EIR Daily Alert Service, MONDAY, AUGUST 6, 2018

MONDAY, AUGUST 6, 2018

Volume 5, Number 155

EIR Daily Alert Service

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

China’s EximBank Belt and Road Loans Are Up 37%

Uruguay To Announce Formal Entry into Belt and Road Initiative

Huge Pennsylvania Rally for Trump Links to Citizens Over the Heads of Media

Russia Thanks Romanian Defense Minister for Truth About U.S. BMD Installation in Romania

New Letters Between Trump and Kim Point to Possible Second U.S.-North Korea Meeting

China Donates a Small Tokamak for Thailand’s Fusion Program

EDITORIAL

Worse than ‘Fake News’: The Forced Conformity of the Media!

Aug. 5 (EIRNS)—Helga Zepp-LaRouche wrote the following as the lead article for the German weekly Neue Solidatität, #32, Aug. 9, 2018. It has been translated by EIR:

We should have learned from the 1920s and 1930s that the spread of cultural pessimism throughout the population has fatal consequences. But such pessimism is spreading today in many Western societies, and especially in Germany, in the face of uncertain future options, with the result that more and more citizens have completely given up the hope of being able to make a difference through their own participation, or they are joining right-wing parties that provide an outlet for anger but offer no solutions. The culprit of this development is not least the political establishment, which leads us to accept a “TINA” policy—TINA is the acronym for “there is no alternative”—and the forced conformity of the mainstream media, which suppress all messages that point to alternatives.

We are living through what is probably the biggest strategic change of all time. Under the leadership of the BRICS countries (Brazil, Russia, India, China, and South Africa), the majority of the developing countries are currently focussing on close win-win cooperation, with the aim of achieving the leap to the status of industrialized nations, and a good standard of living for their entire populations as quickly as possible. The BRICS Group Annual Conference in Johannesburg in July included some of the largest and most important and international organizations of developing countries, such as the Group of 77, the Organization of Islamic Cooperation (OIC), Mercosur, and the African Union, which were there to join forces with the BRICS in the Global South initiative.

The Chinese Silk Road Initiative, and the idea that relations are no longer based on geopolitical confrontation but on mutual benefit, have changed the political climate in many regions of the world in a completely positive way. For example, the election victory of newly-designated Pakistani Prime Minister Imran Khan, has created for the first time the potential to settle the conflict between India and Pakistan. Khan promised to ensure that his country took two steps toward India for every step that India wanted to take towards Pakistan. The cooperation between the BRICS countries also has its impact on Pakistan; China has traditionally good relations with Pakistan, and just now the Russian and Pakistani navies had a high-level meeting, after the first-ever joint maneuvers of Russian and Pakistani ground troops took place just one year ago.

Also embraced by the new spirit of cooperation is the Horn of Africa, where the hitherto hostile states of Somalia, Djibouti, Eritrea and Ethiopia are massively expanding their diplomatic and economic relations, largely thanks to Chinese investment such as in the construction of the railway from Djibouti to Addis Ababa. And, in contrast to the consistently negative media coverage of the progress of negotiations among North Korea and South Korea and the U.S., this process is on a good track, with the option that a leading North Korean government member may speak in New York before the upcoming UN General Assembly in September.

Meanwhile, the Syrian government has begun the economic reconstruction of the province of Aleppo. The first part of the three-phase program is the reconstruction of the infrastructure, the second step is the specific provisioning of each individual family, and the third phase is the return of people to a safe environment, as the Deputy Governor of the province, Hamid Kenno, stressed. At the same time, the Russian military has helped create a refugee center in Syria that will welcome refugees returning from Jordan, Lebanon, and Turkey, and assist them in their return to their homes. An inter-ministerial coordination committee of the Russian Foreign and Defense Ministries has taken over the orderly repatriation of the refugees.

One might assume that all these developments would actually dominate the headlines, which would immediately fill all clear-thinking people with hope that world peace has become more secure, poverty can be overcome, and the refugee crisis can be resolved in a humane way. Instead, the media do not say a word about the “Global South” initiative. An article in Die Welt, furnished with much geopolitical spin, cites Xi Jinping’s speech at the BRICS Summit: “Africa has more development potential than any other region in the world.” And what does the author conclude? That “China is working to build its empire” and the upcoming summit between China and the African Union in Beijing this September is just Xi Jinping’s “charm offensive.”

Of course, this censorship of good news has the purpose of depicting the politics of the old neo-liberal paradigm as having no alternative. If China—incidentally, along with India, Russia and Japan—now demonstrates that Africa can indeed be industrialized, and if that were truthfully reported, then someone might think to ask why the African continent, after centuries of colonialism and decades of the IMF’s notorious credit conditionalities, is in its current precarious state, and whether this is not a major cause of the refugee crisis.

Instead of responding to China’s repeated offer to work together with the African states on their industrialization in the context of the New Silk Road, the German government is blocking Chinese investments in Germany, such as the recent acquisition of the precision machinery manufacturer Leifeld Metal Spinning, although various surveys confirm that Chinese investors have always taken care to increase the number of jobs and raise wages. Where was the government’s veto when, in recent years, dozens of American or British hedge funds have taken everything from mid-sized companies to housing companies and infrastructure, carving out the choicest portions to sell, and closing down the rest as socially incompatible?

It is an absurd idea to think that one could halt the rise of emerging and developing countries—India and China alone account for 2.6 billion people—and impose the neo-liberal model of geopolitics as the only possible option on the rest of the world. Blair’s and Obama’s policies of converting the whole world to Western democracy through regime change and “humanitarian” interventions, as a sort of modern crusade, have clearly failed. Neither China nor Russia wants this model, and more and more developing countries see the Chinese model as the model for their own development.

The reason is that the BRICS offers a form of cooperation that focuses on mutual development, while “the West” prefers the neo-liberal model, and thus profit maximization for the few at the expense of the many. It is also not overlooked in the rest of the world that the EU is slipping into more and more disagreement between its member states, whether in dealing with the refugee crisis, in choosing between greater integration versus emphasis on sovereignty, or in relations with China, Russia and the U.S.

Looking at the world through Eurocentric glasses obscures the view that the greater part of humanity, represented by the BRICS and Global South, has drawn from the neo-liberal policies of the West the conclusion that a revision of the current system of global governance is urgently needed, and that this reorganization cannot be left to the West.

Instead of arrogantly continuing to sit on the high horse of egoism in their supposed superiority and soon landing their own populations on the margins of history, the nations of Europe and the U.S. should look to the offers from China and Russia for cooperation and co-creation of the New Paradigm. Despite the punitive tariffs imposed by Trump, China continues to offer cooperation with the U.S. in order to overcome the trade deficit through joint ventures in third countries. And a spokeswoman for China’s Ministry of Commerce just said, “We always believe that bad things can be turned into good ones and challenges can be turned into opportunities.”

And at the just-ended ASEAN (Association of Southeast Asian Nations) Summit in Singapore, Russian Foreign Minister Sergey Lavrov recalled Putin’s words at the 2016 Russia-ASEAN Summit in Sochi, at which he called on partner-countries to be aware of the huge geopolitical and geo-economic potential of the Eurasian continent, where the Eurasian Economic Union (EAEU), the Shanghai Corporation Organization (SCO) and ASEAN complement each other. Lavrov stressed that their door remains open to the EU, and no one should doubt that the EU should be interested in it purely for pragmatic economic and business interests.

But one could also find reasons for such cooperation, which go beyond the pragmatic. If Europe does not want to completely forget and lose its humanistic and classical culture, then we could revive the ideas of Nicholas of Cusa, Leibniz and Schiller, and make our contribution to the development of humanity. You certainly will not read about it in the mainstream media.

THE NEW GLOBAL ECONOMIC ORDER

China’s EximBank Belt and Road Loans Are Up 37%

Aug. 5 (EIRNS)—The Export-Import Bank of China said its outstanding loans to Belt and Road Initiative projects rose 37% in the first half of this year from the same period in 2017, the official Xinhua news agency said Aug. 5.

A total of 130 billion yuan ($19.03 billion) worth of EximBank loans for projects discussed at the Belt and Road Forum for International Cooperation last year (in which Helga Zepp-LaRouche participated), have all been disbursed, Xinhua reported the bank saying.

From 2014 to 2017, the bank issued loans totalling more than 930 billion yuan. At the end of March, the total of outstanding loans made by the bank to countries along the Belt and Road Initiative hit more than 810 billion yuan, up 29.7% year on year.

Mexican President-Elect López Obrador Met with China’s Ambassador

Aug. 3 (EIRNS)—Andrés Manuel López Obrador met yesterday with China’s Ambassador to Mexico Qiu Xiaoqui. A lot seems to have been accomplished in the 35-minute meeting on Aug. 2 at AMLO’s transition headquarters in Mexico City, which the Mexican press dubbed an “express meeting,” because of its brevity.

1) Ambassador Qiu invited AMLO and his transition team to attend the Nov. 5 international fair in Shanghai, featuring China’s required areas of imports. The Mexicans accepted and will be sending, at least, Foreign Minister-designate Marcelo Ebrard and Economics Minister-designate Graciela Marquez Colin, along with a delegation of Mexican businessmen.

2) Ambassador Qiu brought AMLO “the most personal greetings” from the Chinese President, and gave him two autographed volumes of Xi’s writings.

3) The AMLO transition team agreed to participate in a high-level working group with China “to define joint investment, trade and development projects,” Ebrard told the press after the meeting. “What they want is to increase trade with Mexico and possibly to participate in infrastructure projects; as you know, they already have investments here, but they are not 100% investments.” The AMLO transition team will be represented by Ebrard, Marquez Colin, and Finance Minister-designate Carlos Urzua.

4) Ebrard said Mexico is very anxious to reduce its large trade deficit with China, which he said now stands at an 8-to-1 ratio of imports to exports. “China displayed a willingness in this regard,” he reported.

The AMLO team went out of their way to make the meeting a high-visibility event, with lots of media coverage, live video streaming, and so on. In the immediate aftermath, there was tangible optimism in political circles in Mexico, that new vistas were opening up for the country. Not surprisingly, LaRouche movement (Mocila) organizers in Mexico received a number of calls of congratulations from supporters, saying that LaRouche had really called it with China’s Belt and Road Initiative.

Uruguay To Announce Formal Entry into Belt and Road Initiative

Aug. 3 (EIRNS)—The office of Uruguayan President Tabaré Vázquez has announced on its website that it will formally join the Belt and Road Initiative (BRI), which will be announced officially during the Aug. 20-27 “Uruguay Week in China,” celebrated in the Chinese cities of Beijing, Guangzhou, Chonqing, Zhuhai and Shanghai.

Although the Uruguayans claim they are the “first” Ibero-American nation to officially join the BRI, both Panama and the Dominican Republic, which established diplomatic relations with China during the past year, also claim to be the “first” in joining the BRI. Undoubtedly there will be many more “firsts”!

Uruguay’s Foreign Ministry and the Uruguay XXI trade promotion office are organizing the “Uruguay Week in China” event, and Foreign Minister Nin Novoa will lead the delegation participating in it. Uruguay XXI’s director Antonio Carambula stressed that during the Aug. 20-27 events, “we will be presenting Uruguay as a nation of great investment opportunities … but also thinking of the possibilities of expanding to the rest of the region,” according to Montevideo website.

Following the August events, Uruguay will send another large delegation to Shanghai, to attend the Nov. 5-10 China International Import Expo, hosted by the Chinese Commerce Ministry and the Shanghai municipal government. This is a huge affair, at which representatives of at least 100 countries are expected to attend. Several Ibero-American governments and companies have already committed to attending, and the Chinese continue to organize for this aggressively around the world.

(Chinese imports are in fact growing significantly faster than its exports now; a 21% annual pace in the first half of 2018, as opposed to 10% annual rate of growth in exports.)

Also taking place in November in the city of Zhuhai is the China-Latin America-Caribbean Business Forum, which Uruguay hosted last year, and is another very large event including Chinese and Ibero-American businessmen and government officials. Later in November, Carambula announced, the “icing on the cake” will be Chinese President Xi Jinping’s state visit to Uruguay following the G20 meeting in Argentina.

COLLAPSING WESTERN FINANCIAL SYSTEM

MarketWatch: Fed Must Act To Stop Corporate Bubble Collapse

Aug. 4 (EIRNS)—An Aug. 2 op-ed on the financial website MarketWatch urges the Federal Reserve to act quickly to “activate safeguards against financial bubbles.” Specifically, the op-ed—author Gregg Gelzinis is a research associate at the Center for American Progress—is calling on the Fed to force increases in bank capital levels under authorities given it by the Dodd-Frank Act (the “countercyclical capital buffer”) to prevent big banks being taken down by the coming wave of corporate debt defaults.

Corporate debt has reached over 500% of corporate profits, the same ratio as during mid-2008 before the financial crash; the now familiar figures are given, of $6.3 trillion bonded debt which has grown by $2.7 trillion just since 2013, and $7.5 trillion in loan debt. The editorial repeatedly stresses the U.S. and European economies are at “the end of a growth cycle” and ready to fall with a trigger like a corporate debt implosion.

“Whether this massive level of outstanding corporate debt is compared to gross domestic product or to measurements of corporate earnings, current debt levels meet or exceed pre-financial crisis highs. Companies will have difficulty refinancing this debt as interest rates rise and the debt matures in the coming years, which raises the probability of corporate defaults. In addition to the staggering amount of corporate debt outstanding, the credit quality of the firms taking on this leverage has deteriorated” with junk debt having reached $2.4 trillion in the U.S. economy alone. Bond repayment covenants have virtually disappeared; bank loan underwriting has gotten much weaker.

The increased capital buffer recommended has already been activated in some trans-Atlantic locations, including the U.K., where debt bubble conditions are worse and the Bank of England sees Brexit as a big threat to the immense London-centered derivatives markets.

But when a debt crash hits, as in 2007-08, bank losses wipe out such capital buffers and the assets in the buffers themselves then to become illiquid. No trans-Atlantic country’s regulators have raised capital requirements to as much as 6% of tangible bank assets; but more than 6% of tangible assets were wiped out across the trans-Atlantic major banks in 2008.

Since so much of the corporate debt is speculative, securitized, and bet upon with derivatives, Glass-Steagall reorganization would take it off commercial bank books, and taxpayer liabilities for bail-out, entirely. Glass-Steagall is the preventive action that can work in time.

Potential for U.S.-China Trade War Escalates

Aug. 3 (EIRNS)—This morning China’s Ministry of Commerce announced a list of $60 billion in U.S. exports which it will tariff if the tariffs on the United States’ $200 billion list are imposed. China’s list consists of four lists, with tariffs ranging from 5% to 25%. It emphasizes metals, foodstuffs and other agricultural products. The Chinese Commerce Ministry statement said: “China’s differential tax rate counter-measures are rational and restrained. They are put forward after extensively listening to opinions and carefully assessing the impact, especially taking into account factors such as the welfare of the people, the endurance of the enterprises, and the maintenance of the global industrial chain. The implementation date of the taxation measures will be subject to the actions of the U.S., and China reserves the right to continue to introduce other countermeasures.”

CNBC claimed from anonymous sources that China’s state oil major Sinopec has suspended oil imports from the United States at least through October. Sinopec is the largest importer of American crude in Asia. Shipping-based data show China’s total oil imports from America will drop nearly in half in September, to about 195,000 bpd, from 335,000 bpd in January-August.

Trump Administration officials are proposing to raise the threatened U.S. tariffs to 25% from 10% on the list of $200 billion Chinese exports which is now going through hearings by the U.S. Trade Representative. Sources indicate that some in the Administration, clearly including economic advisor Larry Kudlow, believe a fantasy that China is weakening and that there is opposition on trade policy to Xi Jinping. Kudlow called China’s counter-tariff list today “a weak response.”

Meanwhile the yuan had dropped 7% against the dollar over two months, the likely reason for Trump officials going for a 25% rather than a 10% tariff. While financial media all have claimed that China is “managing” its currency downward in order to offset U.S. tariffs, China’s decisively proved them wrong today. It instituted high reserve requirements for trading in the yuan-dollar relationship—effectively, partial exchange controls to stop speculators. Short speculators were caught, and the yuan “shot up” against the dollar. The yuan decline may resume, and cause a chain of nasty effects in both countries’ economies; but the false claim of China’s manipulating the currency down has been completely discredited.

The Commerce Ministry said, correctly, the purpose of the U.S. tariffs is to harm China’s development, not to balance trade between the countries, as U.S. Trade Representative Robert Lighthizer has stated himself. Beijing said that the United States escalating while asking for talks “doesn’t work for China at all.”

U.S. POLITICAL AND ECONOMIC

Huge Pennsylvania Rally for Trump Links to Citizens Over the Heads of Media

Aug. 3 (EIRNS)—President Donald Trump drew a very large outpouring of Pennsylvanians to a rally in Wilkes-Barre the night of Aug. 2, where he began by again saying he was representing “the forgotten men and women of our country.” The rally, and others like it, importantly create a certain spirit that is necessary as a connection between the President and the population, under conditions of virtually universal and constant media attacks on the President.

Trump was campaigning for Rep. Lou Barletta, running for the Senate seat of Democrat Bob Casey. His audience was estimated at 10,000 inside an auditorium with thousands more listening and watching outside. While attacking media “fake news” coverage, the President strongly defended his summit meetings with Russian President Vladimir Putin and North Korean leader Kim Jong-un; called possible restoration of good relations with Russia “a good thing, not a bad thing”; and denounced the “Russiagate hoax.”

He also called on Pennsylvanians to support his having returned steel jobs to the state, and more than 300,000 manufacturing jobs to the country at large.

STRATEGIC WAR DANGER

Russia Thanks Romanian Defense Minister for Truth About U.S. BMD Installation in Romania

Aug. 4 (EIRNS)—Romanian Defense Minister Mihai Fifor caused a firestorm this week, when he said, either deliberately or inadvertently—or was misinterpreted, as he claimed afterwards—that the United States has ballistic missiles at the Deveselu base, where the U.S./NATO Aegis Ashore missile defense installation is located. Judging from the report in the British Daily Express tabloid, Fifor was apparently bragging in a July 31 interview with the Antena 3 TV broadcaster that the U.S. military buildup in Romania, plus Romania’s own growing capabilities, would anger Russian President Vladimir Putin. “Obviously, President Putin will not be extremely delighted that very serious military capabilities are being developed in Romania,” he said, according to Romania’s Agerpres national news agency. “How could President Putin ever be excited about the fact that in Romania there is the military base at Deveselu with ballistic missiles? How could President Putin ever be delighted that we have a base at Mihail Kogalniceanu populated with American soldiers, and we continue to insist on the U.S. under the strategic partnership to secure the continuity of U.S. troops on Romania’s soil?”

The Russians took Fifor’s statement as proof of what they’ve been saying about the BMD installation all along. “Fifor’s statement is another proof that the American shield in Deveselu is a direct and immediate threat to Russian national security. Thank you for this spontaneous truth, Mr. Fifor!” wrote Pavel Alexeyenko, a diplomat at the Russian Embassy in Bucharest, on social media.

Later, Fifor corrected himself, claiming he’d never said that there were ballistic missiles at Deveselu and accused “some officials” of misinterpreting what he said. “I want to emphasize something as clear and firm as possible: Romania, and I emphasize, Romania does not have ballistic missiles at Deveselu base, and I think it’s time for us to stop with these speculations because they are not things that should reach the political dialogue area,” he said. According to TASS, the leaders of three opposition parties in Romania have called for Fifor’s resignation.

New Letters Between Trump and Kim Point to Possible Second U.S.-North Korea Meeting

Aug. 3 (EIRNS)—Ignoring general press coverage seeking to declare President Donald Trump’s Korea diplomacy a failure, North Korean leader Kim Jong-Un and Trump have exchanged letters in recent days at the same time as 55 boxes of remains of Korean War dead were returned to the U.S. by North Korea. Presidential Press Secretary Sarah Sanders did not divulge the contents of either letter in her Aug. 2 briefing; however, Kim’s letter may have proposed a second meeting between the two, since Trump also “replied” on Twitter: “Thank you to Chairman Kim Jong Un for keeping your word & starting the process of sending home the remains of our great and beloved missing fallen! Also, thank you for your nice letter—I look forward to seeing you soon!” During the briefing Sanders also replied to a question, that a second meeting is “not locked in.”

If the possible meeting takes place during the United Nations General Assembly in September, which both Trump and Kim may attend, it could also involve other leaders present, such as South Korean President Moon Jae-In.

SCIENCE AND INFRASTRUCTURE

China Donates a Small Tokamak for Thailand’s Fusion Program

Aug. 3 (EIRNS)—China’s Institute of Plasma Physics (IPP) has donated its HT-6M tokamak to Thailand’s Institute of Nuclear Technology, the Chinese Academy of Sciences reported Aug. 1. The small experimental device had been in operation for 18 years, from 1984 to 2002. It is one of four fusion devices developed by the IPP, which today is home to China’s frontline Experimental Advanced Superconducting Tokamak, or EAST.

The two institutes signed a cooperation agreement last year, in which China will help Thailand with the installation and operation of the tokamak, and help “cultivate talent” in fusion. Thailand’s Princess Maha Chakri Sirindhorn attended the hand-over ceremony of the facility at the IPP.

China and Thailand are also collaborating, the Academy of Sciences reports, in “finding synergy between China’s Belt and Road Initiative and Thailand’s National 4.0 Strategy.” To coordinate research, the Chinese Academy of Sciences Innovation Cooperation Center has been established in Bangkok, which will also provide assistance for the commercialization of new discoveries.

The Solar System Suggests Humanity Take Up Strategic Defense of the Earth

Aug. 4 (EIRNS)—Readers will recall that on Feb. 25, 2013, a meteor exploded over the Russian city of Chelyabinsk with such force that some 1,500 people were injured by flying glass that was shattered by the shock wave. Five years and five months later, on July 25, another meteor exploded, over a U.S. Air Force Base in Greenland. Though it was much less powerful, the message could not be lost on clear-eyed thinkers. With one meteor exploding over Russia and another over a U.S. military base, our Solar System is suggesting it’s clearly time for the nuclear powers to initiate a Strategic Defense of Earth.

“The Chelyabinsk event drew widespread attention to what more needs to be done to detect even larger asteroids before they strike our planet,” said NASA Planetary Defense Officer Lindley Johnson, reported Fox News. “This was a cosmic wake-up call.” This might be a better mission for the Space Force that U.S. President Donald Trump has ordered into existence, rather than the hype around the supposed Chinese and Russian threats to U.S. military satellites in low Earth orbit. Russians have been calling for a Strategic Defense of Earth against dangerous objects from space since well before the Chelyabinsk meteor.

Unlike the Chelyabinsk event, the news of the July 25 explosion, detected at an altitude of 43.3 km and estimated at 2.1 kilotons, over the U.S. military base in Thule, Greenland wasn’t reported until July 31, when Ron Baalke, a NASA scientist at the Jet Propulsion Laboratory, issued a Twitter posting about it. Hans Kristensen, the director of the Nuclear Information Project of the Federation of American Scientists, picked up on Baalke’s tweet and responded: “We’re still here, so they correctly concluded it was not a Russian first strike. There are nearly 2,000 nukes on alert, ready to launch.” Kristensen was referring to the early warning radar station that the Air Force operates at Thule to provide early warning of Russian missile launches.

 

 

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