EIR Daily Alert Service, WEDNESDAY, JULY 25. 2018

WEDNESDAY, JULY 25, 2018

Volume 5, Number 147

EIR Daily Alert Service

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

 

Next Steps in U.S.-Russian Diplomacy Following Summit

Senate Scrambles To Head Off Good Relations with Russia

Trump Intends $12 Billion Farm Aid To Relieve Tariff Damage from China, Other Countries

Modi and Kagame, in Rwanda, Witness as Their Countries Sign Seven Agreements

China Adopts Economic Measures ‘In the Face of External Uncertainties’

Glazyev To Global Times: Russia and China Must Collaborate against Speculation, Trade Aggression

 

EDITORIAL

‘As Goes Africa, So Goes Humanity’

July 24 (EIRNS)—It has been only a week and a day since the historic July 16 Trump-Putin summit in Helsinki, but already the world has changed dramatically. “There are those who are aware of these positive changes” and are working to bring them to fruition, Helga Zepp- LaRouche stated today, “and then there are those who are wearing geopolitical spectacles and who refuse to see the changes. They are still defending a status quo which no longer exists. They just don’t get it!”

The combination of the Belt and Road Initiative, Zepp-LaRouche continued, and Trump’s policies—at least most of them, especially his summit meeting with Putin—are moving the world to a different plateau. What is emerging is a New Paradigm of cooperation among sovereign nations, precisely along the lines that Lyndon LaRouche has laid out for the last half-century.

Africa, Zepp-LaRouche emphasized, is now center-stage in this dramatic new chapter of Mankind’s history that is being written—as was discussed in detail at the June 30-July 1 international Schiller Institute conference in Bad Soden, Germany.

More than 20 years ago, back in December 1996, the Schiller Institute published an international manifesto headlined: “As Goes Africa, So Goes Humanity.” In January 1997, Lyndon LaRouche issued one of his numerous, urgent calls to action in that regard:

“The fact of the matter is, that the British Commonwealth, and its monarchy, are presently guilty of organizing both aggressive warfare against the nations of Sudan and Zaire, and, simultaneously, the functionally greatest rate of genocide in modern history against sundry targetted African populations. In fact, there is no factual basis for doubting the monarchy of the United Kingdom has launched and is coordinating aggressive warfare…. A river of blood divides all moral persons in the world from those British and other racists who support or condone these Nuremberg crimes by the British Commonwealth and its United Kingdom-based, British Privy Council. Perfide Albion!”

Today, the face of Africa is being changed for the good by China’s Belt and Road projects. President Xi Jinping is currently on a tour of various African countries, ending at the July 25-27 Tenth BRICS Summit in South Africa, which is rapidly advancing that process. Fellow BRICS leader Indian Prime Minister Narendra Modi is also on a tour of Africa and will likewise be at the BRICS Summit. China’s Foreign Ministry explained the thinking behind this intense diplomacy:

“As the two largest developing countries and emerging markets in the world, both China and India are willing to help Africa accelerate its industrialization within the framework of South-South cooperation and achieve its self-development. We are also ready to deepen the cooperation in various fields with African countries to achieve mutual benefit and win-win outcomes. China and India are partners sharing the same vision in this regard…. The two sides will follow through on the consensus between the two leaders [Xi and Modi] to vigorously explore ‘China-India plus one’ or ‘China-India plus X’ cooperation to achieve mutual benefits and win-win outcomes between China and India and other countries, and jointly make contributions to promoting regional and world peace, stability, development and prosperity.”

Lyndon LaRouche specified that necessary “X” many years ago: The United States, Russia, China and India jointly constitute a Four Powers alliance capable of finishing off Perfide Albion once and for all.

U.S. POLITICAL AND ECONOMIC

Next Steps in U.S.-Russian Diplomacy Following Summit

July 24 (EIRNS)—President Trump tweeted another aggressive “Fake News be damned” message on Monday in support of the Helsinki summit, writing that “when you hear the Fake News talking negatively about my meeting with President Putin, and all that I gave up, remember, I gave up NOTHING, we merely talked about future benefits for both countries. Also, we got along very well, which is a good thing, except for the Corrupt Media!”

His Press Secretary Sarah Sanders reported to the self-appointed “Fourth Estate” hounding her at the White House briefing that “the only specific agreement that was made [at the summit] was that the two national security teams from both the United States and Russia would continue at a working level, these discussions.  I can tell you that Ambassador Bolton plans to have a meeting—a follow-up with his counterpart from Russia next month, in addition to meetings with other European allies to further those discussions.”

For his part, President Putin’s aide Yuri Ushakov confirmed to reporters today that a meeting between Bolton and Russian officials is planned for August, “to continue discussing the outcome of the Helsinki summit and consider the prospects for future cooperation in a number of fields,” although where the meeting will be held has not been confirmed.

As for President Trump’s offer to hold a second Presidential summit in Washington “at the end of the year,” Ushakov reported that Bolton had conveyed that offer, but “practical steps to prepare the meeting haven’t started yet,” TASS reported today. “There are also other options that our leaders may consider, which include the G20 summit in Buenos Aires. Putin and Trump may also meet at other international forums they will participate in; such possibilities will surely be discussed.”

Ushakov, asked at his press conference to say more about how President Trump raised Russia’s alleged 2016 election interference in the Helsinki summit, refused to answer, citing “heated” U.S. reactions to the summit. “You know what the situation surrounding the meeting’s outcome is like in America, so we need to wait for things to settle down and then we will be able to discuss these matters in a business-like manner,” Ushakov said.

Actions such as the Department of Justice’s July 15 arrest of Russian national Maria Butina on trumped-up “Russian influence” charges, and then July 18 ruling to deny her bail, which Russian Foreign Minister Sergey Lavrov called “unacceptable” in his Saturday, July 21 phone call with Secretary of State Mike Pompeo, and the gratuitous attack on Russian actions in Syria which State Department’s nasty geopolitical press spokeswoman Heather Nauert stuck into her read-out on that call, also introduce complications in the needed post-summit follow-up.

U.S. Anglophiles Desperate To Seize Back Control over U.S.-Russian Relations

July 24 (EIRNS)—The Anglophile establishment is scrambling, after the fact, to throw monkey wrenches into the opening of good relations with Russia which the Helsinki summit initiated.

U.S. CENTCOM Commander Gen. Joseph Votel opposes any broader cooperation with Russian military in Syria than current de-confliction, he told the Wall Street Journal in an interview published on July 22. “I don’t see anything that we ought to be doing militarily right now beyond what we are currently doing…. They have supported a regime that has pretty brutally attacked their people. They’ve actively worked to make sure that the Syrian regime wasn’t held to full accountability for their use of chemicals. These are not things that give me great confidence that just by stepping over into the next level of coordination that things are going to be fine…. It’s Russia. Let’s not forget that it’s Russia.”

General Votel also said he opposes closing the U.S. military base in southern Syria at Al Tanf, according to the Journal.

For its part, the Department of Homeland Security chose to play its two-bit part in the build-up of the “Russian malign influence” game on July 23, generating scary press stories by holding the first of four briefings on what DHS chief of Industrial Control Systems Jonathan Homer described dramatically as cases of successful Russian hacking of U.S. electrical utility control rooms, where “they could have thrown switches and disrupted power flows,” blacking out U.S. electricity.

Speaking as if she were still in power, the infamous Victoria Nuland suggested to last week’s Aspen Security Forum confab of virulently anti-Trump advocates of the old geopolitical order that they should try to seize control over the agenda of the second Putin-Trump summit which President Trump has proposed, and thereby reverse the success of the Helsinki summit. She told the July 20 “Cold War” panel discussion at the “has-been” forum that she thinks “that perhaps having a do-over summit in the fall might be an opportunity for us to get it right.” Her idea of “right” is to deliver ultimata to Russia which will sink cooperation.

Senate Scrambles To Head Off Good Relations with Russia

July 24 (EIRNS)—Their British masters hysterical over the success of President Donald Trump’s summit with Russian President Vladimir Putin, Senators Bob Corker and Mike Crapo, the respective heads of the Senate Foreign Relations and Banking Committees, announced today they will hold a series of hearings to discuss strategies “to push back on Russia” and its “malign behavior,” through expanded sanctions and other measures.

Senate Majority Leader Mitch McConnell (KY) last week tasked them to hold hearings on beefing up the “Countering America’s Adversaries Through Sanctions Act (CAATSA),” the bipartisan bill which the Senate and House passed in August 2017, thinking thereby that they had blocked President Trump’s ability to do what he just did towards reestablishing friendly relations with Russia.

Buttressing this offensive, Senate Foreign Relations Committee members Bob Menendez (D) and Lindsey Graham (R) announced today that new comprehensive legislation they are preparing to strengthen CAATSA includes discussion of “sanctions on Russian sovereign debt,” and increased sanctions on the Russian energy and financial sectors.

The Senators are playing with fire. Any such action to cut Russia out of the international financial system at the point it is an already-disintegrating corpse, will be answered by countermeasures whose impact these fools refuse to contemplate.

The first of the committee hearings starts this July 25, with a Senate Foreign Relations Committee hearing called “An Update on American Diplomacy To Advance Our National Security Strategy,” featuring Secretary of State Pompeo as the witness, to discuss the Helsinki Summit and North Korea. Hearings on the value of NATO, Russia’s activities in Syria, alleged Russian violations of the Intermediate-Range Nuclear Forces (INF) Treaty were reported to follow.

The Senate Banking Committee, for its part, will convene a classified Members briefing next with administration officials to discuss the impact of sanctions on Russia, as well as other hearings on what greater sanctions can be applied.

This, from a Congress which on a rare good day this year enjoys a 19% approval rating, because the only bipartisan action it appears capable of undertaking is against President Trump’s moves to crush the geopolitical order which has driven the U.S. into endless wars.

Trump Intends $12 Billion Farm Aid To Relieve Tariff Damage from China, Other Countries

July 24 (EIRNS)—President Trump will be in three farm belt states this week: today in Missouri, Thursday, July 26 in Iowa, and Friday, July 27 in Illinois. Besides backing Republican candidates and other purposes, his presence comes as a show of support for farmers, hard hit by years of low prices under the free trade regime, and now, the impact of tariff-feuding in loss of sales. Thousands of farmers face ruin.

The farm belt, like the rust belt, after years of de-structuring, needs rebuilding and growth, which requires taking down Wall Street, new credit, and deliberate development policies, including mutually beneficial trade. However, tariffs so far remain the fixation for economic action.

Agriculture Secretary Sonny Perdue today held a press conference, announcing help for farmers. His U.S. Agriculture Department statement called it, “a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy.” He told reporters, “We’re formally announcing that the Trump Administration will be taking several actions to assist farmers in response to the trade damage caused by the illegal retaliatory tariffs that have been imposed on the United States in the past few months. The programs we’re announcing today are a firm statement that other nations cannot bully our agriculture producers to force the United States to cave in.”

The USDA release states, it “will authorize up to $12 billion in programs, which is in line with the estimated $11 billion impact of the unjustified retaliatory tariffs on U.S. agricultural goods.”

There are to be three actions, which come under the Commodity Credit Corp., formed under FDR in 1933 to stabilize prices and farm income, and in particular, Section 32 funding: 1) payments to farmers under what is called the Market Facilitation Program; 2) federal commodity buy-ups under the Food Purchase and Distribution Program, for donating to nutrition programs; 3) activation of the Trade Program (Foreign Agriculture Program) to boost sales of U.S. commodities to new markets.

Producers of the following commodities are to be covered: soybeans, sorghum, corn, wheat, cotton, dairy and hogs. The timing of payments is expected to follow harvests and the like, so the earliest might be in September for wheat, milk and pork. Details of how to sign up have yet to be worked out; they must by published in the Federal Register, etc.

The Executive branch has authority to conduct such support intervention without approval by Congress; rumors are flying that some funding will come out of the food aid program, the Supplemental Nutrition Assistance Program (SNAP), also run by the Agriculture Department.

Trump tweeted early this morning, “Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that—and everybody’s talking! Remember, we are the ‘piggy bank’ that’s being robbed. All will be Great.”

THE NEW GLOBAL ECONOMIC ORDER

Modi and Kagame, in Rwanda, Witness as Their Countries Sign Seven Agreements

July 24 (EIRNS)—On his way to attend the 10th annual BRICS Summit over July 25-27 in Johannesburg, South Africa, Indian Premier Narendra Modi stopped in Rwanda and, along with Rwandan President Paul Kagame, witnessed as Indian and Rwandan officials signed seven bilateral pacts, reported Rwanda’s New Times.  The event took place at Village Urugwiro, the President’s office in Kigali. Prime Minister Modi is the first Indian head of government to visit the East African nation, which is considered an important gateway for India to eastern Africa.  Modi is on a three-nation tour, beginning with Rwanda and Uganda, and thence to Johannesburg for the BRICS summit.

The countries signed agreements in the area of trade, defense, dairy cooperation, agriculture, culture, leather and allied sectors and two lines of credit worth $200 million for expansion of the special economic zone and irrigation scheme, IANS reported. “During the talks, both leaders reviewed the entire gamut of bilateral cooperation and expressed satisfaction at the excellent relations between Rwanda and India in the overall context of Strategic Partnership,” India’s Foreign Ministry stated. Ties between India and Rwanda were elevated to a Strategic Partnership in January last year.

China’s President Xi Jinping also made a tour through Africa on his way to Johannesburg, arriving in Senegal on July 21-22, and then visiting Rwanda. He plans a stopover in the Indian Ocean island-nation of Mauritius on his way home. Africa is his first overseas trip since being re-elected as President in March.

China Adopts Economic Measures ‘In the Face of External Uncertainties’

July 24 (EIRNS)—The Chinese government is moving proactively on economic policy matters, both domestically and internationally, “in the face of external uncertainties,” according to this year’s Government Work Report by Premier Li Keqiang. On the international front, China’s interventions center on the ongoing expansion of the Belt and Road Initiative, especially in Africa around President Xi Jinping’s ongoing tour and the July 25-27 BRICS Summit in Johannesburg, South Africa. On the domestic front, Premier Li Keqiang chaired a July 23 meeting of the State Council’s executive, which issued a series of economic policy directives, according to Xinhua.

“In this year’s Government Work Report, Premier Li Keqiang stressed the need to focus on the real economy and leverage the proactive fiscal policy to tackle the financing difficulties facing small and micro businesses,” Xinhua reported. “China will continue with stable macro policies and adopt a combination of fiscal and financial measures in an effort to boost domestic demand and bolster support for real economy … [although] it will firmly refrain from resorting to a deluge of strong stimulus policies.

“A more proactive fiscal policy will be pursued. The government will focus on introducing deeper tax and non-tax fee cuts, and more companies will be eligible for the preferential policies of the additional deduction of R&D spending in taxable income, a policy which is expected to cut another 65 billion yuan of tax within this year on top of an initial goal of cutting taxes and fees by 1.1 trillion yuan this year. Efforts will be stepped up in issuing the 1.35 trillion yuan of special bonds [about $200 billion] for local government to see more tangible progress on ongoing infrastructure projects.”

Xinhua explained that financial measures will also be taken to further curb speculation and foster real production. “Financial institutions will also be called on to use the money released from cuts in their required reserves to support small and micro businesses and debt-to-equity swap…. At the same time, the government will resolutely phase out the ‘zombie’ companies to free up their under-used funding, and crack down on illegal financial institutions and activities to forestall risks.”

STRATEGIC WAR DANGER

Russian Foreign Minister Lavrov, General Gerasimov Meet Netanyahu in Israel

July 24 (EIRNS)—Russian Foreign Minister Sergey Lavrov, accompanied by Chief of the Russian General Staff Gen. Valery Gerasimov, were in Israel yesterday for meetings with Prime Minister Benjamin Netanyahu and their counterparts. According to the Russian Foreign Ministry read-out, they “discussed various aspects of the Middle East agenda focusing on the situation in and around Syria.” In particular, they “discussed in detail tasks related to completing the anti-terrorist operation in southern Syria and providing security along the Israeli border, including implementation of the 1974 Agreement on Separation of Forces” between Syria and Israel, following the October 1973 war.

The Russian Foreign Ministry stated that the talks were a continuation of earlier discussions between Netanyahu and Russian President Vladimir Putin. Not mentioned, but still evident, is that the talks follow on the Putin-Trump summit of July 16, where the two leaders discussed potential solutions to the Syrian and broader crises in Southwest Asia. The nitty-gritty of that discussion would now appear to be underway, with attendant points of disagreement. For example, Reuters reported that Israel rejected a Russian proposal to keep Iranian-backed forces 100 km from the Syrian border with Israel, with Netanyahu reportedly telling Lavrov: “We will not allow the Iranians to establish themselves even 100 km from the border.”

Russian Foreign Ministry Blasts Rescue of Pro-Terrorist White Helmets from Syria

July 24 (EIRNS)—The Russian Foreign Ministry yesterday issued a blistering critique of the evacuation, by Israel with the backing of the U.S., the U.K., Canada and Germany, of hundreds of the so-called White Helmets “civil defense” from Syria to Jordan overnight on July 21-22. The Russian statement said that the U.S. State Department accused Russia of not meeting its obligations in southern Syria when, in fact, it was the U.S. that failed over many months, to separate the so-called “moderate” opposition from ISIS and Al-Nusra terrorist groups in the southern de-escalation zone. “As a result of successful actions by the Syrian armed forces with our support, law and order are being restored in southwestern Syria and proper conditions are being created for the people to return to peaceful life,” the ministry statement said.

In this context, the statement went on, the evacuation of the White Helmets from southern Syria “speaks volumes.” “It is well known that it was the White Helmets who were implicated in the most odious provocations during the Syrian conflict,” including producing propaganda videos and staging fake chemical attacks that could be used as accusations against the Syrian government. “It is symbolic that the White Helmets chose to flee Syria with foreign intervention, thus revealing who they really are and demonstrating their hypocrisy to the entire world,” the statement concluded. “As the saying goes, a guilty conscience gives itself away, and these operators clearly showed whose orders they were following and who was funding them.”

FSB Investigation into Roscosmos Hypersonic Leaks Yields an Arrest

July 24 (EIRNS)—There has been an arrest reported in the Russian Federal Security Service (FSB) investigation into apparent leaks of highly classified hypersonic research from two institutions of Roscosmos, Russia’s space agency, first broken by Kommersant on July 21, though much else about the investigation remains shrouded in secrecy. Roscosmos spokesman Vladimir Ustimenko told TASS that the agency has set up a commission to examine the activity of the Central Research Institute of Machine-Building (TsNIImash), where, Kommersant reported on July 21, the FSB had carried out a number of raids. “An instruction has been issued to form a commission to scrutinize the TsNIImash’s activity. An inspection will be carried out. After that, the corresponding conclusions will be made. The commission will start its work shortly this week,” Ustimenko said. The commission will be chaired by Roscosmos Deputy CEO Sergei Dyomin.

TASS also reported that a 74-year-old research fellow at TsNIImash has been arrested. “TsNIImash employee Viktor Kurdryavtsev was arrested, indeed,” Ustimenko said. Yevgeny Yenikeyev, a member of the Moscow Public Monitoring Commission, earlier told TASS that a Moscow court had authorized Kurdryavtsev’s arrest on charges of high treason. According to TASS, Moscow’s Lefortovo district court considers high treason cases, but has not confirmed it is handling this one.

According to SouthFront website, an undisclosed source told Interfax “first signals on possible unlawful activities at TsNIImash appeared in the first half of 2013, and this is when law enforcement agencies turned their attention to the institute.” He continued, “At the same time, the documents seized date to the last quarter of 2013.”

According to the July 21 Kommersant report, the FSB had determined that Western intelligence agencies had found out about the results of the Russian space industry’s “top secret” work on hypersonic technologies. Just eight days earlier, on July 13, CNBC had reported, citing anonymous sources, that U.S. intelligence agencies had determined that the Russian military had successfully tested the Kinzhal hypersonic missile. It’s reasonable to assume from this that Russia’s hypersonic weapons programs, along with other advanced weapons, are a high-priority target for U.S. intelligence agencies.

COLLAPSING WESTERN FINANCIAL SYSTEM

Glazyev To Global Times: Russia and China Must Collaborate against Speculation, Trade Aggression

July 24 (EIRNS)—China’s semi-official Global Times yesterday published a lengthy interview with leading Russian economist Sergey Glazyev, who participated in the fourth China-Russia Economy Dialogue in Beijing, held on July 15-16 by the Chongyang Institute for Financial Studies at Renmin University. Identifying Glazyev as “a counselor to President of the Russian Federation Vladimir Putin,” Global Times spoke with Glazyev “to seek his opinions on bilateral trade potential and how to deal with U.S. trade hostility.” (Note that the interview was conducted immediately prior to the Trump-Putin summit, and that subject was not raised in the discussion.)

Glazyev said that “The trade tension is partly due to stagnation in Western economies, which are now in very bad shape. A lot of money is used for speculation and this is undermining the stability of financial sectors.” He called for increased cooperation against such policies: “If we can enhance cooperation within the Shanghai Cooperation Organization or the BRICS and stop relying on the dollar as an international currency, the U.S. pressure will fall away…. We have to move to a deeper partnership. We should promote cooperation between our companies, the creation of large consortiums, and the establishment of research and development institutions, especially in the aviation industry. Trade is just what you see on the surface.”

The Russian economist continued: “The second point is development of high-tech sectors, especially the shipbuilding industry. But this requires more investors for it to be modernized. There is clear demand for new logistics centers and seaports.”

As for U.S. sanctions against Russia and China, Glazyev said: “If U.S. aggression against Russia continues, we are ready to move away from the dollar as the world’s main currency, because sanctions make the dollar a very toxic currency. Even foreign companies are suffering threats from the U.S. administration. So if the U.S. keeps contradicting international law and the WTO’s norms, the first measure we would have to take together with China and other countries who are suffering from U.S. aggression, would be to get rid of the dollar as the key international currency.”

Savings Bank of Genoa Crisis Will Test Italian Government Resistance to ECB

July 24 (EIRNS)—One day after the European Central Bank letter with an ultimatum to the Savings Bank of Genoa (Carige) was made known, prosecutors opened an investigation, and police seized evidence in the bank headquarters. The bank crisis is a test of how the current government will react to the ECB bail-in plans.

Carige’s capital has dropped from €2.8 billions in 2017 to €422 millions, despite capital injections of up to €2 billions.

The prosecutors’ action intersects internal fights, in which some shareholders oppose the ECB plans, apparently supported by CEO Paolo Fiorentino.

On July 23, Carige published the ECB letter, in which the ECB demands immediate action on three fronts: 1. Fill empty seats on the board; 2. Start plans for a merger; 3. Increase Capital Tier 2.

This last point is especially ominous because it is part of the bail-in schemes. Capital Tier 2 (CT2) instruments, in fact, are “subordinate bonds,” that is, bonds which are at the front of bail-in eligible assets. The ECB knows very well that those bonds are sold to retail customers who then lose their savings, as happened in the case of three banks in the Veneto region, and other banks in central Italy in recent years.

Fabrizio Galluzzi, a member of the Genoa Confindustria industrialists’ association, has blasted the ECB policy which is the ultimate cause of the Carige crisis. Writing in the Liguria Business Journal, Galluzi explained: In reaction to the 2008 crisis, the ECB introduced rules which punished commercial and savings banks such as Carige. “Carige had a very low level of speculative assets, in terms of derivatives and ‘toxic assets,’ but a high exposure in real estate, and, to a lesser extent, in credits to companies in the community; when was faced with the new rules, which forced it to implement heavy downgrades and to ultimately reduce its capital to zero.

“The new tighter rules on credit, combined with the ECB policies following [ECB President] Mario Draghi’s famous ‘whatever it takes,’ with flooding the system with liquidity and the reduction of interest rates, in some cases below zero, simply devastated the profitability of the banking system. The system was forced to operate under the supervision of third parties, which almost always had no knowledge of the community or of its economic and entrepreneurial reality—especially in the case of regional banks such as Carige…. [With] tight rules that reduce activities, along with very low rates that eliminate profitability, one wonders how the Italian banking system can still exist!”

The business community and the political leadership in Genoa have joined the perspective of becoming a hub for the Maritime Silk Road of China’s Belt and Road. This means investments to upgrade the port and railway infrastructure, in order to connect with four Trans-European corridors. Carige could play a role in helping to finance this effort, but it should be removed from ECB supervision and put under a commercial bank-only charter.

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