European Governments Face Existential Crisis, as World Is Shifting to ‘New Silk Road’ Course
July 12 (EIRNS)—With only four days to go until the highly important July 16 Helsinki meeting between U.S. President Donald Trump and Russian President Vladimir Putin, Trump’s attending the NATO summit in Brussels yesterday, and his arrival for weekend meetings in Britain, have particulars which only throw light on how the European governments themselves are facing an existential crisis. They are on the line. The world is increasingly shifting to positive economic and foreign relations in the era of the New Silk Road, and now the Trump meeting with Putin can potentially mark a turn of the U.S. in that direction.
Schiller Institute President Helga Zepp-LaRouche addressed these implications today, in her weekly strategic webcast. She began her summary of the portent of the coming Trump-Putin summit, “Well, obviously, the geopolitical manipulation of the world as we have seen it by such things as fake news leading then to military strikes against supposed chemical weapons use, or use of chemical weapons in Syria in order to disrupt the meeting between China and the United States; or Russiagate, which has now absolutely turned into ‘Muellergate’; all of these things are happening, because if you have a collaboration between the United States, Russia, China, with India now moving clearly closer, with Japan coming into this combination, then the possibility to manipulate in the typical British Empire way, to ally with the weakest against the stronger, or to play one side against the other, have factions in each country—this all will go out of the window.
“And in a certain sense, Putin who has managed to become clearly a world player, who has demonstrated through his intervention in Syria that there is no solution to the Middle East crisis without cooperation with Russia; that you cannot address international terrorism without working with Russia and China. And also, obviously, the pending danger of a financial crisis. All of these issues which are absolutely crucial could be solved if the adversarial relationship between the United States and Russia would disappear. Given the fact that there is a very deep strategic partnership between Russia and China already. And as I said, many countries are realigning—for example, Japan—Japan has undergone a tremendous reset of its policy in respect to Russia, but also recently in respect to working with the New Silk Road.
“So I think the potential that eventually most countries of the world would say, it is much better to work together for the common interests of mankind, such as joint space exploration, finding out more about the uncovered secrets of our physical universe, to start colonizing the Moon, or having joint Mars missions and other joint space missions; for example, to defend the planet against the danger of asteroids and comets; and carry out earthquake research together, or similar crash programs. If you could re-direct what is being wasted right now in the military sector for crash programs of those things which really would make the lives of people better, like finding a cure for cancer, or other so far incurable diseases; by also developing space medicine, and connecting everybody even in the most remote areas of the world to a medical system which could save, many, many lives. There are so many beautiful things we could do!
“And I’m very optimistic that we have a couple of leaders who are quite different in character—they’re not all the same, they’re not all of one kind—but I think you have philosopher-king as the President of China—that’s my deepest conviction; you have an excellent strategist in the person of Putin; and you have a person who has been courageous in upsetting a neo-liberal system, which, after all was responsible for many wars, which, if you count the people who were killed as a result of wars based on lies, conducted by the Bush and Obama Administrations, I think people forget that it is a good thing that Trump was able to upset this very powerful apparatus, and he has the inclination to try to improve the relationship with Russia and China.
“And despite the fact that he sometimes says things which I have to say I disagree with, nevertheless, I have stuck my neck out early on by saying, if Trump succeeds to get a good relationship between Russia and China and the United States, then he will go down as one of the great Presidents of American history; and I think that potential absolutely still exists. And therefore, I really think we are in an incredible period, and those politicians who scream against everything that Putin is doing, or China, the ‘big dictatorship,’ or Trump the horrible person who’s ‘erratic’ and whatnot—all of these people should think, because these are not the important things. What is important is that we move our planet and out civilization into a safe period, and establish peace on the planet, based on the development of all nations.
“And I think that is what the nature of man says, the human species being the only creative species known so far, and we should be able to organize our relations among each other to have a truly sustainable development, which means growth, which means developments, which means continuous discoveries of more fundamental physical principles of our universe, and grow up as a civilization.”
COLLAPSING WESTERN SYSTEM
Trump Throws Grenade into NATO Summit
July 12 (EIRNS)—President Donald Trump in effect blew up the NATO summit, declaring yesterday that 2% of GDP for defense spending was not enough, and it should be 4%. He said this at a time when various NATO “allies” wanted to bring up their concerns and objections about his July 16 summit with Russian President Vladimir Putin. According to Bulgarian President Rumen Radev, “he just left after he announced that.”
Britain’s Guardian wrote in dismay: “Trump left the assembled presidents and prime ministers floundering, unsure whether he was serious about the 4% target, double the existing NATO target of 2%, which many do not meet, or whether it was just a ploy.”
Ploy or not, White House Press Secretary Sarah Sanders said, “During the President’s remarks today at the NATO summit, he suggested that countries not only meet their commitment of 2% of their GDP on defense spending, but that they increase it to 4%. President Trump wants to see our allies share more of the burden and, at a very minimum, meet their already-stated obligations.” She also pointed out that President Trump had made the 4% demand last year.
The Guardian whined that Trump’s move “will please Russian President Vladimir Putin, who has long pursued a strategy of creating division in NATO.”
Trump himself tweeted: “What good is NATO if Germany is paying Russia billions of dollars for gas and energy? Why are there only 5 out of 29 countries that have met their commitment? The U.S. is paying for Europe’s protection, then loses billions on Trade. Must pay 2% of GDP IMMEDIATELY, not by 2025.”
The Guardian reports that Theresa May, who was sitting next to Trump, agreed: “Of course, more can and should be done in terms of defense spending. Our collective security depends on it,” but other British officials did not back Trump’s call for the U.K. to nearly double its defense spending.
May also asked Donald Trump to raise the issue of Russian aggression against the West, including the Salisbury nerve agent attack, when he meets Putin. In her presentation she said that it was time for NATO members to call out Russia’s “malign behavior,” which was undermining democracies and damaging their interests around the world. The Guardian comments: “Trump’s decision to meet Putin was widely regarded as a blow to the prime minister’s attempts to isolate Russia following the Salisbury attack in March, even though he had strongly condemned the Kremlin’s actions at the time.”
Trump did sign the summit’s 23-page joint statement.
Trump tweeted on July 11: “Presidents have been trying unsuccessfully for years to get Germany and other rich NATO Nations to pay more toward their protection from Russia. They pay only a fraction of their cost. The U.S. pays tens of Billions of Dollars too much to subsidize Europe, and loses Big on Trade!”
And again this morning: “On top of it all, Germany just started paying Russia, the country they want protection from, Billions of Dollars for their Energy needs coming out of a new pipeline from Russia. Not acceptable! All NATO Nations must meet their 2% commitment, and that must ultimately go to 4%!”
A Great Discontinuity Looms; Britain’s Government Falls into Chaos
July 12 (EIRNS)—The Trump-Putin summit, now only four days away, looms as a great discontinuity immediately ahead—especially combined with the fact that the tide of “Russiagate” is rapidly turning against its perpetrators. The circles of Hillary Clinton and Robert Mueller simply refuse to look at what is about to happen in Helsinki. That is why the fake-news media continue to pretend it isn’t really happening at all. In this situation, the responsibilities of all people of good will are greater than ever.
Statesman Lyndon LaRouche has been preparing for this summit and opportunity for decades, when no one else has, and it is only LaRouche and his method which can show the way into the new period which is now suddenly opening up.
At the same time, the British government has been rapidly collapsing into ever-deeper chaos; every hope for stability is receding. What is this all about? Don’t ask the actors in the drama. The details and the nominal issues really tell you little or nothing—but if approached from LaRouche’s and Gottfried Leibniz’s standpoint of “analysis situs,” one hypothesis that the British imperial command is deliberately smashing up not just the government and the British party system, but even the structure of the establishment itself, in order to “reinvent itself” in a new form which—it hopes—will be effective in the current period, as it currently is not. One of Lyndon LaRouche’s memorable statements on this sort of problem was when he said that kings, as such, function within rules and laws—whereas the Emperor’s prerogative is to suddenly rescind all the existing rules and laws, and replace them all with new ones.
Again, the details from Britain—cabinet resignations, repeated frauds against Russia, etc.—while shocking, don’t communicate the reality. But with even a few minutes study, anyone can readily learn that the British political system itself is falling head over heels into self-feeding chaos, with little or no hope of any near-term exit. The upcoming Trump-Putin summit is critical for Europe, the entire trans-Atlantic and world.
Italian Government Announces Challenge to EU Austerity
July 12 (EIRNS)—Italian Minister for EU Affairs Paolo Savona outlined the Italian government challenge to the current EU policies, speaking before joint committees of the Parliament on July 10. Savona was reporting on the deliberations at the first meeting of the task force called Interministerial Committee for European Affairs, the body that de facto has given him an upper hand in EU negotiations.
Italy, he said, rejects the current EU proposals and is pushing an investment program which requires at least a temporary increase of the budget deficit. Savona said that current expenses won’t increase in the budget, but investments need extra funds.
The problem with current EU proposals is that “stability is considered to be a precondition for the growth of income and employment, and not the result of joint action on these two objectives. The general orientation is that growth should be entrusted to the ‘reforms’ to be carried out at the national level, in substance to the supply policy, without being accompanied by the indispensable interventions into aggregate demand.
“In implementing this policy [of boosting aggregate demand], the instrument suggested by theory, and historically established, is that of investments which, in contrast to current expenses, have the characteristics of being one-time and of easy revocability in the face of inflationary ignitions of demand.
“This political and instrumental need has already been recognized in the EU, both with the 2000 Lisbon Agreement … in which investments in technological innovations were considered to be the crucial variable, and at the time of the appointment of the Juncker [EU] Commission whose program included the implementation of an infrastructure investment plan. This policy has clashed with the lack of autonomous financial means of the EU, but above all with the refusal to reconcile the required reforms (supply policy), and the indispensable policy of stimulating the growth of income and employment (demand policy), ending with domination of the second by the first.”
The government program does include an increase of current expenditures, Savona admitted, such as pensions and unemployment payments, but “the government and Parliament are not in a rush to proceed with the current expenditure side, before the investments show the expected effects. The problem is not therefore whether to implement the promises, but what are the ways—and among these, the timing—in which they will be implemented. It is also true that, beyond a positive effect of its announcement, an investment expense fully reflects its effects on GDP within a period of time, being reflected in a larger public budget deficit. Much depends on the size of the multiplier in the sectors in which the investment is to be directed to remove bottlenecks in development.”
Since the “markets” will tend to punish any increase of debt, without distinguishing between investments and expenses, Savona also called for the ECB to become the lender of last resort in order to protect member-states from speculation against sovereign debt, and to be empowered to act on currency exchange rates in order to offset oscillations of other reserve currencies (i.e. the dollar) which are detrimental to EU exports.
In the Q&A discussion, he said that although Italy does not intend to leave the euro, it should be prepared should another EU member-state decide to exit. This latter statement was cherry-picked from his speech and made headlines, provoking the expected tensions on the bond market.
THE NEW GLOBAL ECONOMIC ORDER
Chinese Mergers & Acquisitions Investments Along Belt and Road Show Steep Rise
July 12 (EIRNS)—China’s investment through mergers and acquisitions in countries and regions that are part of the Belt and Road Initiative is estimated cumulatively to reach $25 billion in 2020, up 100% from the levels seen in 2014, according to a June report from Commerzbank, Germany’s second-biggest bank by assets, China Dailyreported today. China Daily wrote that the Belt and Road Initiative” is redefining China’s outbound mergers and acquisitions (M&As), with some 450 acquisition deals in Western Europe during 2016 and 2017, and 300 in 74 countries and regions that were part of the initiative during the same period, the bank said in its report. The total value of the deals during the period reached $120 billion and $60 billion respectively.”
“We believe that the Belt and Road Initiative is giving Chinese companies an opportunity to show the outside world that they no longer deserve a reputation as technology and asset hunters, but instead offer high-value products and services,” said Roland Boehm, divisional board member at Commerzbank.
In terms of the regional M&A targets, Commerzbank highlights an emerging distinction between technology-focused acquisitions in Europe—such as ChemChina’s acquisition of Pirelli, and power and infrastructure projects in Central and Southeast Asia and Africa.
Commerzbank’s White Paper “The Belt and Road Initiative—Changing the Behavior and Perceptions of Corporate China” is available on the bank’s website. Chinese and German editions are also available online.
American Firms Participating with China in Africa Infrastructure Development Plan
July 12 (EIRNS)—Although the United States government has not endorsed China’s Belt and Road Initiative (BRI), a few large American companies are participating with China-led projects in Africa, according to a report yesterday in the Brookings Institution “Africa in Focus” by Yun Sun. As early as 2015, GE partnered with China Machinery Engineering Corporation (CMEC) on the Kipeto wind farm in Kenya, for which GE provides machinery, equipment, tech support, and training. CMEC, however, is the project contractor, Yun Sun reported, meaning the project is not strictly speaking a Chinese project.
But, more recently, GE has been working with China’s state-owned Power Construction Corporation of China (PowerChina) to build power plants and grids in African countries such as Nigeria. In November 2017, the two companies launched a roadshow in Nigeria, Ethiopia, and Kenya.
In addition to GE, Caterpillar sees BRI as a key growth area for the sales of its construction machinery. Caterpillar has built one of the world’s largest construction machinery factories in the city of Xuzhou, China, to meet the rising demand from the BRI. Its equipment has appeared in multiple Chinese construction sites in Africa, including the Abidjan port of Côte d’Ivoire, road projects in Ethiopia and Senegal, and the Lower Kafue Gorge in Zambia. Another American company, Honeywell, has identified collaboration with Chinese contractors to develop third party market as a top priority and, according to the CEO of Honeywell China Bin Shen, the company has participated in more than 20 Chinese overseas engineering, procurement and construction (EPC) projects in the past 20 years, including in Africa, Yun wrote.
Will China Reward Bigger Families?
July 12 (EIRNS)—China may reward families for raising a second child or more beginning next year—or even earlier—Zhang Hui writes in the Global Times today. This would be a total reversal from China’s 1979-2015 “one-child policy.” Zhang bases his story on reports that China’s National Health Commission is formally studying such proposals, and on his discussions with demographers. He writes that China’s fertility rate was 1.7 in 2016, while its Statistical Yearbook for 2017 failed to disclose the fertility rate.
Northeast China’s Liaoning Province has been the first to introduce incentives for parents to have two children. Liaoning’s population development plan for 2016-2030, issued last week, said that the provincial government will improve policies on personal taxes, education, social welfare, and housing to provide more incentives to a family of four, in order to lighten the load of raising children. “Experts noted that Liaoning’s policy is likely to be adopted across the country, but with even stronger incentives,” Zhang writes.
ENDING THE STRATEGIC WAR DANGER
Russian Diplomacy in Southwest Asia Expands Before Trump-Putin Summit
July 12 (EIRNS)—Russian Foreign Minister Sergey Lavrov met with Jordan’s Foreign Minister Ayman al Safadi on July 4; Israeli Prime Minister Benjamin Netanyahu met with President Vladimir Putin yesterday; and Palestinian President Mahmoud Abbas will be Moscow in July 13-16 during which he will meet with President Putin.
Russia’s Foreign Ministry has also reported that a very high-level Russian delegation travelled to Israel and Palestine for meetings over July 9-10, and that Deputy Foreign Minister Mikhail Bogdanov met a delegation of the Popular Front for the Liberation of Palestine on July 11, after speaking by telephone with the Chief of the Political Bureau of Hamas on July 10. Additionally, Ali Akbar Velayati, Senior Advisor for International Affairs of Iran’s Supreme Leader Ali Khamenei, met with President Putin today.
South Korea’s Moon Jae-in Makes Observations of North Korea’s Negotiating Tactics
July 12 (EIRNS)—During his July 12-13 state visit to Singapore, South Korean President Moon Jae-in said that talks on the denuclearization of the Korean Peninsula between North Korea and the United States may face hurdles and take time, his office said. “No one can be optimistic about the results, but my cautious outlook is that the negotiations would be able to succeed if the North carries out a complete denuclearization, and the international community gathers efforts to provide security guarantees to the North,” Moon said, reported Reuters.
The North’s criticism was a “strategy” meant to show its frustration about what it sees as a lack of action from the United States in response to the steps Pyongyang had recently taken, Moon said, according to Reuters. President Moon said that North Korea wanted the United States to take action to end hostile relations and build trust. He also observed “a big difference in North Korea’s attitudes to talks” from the past, Reuters wrote.
According to media reports, more than any other player in this diplomatic drama, South Korean President Moon Jae-in was most responsible for the historic Trump-Kim June 12 meeting in Singapore. He acted as a mediator to bring those two leaders to the table to settle the differences.
SCIENCE AND INFRASTRUCTURE
India-Nepal Rail Will Connect to China
July 11 (EIRNS)—India and Nepal have agreed to speed up plans for a rail connection between Raxaul in India’s Bihar State to the Nepali capital of Kathmandu, the Press Trust of India reports today. The decision comes weeks after Nepal and China agreed on a feasibility study for a railway line connecting Tibet with Kathmandu, which would thus connect China by rail to India. The agreement came during Nepali Prime Minister K.P. Oli Sharma’s visit to India.
PTI also reports that India is in the process of building five cross-border railway lines between Nepal and India, with the first to be completed this year.