, to implement President Trump’s Space Policy Directive-2. The purpose, Ross explains, is to promote the industry, while improving—meaning eliminating—regulations, that the industry complains are holding back progress.

“[A]s the agency charged with promoting job creation and economic growth, we will not engage only in oversight, but will support American companies so they can compete and lead on a level playing field,” Ross wrote in a New York Times op-ed on May 25, posted to the White House website.

This approach, to have one agency both regulate and promote the industry, can create a serious conflict of interests. Which would take precedence? Will regulations—the few that remain—be ignored or waived to promote a company? The promotion of commercial space operations, which has been foisted upon NASA, has already created a situation in which, because the private companies are years behind schedule to transport astronauts to the International Space Station, people have mooted the possibility of lowering NASA safety standards, in order to save time.

SpaceX, owned by Elon Musk, is in that bind. As the Wall Street Journal reports today, the trend in satellite design is smaller and smaller craft, that do not need the heavy-lift rocket that SpaceX has spent years, and untold millions of dollars, developing. With a shrunken market for SpaceX launchers, where does that leave the projects the company is contracted to carry out for NASA? SpaceX itself projects a nearly 40% reduction in space launches next year, says the Journal.

COLLAPSING WESTERN FINANCIAL SYSTEM

Robert Reich Urges ‘Breaking Up’ Wall Street’s Biggest Banks

June 4 (EIRNS)—Perhaps inspired by the recent poll showing a large majority of politically involved Americans support the reimplementation of Glass-Steagall restrictions on Wall Street banking, Bill Clinton’s former Labor Secretary Robert Reich penned a piece over the weekend titled, “Why the Only Answer Is To Break Up Wall Street’s Biggest Banks.”

Appearing on his website on June 1, and getting widespread circulation among the off-mainstream (liberal) media, Reich’s piece first discusses the proposed rule changes (by the Fed and other regulators) which would “water down” the Volcker Rule in the Dodd-Frank Act, which was already a “watered-down” version of the original, 1933 Glass-Steagall Act restrictions on investment banks’ risky practices.

Reich writes: “Glass-Steagall forced banks to choose between being commercial banks, taking in regular deposits and lending them out, or being investment banks that traded on their own capital. Glass-Steagall’s key principle was to keep risky assets away from insured deposits. It worked well for more than half a century.”

SCIENCE AND INFRASTRUCTURE

Stopping Nuclear Plant Construction ‘Cancels Part of Argentina’s Present and Future’

June 4 (EIRNS)—The above quote in the Argentine Cuyo Noticias website May 24, captures the reaction of the scientific community—and beyond—at the announcement by the Mauricio Macri government that it is cancelling, “for budgetary reasons,” construction of the country’s fourth nuclear reactor, and postponing the fifth, both to have been built by China. This is the IMF at work.

Argentina’s fourth reactor, the 800 MW Atucha III, whose construction was to begin at the end of this year, would have had 85% of its $9 billion cost financed by China, although 70% of its components were to be produced by national companies. According to Infobae May 22, Argentina’s Foreign Minister Jorge Faurie advised Chinese Foreign Minister Wang Yi of the cancellation of Atucha III during the G20 foreign ministers meeting in Buenos Aires, which Wang reportedly accepted in exchange for a promise that Atucha IV, whose construction would be postponed until 2022, would be built entirely with Chinese technology.

Then-President Cristina Fernández de Kirchner signed the contracts with China for these two reactors in 2015. The cancellation is a crushing blow to a nation that is enormously proud of its nuclear energy industry and its impressive related achievements in science and technology. The economic consequences will be devastating. In Zarate, where the Atucha I and II reactors are located, a significant proportion of the population consists of highly skilled workers, involved in upkeep of existing reactors, and who were to help build Atucha III.

Eighty small and medium-sized national companies that were to produce components for the reactors will now be left out of the nuclear market. Furthermore, 400 new nuclear engineers will be left jobless as well, but there are estimates that as many as 1,500 scientists, engineers, and skilled workers could be out of work. An exodus abroad of scientists and engineers, as occurred during the 1990s, is now expected, as one analyst put it who will seek work “on the 50 nuclear reactors being built around the world.”

Another casualty of Macri’s decision could be the Heavy Water Industrial Plant (PIAP) at Arroyito in the Patagonian province of Neuquén, which was to have supplied heavy water to Atucha III, as it was based on the Canadian CANDU technology. Argentina is a leader among the 11 countries in the world capable of producing heavy water, and with Atucha III’s cancellation, PIAP could be closed, leaving 620 engineers, chemists, and skilled technicians unemployed.

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