iftttwall

Italy on Sunday allowed all 150 migrants from a NGO rescue ship to disembark after docking for five days at a Sicilian port – ending a standoff between Rome’s populist coalition government and European Union partners, reports Reuters. 

The migrants, mainly from Eritrea, had been stranded in the port of Catania since Monday because the government refused to let them off the boat until other EU states agreed to take some of them in.

Interior Minister Matteo Salvini said Albania had offered to accept 20 of the migrants and Ireland 20-25, while the rest would be housed by Italy’s Catholic Church “at zero cost” to the Italian taxpayer. –Reuters

“The church has opened its heart and opened its wallet,” said Salvini at a Saturday evening rally in the Northern Italian town of Pinzolo. 

Salivini – who has spearheaded Italy’s crackdown on illegal immigration beginning in June, also announced that he is currently under investigation by a Sicilian prosecutor for “abuse of office, kidnapping and illegal arrest.” 

“Being investigated for defending the rights of Italians is a disgrace,” he said.

The United Nations called for “reason from all sides” on Saturday following a meeting of envoys from 10 European Union member states, after the Friday meeting failed to break the deadlock. 

“Frightened people who may be in need of international protection should not be caught in the maelstrom of politics,” the U.N. refugee agency UNHCR said in a statement. 

The agency appealed to EU member states to “urgently” offer relocation places to the rescued people, in line with an agreement at an EU summit in June, and in the meantime, urged Italy to allow “the immediate disembarkation of those on board.”

Rome had refused to back down, despite criticism from rights groups and the opposition, with Salvini saying he considered the attacks he received to be a “badge of honor.” –Reuters

At the end of the day, Albania, Ireland and the Catholic Church agreed to take the migrants, while Italy’s Foreign Ministry called Albania’s offer “a signal of great solidarity and friendship that Italy greatly appreciates.” 

On Friday – before Saturday’s breakthrough, Italian Prime Minister Guiseppe Conte attacked the EU over Facebook for its lack of support in taking the migrants, stating that Italy may refuse to back the bloc’s long-term budget currently under discussion. He called Friday’s meeting in Brussels a “defeat for Europe,” and “a clear violation of the spirit of solidarity.” 

Before the breakthrough late on Saturday, thirteen migrants – seven women and six men – were ordered off the boat by doctors after a check-up carried out at around midday.

They finally left the boat one-by-one some six hours later, stepping down a flight of steps to touch dry land for the first time since leaving Libya at least 10 days ago. The 13 were taken by ambulance to Catania’s Garibaldi hospital.

Italian media reported that among them there were three cases of suspected tuberculosis and two of suspected pneumonia. Medical officials on the spot did not confirm this. –Reuters

The remaining 137 migrants were allowed to disembark early Sunday, after which they were to be taken to a reception center in the Sicilian city of Messina. From there, they will be “distributed to the Church dioceses as well as Ireland and Albania,” according to Reuters. 

27 unaccompanied minors and 13 people who needed medical treatment were allowed to leave the boat earlier this week. While docked for five days at Catania, the group of mostly young men on the NGO ship sheltered under a large green tarp that covered about half the deck. 

About 200 left-wing protesters showed up at the port waving flags on Saturday, calling for the release of the migrants. The group later skirmished with police. In Rome, meanwhile, prosecutor Luigi Patronaggio interviewed several officials within the Interior Ministry as part of his criminal investigation over the treatment of migrants held against their will. 

At that time, the investigation was said to be against “unknown persons”, but Salvini said he was responsible for his ministry’s actions, challenging the prosecutor to arrest him.

The 5-Star Movement, the League’s coalition partner, has so far backed Salvini’s hard line, and its Transport Minister Danilo Toninelli, who is responsible for the country’s ports, on Saturday renewed the government’s attacks on the EU. –Reuters

“Nobody can give lessons to Italy on its humanitarian efforts”, he said. “The government is only asking the EU give some sense to its own existence.”

via RSS https://ift.tt/2wqennr Tyler Durden

Authored by Ilana Mercer via Unz.com,

He who believes he has a right to another man’s property ought to produce proof that he is its rightful owner.

“As the old legal adage goes, ‘Possession is nine-tenths of the law,’ as it is the best evidence in our uncertain world of legitimate title. The burden of proof rests squarely with the person attempting to alter and abolish present property titles.” (From “Into the Cannibal’s Pot: Lessons For America From Post-Apartheid South-Africa”.)

It is to this potent principle that democratic rule in South Africa has taken an axe – or, rather, an assegai.

Here is how taking land legally currently works, in South Africa, a place the US State Department has only just lauded as “a strong democracy with resilient institutions…,” a country merely “grappling with the difficult issue of land reform.” “Land reform,” of course, is a euphemism for land distribution in the Robert Mugabe mold.

The process currently in place typically begins with a “tribe” or group of individuals who band together to claim vast tracts of private property.

If these loosely and conveniently conjoined groups know anything, it’s this: South Africa’s adapted, indigenized law allows coveted land, owned and occupied by another, to be obtained with relative ease.

See, the country no longer enjoys the impressive Western system of Roman-Dutch law it once enjoyed. Lax law and poorly protected property rights signal a free-for-all on the lives of white owners and their livestock

No sooner does this newly constituted “tribe” (or band of bandits, really) launch a claim with the South African Department of Rural Development and Land Reform, than related squatters—sometimes in the thousands—move to colonize the land.

They defile its grounds and groundwater by using these as one vast toilet, and terrorize, sometimes kill, its occupants and their animals in the hope of “nudging” them off the land.

Dr. Philip du Toit, a farmer (with a doctorate in labor law) and author of “The Great South African Land Scandal,” speaks of recurrent attacks on farm animals that “hark back to the Mau Mau terror campaign which drove whites off Kenyan farms.”

Farmer’s Weekly used to be packed with pitiful accounts of cows poisoned with exotic substances, battered with heavy metal bars, writhing in agony for hours before being found by a distraught farmer.

“Encroachment is the right word,” a farmer told du Toit. “They put their cattle in, then they cut the fences, then they start stealing your crops, forcing you to leave your land. And then they say: ‘Oh well, there’s vacant land, let’s move on to it.’

It’s a very subtle way of stealing land.” “When there is a farm claim I say ‘Look out!’ because attacks may follow to scare the farmers,” confirmed the regional director of the Transvaal Agricultural Union (TAU).”

Agri SA, an organization representing small and large-scale commercial farmers, reports the annual theft of hundreds of thousands of priceless livestock.

The ANC’s old Soviet-inspired Freedom Charter promised this: “All shall have the right to occupy land wherever they choose.” And so they do today.

Because of legal claims they are powerless to fight, squatters whom they cannot fend off, and cattle, crops and families which they can no longer protect, farmers have already been pushed to abandon hundreds of thousands of hectares of prime commercial farmland.

“Since the end of apartheid in 1994, when multi-racial elections were held,” wrote Dan McDougal of the London Times, millions of “acres of productive farmland have been transferred to black ownership. Much of it is now lying fallow, creating no economic benefit for the nation or its new owners.”

South Africa has become a net importer of food for the first time in its history.

“My visit to Mpumalanga came immediately after crossing the frontier from Zimbabwe,” attests Aidan Hartley, also of the Times, “and what struck me was how similar the landscapes were after redistribution had taken place. Once productive maize fields now grow only weeds. Citrus orchards are dying, their valuable fruit rotting on the branches. Machinery lies about rusting. Irrigation pipes have been looted and farm sheds are derelict and stripped of roofing. Windbreak trees have been hacked down and roads are potholed.”

Dr. du Toit has traversed the “beloved country” from the Limpopo to the Cape, from Natal to the North West to document the transfer and consequent trashing of the country’s commercial farms.

Without exception, splendid enterprises that fed the country many times over have been reduced to “subsistence operations with a few mangy cattle and the odd mealiepatch.” (Mealie is Afrikaans for “maize,” deriving, apparently, from the Portuguese word milho.)

In even the best-case scenario, farms belonging to the whites who feed the country and produce surpluses are being handed over to subsistence farmers who can barely feed themselves.

Now, it’s about to get worse—unless a super hero comes to the rescue. President Cyril Ramaphosa’s government is denying it, but the South African press reports that “the first two farms have been targeted for unilateral seizure.”

If anyone can make the thuggish African National Congress and its leader, Ramaphosa, reconsider their plot to simply steal privately owned land from whites and gift it to the clamoring black citizens of South Africa—it’s President Donald Trump.

Another super hero, Fox News broadcaster Tucker Carlson, has served as the catalyst. Tucker got the American government, in the person of Donald Trump, to respond to indisputable crimes against humanity underway for decades against rural, white South Africans.

I have asked Secretary of State @SecPompeo to closely study the South Africa land and farm seizures and expropriations and the large scale killing of farmers. “South African Government is now seizing land from white farmers.” @TuckerCarlson @FoxNews

— Donald J. Trump (@realDonaldTrump) August 23, 2018

President Trump’s resolve to sic Secretary of State Mike Pompeo on the case is possibly the first impassioned, official, American reaction to what a genocide expert has been warning about.

South African “whites and Boers” Dr. Gregory H. Stanton has placed in these stages of genocide: classification (number 1), symbolization (2), polarization (number 6 in 10).

Classification of whites as The Other has occurred. And attendant symbols of this hatred have been developed and are ingrained in the culture. To wit, in the new, highly polarized South Africa, there’s a renewed appreciation for the old slogan, “Kill the Boer, kill the farmer,” chanted at political rallies and funerals.

via RSS https://ift.tt/2LuV8Pc Tyler Durden

Following a sharp increase in Russian naval activity in the arctic and North Atlantic, the Trump administration has reactivated Navy’s 2nd Fleet to deal with “bad actors on the world’s stage,” according to Vice Adm. Andrew “Woody” Lewis, who took command of the reestablished forces. 

In a Friday ceremony aboard the aircraft carrier George H.W. Bush, Lewis warned of foreign adversaries who intend to undermine American dominance, referring to (but not naming) Russia – which has vast military assets in the Arctic Circle, a region estimated to contain 15% of the world’s remaining oil and up to 30% of natural gas deposits. 

“There are some bad actors on the world’s stage,” Lewis told the crowd. “We call them competitors in our strategic documents. They intend to undermine and rewrite the order that America established at the end of world war II and threaten the very birthright freedoms that we hold sacred.” –Navy Times

“Second Fleet has a storied history and we’ll honor that legacy,” Lewis told those in attendance. “However, we will not simply pick up where we left off. We are going to aggressively and quickly rebuild this command into an operational warfighting organization. We will challenge assumptions, recognize, our own vices and learn and adapt from our own failures in order to innovate and build a fleet that’s ready to fight.”

The 2nd Fleet’s boundaries will extend “well past the old submarine stomping grounds of the Cold War into waters north of Scandinavia and the Arctic Circle,” near the submarine headquarters of Russia’s Northern Fleet, according to John Richardson, Chief of Naval Operations. 

“A new 2nd Fleet increases our strategic flexibility to respond — from the Eastern Seaboard to the Barents Sea,” said Richardson. “Second Fleet will approach the North Atlantic as one continuous operational space, and conduct expeditionary fleet operations where and when needed.”

“The days of competition at sea and challenges to our maritime security have returned,” said US Fleet Forces Commander Adm. Chris Grady. “We, as a nation, have not had to confront such a competition since the Cold War ended nearly three decades ago,” he added. 

Russia’s arctic forces

The Kremlin, meanwhile, has been increasing their presence in the Arctic region over the last several years – deploying submarines and other assets on a permanent basis. “In the future, we plan to further increase our presence in the Arctic region [as] a matter of national state security,” Russian Rear Admiral Viktor Kochemazov told Russian newspaper Krasnaya Zvezda in 2017. Kochemazov is the head of the combat training department of the Russian Navy. 

“Along with the modernization and construction of the new submarines, work is underway to create sophisticated submarine-based weapon systems,” Kochemazov said, referring to the Kalibr and Oniks missile systems capable of destroying both sea and ground targets.

“Additionally, new samples of underwater naval weapons are being developed,” he said, adding that new diesel-electric submarines and nuclear powered submarine cruisers have been equipped with torpedoes with improved tactical and technical characteristics since 2016. –Sputnik

In 2015, Business Insider reported on Russia’s increasing northern presence, warning that the Kremlin is “positioning itself to become the dominant player in a resource-rich and strategically positioned region.” 

In order to capitalize on the oil and gas under the Arctic seabed and exploit new shipping routes as ice cover recedes, Moscow is undertaking a major military upgrade of its northern coast and outlying archipelagos. Its new bases — which include search-and-rescue stations, ports and airstrips, and military headquarters — are meant to project Russian hard power into an emerging strategic frontier.

…

To support the new military bases, many of which are old Soviet bases that are being reopened or modernized, the Kremlin is upgrading its Northern Fleet.

The fleet will undergo a substantial upgrade starting in 2015 that will last through the end of the decade. –Business Insider

Moscow has plans to open ten Arctic search-and-rescue stations, 16 deep-water ports, 13 airfields and 10 air defense radar stations across the Arctic. Once construction is completed, it will “permit the use of larger and more modern bombers,” according to NYU Russia expert Mark Galeotti. 

“By 2025, the Arctic waters are to be patrolled by a squadron of next-generation stealthy PAK DA bombers.” 

In other words, the Trump administration is simply keeping up with the Joneskis after Obama balked in the face of rapid Russian expansion. 

via RSS https://ift.tt/2MT1v3p Tyler Durden

John McCain requested that former Presidents Barack Obama and George W. Bush deliver eulogies at his funeral, according to CBS News. McCain died at home on Saturday of an aggressive form of brain cancer at the age of 81, after his family announced on Friday that the Senator had chosen to discontinue medical treatment. 

McCain will lie in state at the Capital Rotunda and receive a full dress funeral service at the Washington National Cathedral, and will also lie in state at the Arizona Capital, according to the New York Times. He will be buried in Annapolis, Md. according to a Republican official involved in the planning. 

More than 30 people have been honored by lying in state in the Capitol Rotunda, a gesture reserved for the country’s “most eminent citizens,” since the practice began in 1852 after the death of Henry Clay, the former House speaker and senator from Kentucky. Mr. McCain would be the 13th former senator to be granted the honor, according to the Architect of the Capitol. –NYT

Obama, who defeated McCain in the 2008 presidential election, issued a statement after McCain’s death which reads in part: “Few of us have been tested the way John once was, or required to show the kind of courage that he did …. But all of us can aspire to the courage to put the greater good above our own.” 

JUST IN: Barack and Michelle Obama on John McCain: “Few of us have been tested the way John once was, or required to show the kind of courage that he did. But all of us can aspire to the courage to put the greater good above our own.” https://t.co/Fe3eogZ2AD pic.twitter.com/AAiNnKCo4h

— ABC News (@ABC) August 26, 2018

George W. Bush, to whom McCain lost the 2000 GOP nomination, said “John McCain was a man of deep conviction and a patriot of the highest order.”

George W. Bush on John McCain: “Some lives are so vivid, it is difficult to imagine them ended. Some voices are so vibrant, it is hard to think of them stilled. John McCain was a man of deep conviction and a patriot of the highest order.” https://t.co/Spx9rmHGoy pic.twitter.com/7NPGdKYtAM

— ABC News (@ABC) August 26, 2018

Under initial plans for McCain’s funeral, Vice President Mike Pence will attend, as the deceased Arizona Senator insisted that President Trump not appear, according to a May report from the Times. McCain, a harsh critic of President Trump who hand-delivered the controversial “Steele dossier” to FBI Director James Comey, returned to the Senate in July 2017 after emergency brain surgery to become the deciding vote that killed the GOP’s repeal of the Affordable Care Act. 

A controversial Vietnam war veteran who became a fierce advocate for US foreign military intervention and regime change, McCain has been lionized by the establishment on both sides of the aisle – in no small part due to his vehement opposition to President Trump.

Senator Chuck Schumer of New York, the top Senate Democrat, said on Saturday that he would introduce a resolution to rename the Russell Senate Office Building — currently named for Senator Richard Russell of Georgia, who often opposed civil rights legislation — in honor of Mr. McCain. –NYT

The Senate, the United States, and the world are lesser places without John McCain.

Nothing will overcome the loss of Senator McCain, but so that generations remember him I will be introducing a resolution to rename the Russell building after him.

— Chuck Schumer (@SenSchumer) August 26, 2018

In July, the Navy expanded the name of guided missile destroyer USS John S. McCain, named after his father, to include the then-dying Senator.

A lifelong war hawk and neoconservative (famously singing “bomb Iran” to warm up a crowd), McCain strongly advocated for military action in several countries, including; Iraq, Syria, Kosovo, North Korea, Afghanistan and Iran – as well as escalations with Russia. McCain supported the Al-Qaeda-aligned Free Syrian Army, calling for arming them with heavy weapons in order to overthrow Syrian President Bashar al-Assad. 

McCain was a strong supporter of Israel, backing President Trump’s decision to move the US embassy from Tel Aviv to Jerusalem – writing on his website after the announcement “I have long believed that Jerusalem is the true capital of Israel.” The Senator also backed Israel’s multiple offensives against Palestinians – including the 2014 bombardment of Gaza. 

While McCain was one of the most hawkish GOP during the 2003 Iraq War, he wrote in his 2018 memoir The Restless Wave that “The principal reason for invading Iraq, that Saddam had WMD, was wrong.”

“The war, with its cost in lives and treasure and security, can’t be judged as anything other than a mistake, a very serious one, and I have to accept my share of the blame for it.“

via RSS https://ift.tt/2weP2O2 Tyler Durden

Authored by Diana Johnstone via The Ron Paul Institute for Peace & Prosperity,

The Cold War between the United States and the Soviet Union was ostensibly a conflict between two ideologies, two socio-economic systems.

All that seems to be over. The day of a new socialism may dawn unexpectedly, but today capitalism rules the world. Now the United States and Russia are engaged in a no-holds-barred fight between capitalists. At first glance, it may seem to be a classic clash between rival capitalists. And yet, once again an ideological conflict is emerging, one which divides capitalists themselves, even in Russia and in the United States itself. It is the conflict between globalists and sovereignists, between a unipolar and a multipolar world. The conflict will not be confined to the two main nuclear powers.

The defeat of communism was brutally announced in a certain “capitalist manifesto” dating from the early 1990s that proclaimed: “Our guiding light is Profit, acquired in a strictly legal way. Our Lord is His Majesty, Money, for it is only He who can lead us to wealth as the norm in life.”

The authors of this bold tract were Mikhail Khodorkovsky, who went on to become the richest man in Russia, before spending ten years in a Russian jail, and his business partner at the time, Leonid Nevzlin, who has since retired comfortably to Israel.

Loans For Shares

Those were the good old days in the 1990s when the Clinton administration was propping up Yeltsin as he let Russia be ripped off by the joint efforts of such ambitious well-placed Russians and their Western sponsors, notably using the “loans for shares” trick.

In a 2012 Vanity Fair article on her hero, Khodorkovsky, the vehemently anti-Putin journalist Masha Gessen frankly summed up how this worked:

The new oligarchs—a dozen men who had begun to exercise the power that money brought—concocted a scheme. They would lend the government money, which it badly needed, and in return the government would put up as collateral blocks of stock amounting to a controlling interest in the major state-owned companies. When the government defaulted, as both the oligarchs and the government knew it would, the oligarchs would take them over. By this maneuver the Yeltsin administration privatized oil, gas, minerals, and other enterprises without parliamentary approval.

This worked so well that from his position in the Communist youth organization, Khodorkovsky used his connections to get control of Russia’s petroleum company Yukos and become the richest oligarch in Russia, worth some $15 billion, of which he still controls a chunk despite his years in jail (2003-2013). His arrest made him a hero of democracy in the United States, where he had many friends, especially those business partners who were helping him sell pieces of Yukos to Chevron and Exxon. Khodorkovsky, a charming and generous young man, easily convinced his American partners that he was Russia’s number one champion of democracy and the rule of law, especially of those laws which allow domestic capital to flee to foreign banks and foreign capital to take control of Russian resources.

Vladimir Putin didn’t see it that way. Without restoring socialism, he dispossessed Khodorkovsky of Yukos and essentially transformed the oil and gas industry from the “open society” model tolerated by Yeltsin to a national capitalist industry. Khodorkovsky and his partner Platon Lebedev were accused of having stolen all the oil that Yukos had produced in the years 1998 to 2003, tried, convicted and sentenced to 14 years of prison each. This shift ruined US plans, already underway, to “balkanize” Russia between its many provinces, thereby allowing Western capital to pursue its capture of the Russian economy.

The dispossession of Khodorkovsky was certainly a major milestone in the conflict between President Putin and Washington. On November 18, 2005, the Senate unanimously adopted resolution 322 introduced by Joe Biden denouncing the treatment of the Khodorkovsky and Lebedev as politically motivated.

Who Influences Whom?

Now let’s take a look at the history of Russian influence in the United States. It is obvious that a Russian who can get the Senate to adopt a resolution in his favor has a certain influence. But when the “deep state” growls about Russian influence, it isn’t talking about Khodorkovsky. It’s talking about a joking response Trump made to a reporter’s snide question during the presidential campaign. In a variation of the classic “when did you stop beating your wife?” the reporter asked if he would call on Russian President Vladimir Putin to “stay out” of the election.

Since a stupid question does not deserve a serious answer, Trump said he had “nothing to do with Putin” before adding, “Russia, if you’re listening, I hope you’re able to find the 30,000 e-mails that are missing. I think you will probably be rewarded mightily by our press.”

Aha! Went the Trump haters. This proves it! Irony is almost as unwelcome in American politics as honesty.

When President Trump revoked his security clearance earlier this month, former CIA chef John Brennan got his chance to spew out his hatred in the complacent pages of the New York Times.

Someone supposed to be smart enough to head an intelligence agency actually took Trump’s joking invitation as a genuine request. “By issuing such a statement,” Brennan wrote, “Mr. Trump was not only encouraging a foreign nation to collect intelligence against a United States citizen, but also openly authorizing his followers to work with our primary global adversary against his political opponent.”

The Russians, Brennan declared, “troll political, business, and cultural waters in search of gullible or unprincipled individuals who become pliant in the hands of their Russian puppet masters.”

Which Russians do that? And who are those “individuals”?

‘The Fixer in Chief’

To understand the way Washington works, nothing is more instructive than to examine the career of lawyer Jonathan M. Winer, who proudly repeats that in early 2017, the head of the Carnegie Endowment Bill Burns introduced him as “the Fixer in Chief”. Winer has long been unknown to the general public, but this may soon change.

Let’s see what the fixer has fixed.

Under the presidency of fellow Yalie Bill Clinton, Winer served as the State Department’s first Deputy Assistant Secretary for International Law Enforcement, from 1994-1999. One may question the selectivity of Bill Clinton’s concern for international law enforcement, which certainly did not cover violating international law by bombing defenseless countries. In any case, in 1999, Winer was awarded for “virtually unprecedented achievements”. Later we shall examine one of those important achievements.

At the end of the Clinton administration, from 2008 to 2013, the Fixer in Chief worked as high up consultant at one of the world’s most powerful PR and lobbying firms, APCO Worldwide. This is how the Washington revolving door functions: after a few years in government finding out how things work, one then goes into highly paid “consultancy” to sell this insider information and influential contacts to private clients.

APCO got off to a big start some thirty years ago lobbying  for Philip Morris and the tobacco industry in general. 

In 2002, APCO launched something called the “Friends of Science” to promote skepticism concerning the harmful effects of smoking. In 1993, the campaign described its goals and objectives “encouraging the public to question – from the grassroots up – the validity of scientific studies.”

While Winer was at APCO, one of its major activities was hyping the Clinton Global Initiative, an international networking platform promoting the Clinton Foundation. APCO president and CEO Margery Kraus explained that the consultancy was there to “help other CGI members garner interest for the causes they are addressing, demonstrate their success and highlight the wide-ranging achievements of CGI as a whole.” Considering that only five percent of Clinton Foundation turnover went to donations, they needed all the PR they could get.

Significantly, donations to the Clinton Global Initiative have dried up since Hillary lost the presidential election. According to the Observer: “Foreign governments began pulling out of annual donations, signaling the organization’s clout was predicated on donor access to the Clintons, rather than its philanthropic work.”

This helps explain Hillary Clinton’s panic when she lost in 2016. How in the world can she ever reward her multi-million-dollar donors with the favors they expected?

As well as the tobacco industry and the Clinton Foundation, APCO also works for Khodorkovsky. To be precise, according to public listings, the fourth biggest of APCO’s many clients is the Corbiere Trust, owned by Khodorkovsky and registered in Guernsey. The trust tends and distributes some of the billions that the oligarch got out of Russia before he was jailed. Corbiere money was spent to lobby both for Resolution 322 (supporting Khodorkovky after his arrest in Russia) and for the Magnitsky Act (more later). Margery Kraus, APCO’s president and CEO, is a member of Mikhail Khodorkovsky’s son Pavel’s Institute of Modern Russia, devoted to “promoting democratic values” – in other words, to building political opposition to Vladimir Putin.

In 2009 Jonathan Winer went back to the State Department where he was given a distinguished service award for having somehow rescued thousands of stranded members of the Muhahedin-e Khalq from their bases in Iraq they were trying to overthrow the Iranian government. The MeK, once officially recognized as a terrorist organization by the State Department, has become a pet instrument in US and Israeli regime change operations directed at Iran.

However, it was Winer’s extracurricular activities at State that finally brought him into the public spotlight early this year – or rather, the spotlight of the House Intelligence Committee, whose chairman Devin Nunes (R-Cal) named him as one of a network promoting the notorious “Steele Dossier” which accused Trump of illicit financial dealing and compromising sexual activities in Russia. By Winer’s own account, he had been friends with former British intelligence agent Christopher Steele since his days at APCO. Back at State, he regularly channeled Steele reports, ostensibly drawn from contacts with friendly Russian intelligence agents, to Victoria Nuland, in charge of Russian affairs, and top Russian experts. These included the infamous “Steele dossier”. In September 2016, Winer’s old friend Sidney Blumenthal – a particularly close advisor to Hillary Clinton – gave him notes written by a more mysterious Clinton insider named Cody Shearer, repeating the salacious attacks.

All this dirt was spread through government agencies and mainstream media before being revealed publicly just before Trump’s inauguration, used to stimulate the “Russiagate” investigation by Robert Mueller. The dossier has been discredited but the investigation goes on and on.

So, it is all right to take seriously information allegedly obtained from “Russian agents” and spread it around, so long as it can damage Trump. As with so much else in Washington, double standards are the rule.

Jonathan Winer and the Magnitsky Act

Jonathan Winer played a major role in Congressional adoption of the “Sergei Magnitsky Rule of Law Accountability Act of 2012” (the Magnitsky Act), a measure that effectively ended post-Cold War hopes for normal relations between Washington and Moscow. This act was based on a highly contentious version of the November 16, 2009 death in prison of accountant Sergei Leonidovich Magnitsky, as told to Congress by hedge fund manager Bill Browder (grandson of Earl Browder, head of the Communist Party USA 1934-1945). According to Browder, Magnitsky was a lawyer beaten to death in prison as a result of his crusade for human rights. 

However, as convincingly established by dissident Russian film-maker Andrei Nekrasov’s (banned) investigative documentary, the unfortunate Magnitsky was neither a human rights crusader, nor a lawyer, nor beaten to death. He was an accountant jailed for his role in Browder’s business dealings, who died of natural causes as a result of inadequate medical treatment. The case was hyped up as a major human rights drama by Browder in order to discredit Russian charges against himself.

In any case, by adopting a law punishing Magnitsky’s alleged persecutors, the US Congress acted as a supreme court judging internal Russian legal issues.

The Magnitsky Act also condemns legal prosecution of Mikhail Khodorkovsky. Browder, on a much smaller scale, also made a fortune ripping off Russians during the Yeltsin years, and later got into trouble with Russian tax collectors. Since Browder had given up his US citizenship in order to avoid paying US taxes, he had reason to fear Russian efforts to extradite him for tax evasion and other financial misdeeds.

It was Jonathan Winer who found a solution to Browder’s predicament.

As Winer tells it:

When Browder consulted me, […] I suggested creating a new law to impose economic and travel sanctions on human-rights violators involved in grand corruption. Browder decided this could secure a measure of justice for Magnitsky. He initiated a campaign that led to the enactment of the Magnitsky Act. Soon other countries enacted their own Magnitsky Acts, including Canada, Estonia, Latvia, Lithuania, and most recently, the United Kingdom.

Russian authorities are still trying to pursue their case against Browder. In his press conference following the Helsinki meeting with Trump, Vladimir Putin suggested allowing US authorities to question the Russians named in the Mueller indictment in exchange for allowing Russian officials to question individuals involved in the Browder case, including Winer and former US ambassador to Moscow Michael McFaul. Putin observed that such an exchange was possible under the Mutual Legal Assistance Treaty signed between the two countries in 1999, back in the Yeltsin days when America was posing as Russia’s best friend.

But the naïve Russians did not measure the craftiness of American lawyers.

As Winer wrote:

“Under that treaty, Russia’s procurator general can ask the US attorney general … to arrange for Americans to be ordered to testify to assist in a criminal case. But there is a fundamental exception: The attorney general can provide no such assistance in a politically motivated case.” (My emphasis.)

“I know this”, he wrote, “because I was among those who helped put it there. Back in 1999, when we were negotiating the agreement with Russia, I was the senior State Department official managing US-Russia law-enforcement relations.”

So, the Fixer in Chief could have said to the worried Browder, “No problem. All that we need to do is make your case a politically motivated case. Then they can’t touch you.”

Winer’s clever treaty is a perfect Catch-22. The treaty doesn’t apply to a case if it is politically motivated, and if it is Russian, it must be politically motivated.

In a July 15, 2016, complaint to the Justice Department, Browder’s Heritage Capital Management accused both American and Russian opponents of the Magnitsky Act of violating the Foreign Agents Registration Act (FARA; adopted in 19938 with Nazis in mind). Among the “lobbyists” cited was the late Ron Dellums (falsely identified in the complaint as a “former Republican congressman”).

The Heritage Capital Management brief declared that: “While lawyers representing foreign principals are exempt from filing under FARA, this is only true if the attorney does not try to influence policy at the behest of his client.” However, by disseminating anti-Magnitsky material to Congress, any Russian lawyer was “clearly trying to influence policy” was therefore in violation of FARA filing requirements.”

Catch-22 all over again.

Needless to say, Khodorkovsky’s Corbiere Trust lobbied heavily to get Congress to pass the Magnitsky Act, which also repeated its defense of Khodorkovsky himself. This type of “Russian interference intended to influence policy” is not even noticed, while US authorities scour cyberspace for evidence of trolls.

Conclusion

The basic ideological conflict here is between Unipolar America and Multipolar Russia. Russia’s position, as Vladimir Putin made clear in his historic speech at the 2007 Munich security conference, is to allow countries to enjoy national sovereignty and develop in their own way. The current Russian government is against interference in other countries’ politics on principle. It would naturally prefer an American government willing to allow this.

The United States, in contrast, is in favor of interference in other countries on principle: because it seeks a Unipolar world, with a single “democratic” system, and considers itself the final authority as to which regime a country should have and how it should run its affairs.

So, if Russians were trying to interfere in US domestic politics, they would not be trying to change the US system but to prevent it from trying to change their own. Russian leaders clearly are sufficiently cultivated to realize that historic processes do not depend on some childish trick played on somebody’s computer.

US policy-makers practice interference every day. And they are perfectly willing to allow Russians to interfere in American politics – so long as those Russians are “unipolar” like themselves, like Khodorkovsky, who aspire to precisely the same unipolar world sought by the State Department and George Soros. Indeed, the American empire depends on such interference from Iraqis, Libyans, Iranians, Russians, Cubans – all those who come to Washington to try to get US power to settle old scores or overthrow the government in the country they came from. All those are perfectly welcome to lobby for a world ruled by America. 

Russian interference in American politics is totally welcome so long as it helps turn public opinion against “multipolar” Putin, glorifies American democracy, serves US interests including the military-industrial complex, helps break down national borders (except those of the United States and Israel) and puts money in appropriate pockets in the halls of Congress.

via RSS https://ift.tt/2MOUosS Tyler Durden

An unsecured database containing the personal information of 14.8 million Texas voters was discovered by a New Zealand-based data breach hunter who goes by the pseudonym Flash Gordon, reports TechCrunch. 

It’s not clear who owned the server where the exposed file was found, but an analysis of the data reveals that it was likely originally compiled by Data Trust, a Republican-focused data analytics firm created by the GOP to provide campaigns with voter data.

Chris Vickery, director of cyber risk research at security firm UpGuard, analyzed a portion of the data. (It was Vickery who found a larger trove of 198 million voter records last year exposed by a similar data firm Deep Root Analytics, which sourced much of its data from Data Trust.) –TC

The nearly 16 gigabyte file contained “dozens of fields, including personal information like a voter’s name, address, gender, race and several years’ worth of voting history,” including presidential elections and primaries. 

While some of the information in the Texas voter database is already obtainable ofr a fee according to the Texas Tribune, a person’s social security number, political affiliations and party memberships are not. 

data-driven political firms like Data Trust use the data for political purposes, specializing in supplementing those voter profiles with information that might help a campaign to flip a person who might not vote for a Republican candidate at the ballot box.

That’s where this file fills in the gaps with dozens of other fields, which can be used by campaigns to position their political messaging. –TC

The unsecured database goes far beyond basic voter information in order to help campaigns which might purchase the data to better message to constituents. For example, a voter’s views on immigration, abortion rights, firearms and government spending were included in some of the fields. 

Other data was more relevant to the 2016 US general election – as the data “predictively scored individuals on if they “trust” or have “not trust” for then-Democratic candidate Hillary Clinton.” 

It is unknown when the data was compiled, however an analysis suggests it was done prior to the 2016 presidential election. 

via RSS https://ift.tt/2P21uYk Tyler Durden

In an extraordinary 11-page written testament, one which the NYT’s Ross Douthat called a “truly historic bombshell”, a former papal nunco, or Vatican ambassador, to the US, it does what many have called for, and offers testimony concerning “who in the hierarchy knew what, and when,” about the crimes of Cardinal McCarrick. The testimony implicates a host of high-ranking churchmen. And the pope.

Annnnnd in the evening’s *other* news, this document is quite possibly a truly historic bombshell in the life of the Roman Catholic Church. https://t.co/cxY3xNi76g

— Ross Douthat (@DouthatNYT) August 26, 2018

Vigano said that he told Pope Francis in 2013 about allegations of sexual abuse against a prominent priest — and that Francis took no action. Now, the former official, Archbishop Carlo Maria Vigano, 77, is calling for Francis to step down.

Vigano made the allegations in a lengthy statement that concludes with a call for Francis’ resignation:

“In this extremely dramatic moment for the universal Church, he must acknowledge his mistakes and, in keeping with the proclaimed principle of zero tolerance, Pope Francis must be the first to set a good example to Cardinals and Bishops who covered up McCarrick’s abuses and resign along with all of them.”

The former Vatican official, who served as apostolic nuncio in Washington D.C. from 2011 to 2016, said that in the late 2000s, Benedict had “imposed on Cardinal McCarrick sanctions similar to those now imposed on him by Pope Francis” and that Viganò personally told Pope Francis about those sanctions in 2013.

Archbishop Viganò then said in his written statement that Pope Francis “continued to cover” for McCarrick and not only did he “not take into account the sanctions that Pope Benedict had imposed on him” but also made McCarrick “his trusted counselor.”  Vigano said that the former archbishop of Washington advised the Pope to appoint a number of bishops in the United States, including Cardinals Blase Cupich of Chicago and Joseph Tobin of Newark.

CBS News spoke by telephone to Vigano, who confirmed he wrote the statement and said he was speaking out now “to combat the grave situation in the church, to protect the church and also to stop future abuse.” He told CBS News producer Anna Matranga that he had no agenda and was stating facts.

Vigano, who retired in 2016 at age 75, described an exchange with Francis on June 23, 2013, shortly after he became pope, about Cardinal Theodore McCarrick, the former archbishop of Washington, D.C., who resigned last month over claims he sexually abused seminary students and an altar boy.

Vigano writes that he told Francis about the allegations: “Holy Father, I don’t know if you know Cardinal McCarrick, but if you ask the Congregation for Bishops there is a dossier this thick about him. He corrupted generations of seminarians and priests and Pope Benedict ordered him to withdraw to a life of prayer and penance.”

Vigano writes the pope did not respond to the statement, and McCarrick continued in his role as a public figure for the church.

“Pope Francis has repeatedly asked for total transparency in the Church. He must honestly state when he first learned about the crimes committed by McCarrick, who abused his authority with seminarians and priests. In any case, the Pope learned about it from me on June 23, 2013 and continued to cover him.”

Pope Francis addressed the sex abuse scandal on Saturday in comments made in Dublin. “The failure of ecclesiastical authorities — bishops, religious superiors, priests and others — to adequately address these repugnant crimes has rightly given rise to outrage, and remains a source of pain and shame for the Catholic community,” he said. “I myself share these sentiments.”

Pope Francis accepted McCarrick’s resignation on July 28. McCarrick has maintained his innocence, but this month, a Pennsylvania grand jury issued a report that said more than 300 priests abused more than 1,000 children, and likely thousands more, over seven decades.

Father Boniface Ramsey of New York told CBS News this month that he repeatedly complained about McCarrick and heard about his disturbing behavior as early as 1986.

Nearly 100 of the accused clergy are from the Pittsburgh diocese alone, where Donald Wuerl, the current cardinal of Washington, D.C., was the bishop for 18 years.

In his statement, Vigano wrote that Wuerl also knew about McCarrick. “His recent statements that he knew nothing about it … are absolutely laughable. The cardinal lies shamelessly,” Vigano wrote.  

In an interview with CBS News correspondent Nikki Battiste before the grand jury report, Wuerl said that he was quick to deal with allegations and that he was not aware of any rumors about McCarrick.

“If there were allegations, we dealt with them immediately,” he said. “All the time that [McCarrick] was here and certainly all the time that I’ve been here, there was never any news. If I could tell you no one ever came to me and said this person did this to me. No one. No one. And remember, we were just talking about Pittsburgh. I was in Pittsburgh…we weren’t following the rumors of different parts of the country.”

Wuerl also suggested to CBS News that McCarrick had paid a price for his actions. “He has resigned and his resignation has been accepted. And he’s been told to stay in seclusion…that’s a pretty substantial penalty to be paying.”

Vigano’s statement calls on the church to take action.

“To restore the beauty of holiness to the face of the Bride of Christ — so tremendously disfigured by so many abominable crimes, if we truly want to free the Church from the fetid swamp into which she has fallen, we must have the courage to tear down the culture of secrecy and publicly confess the truths that we have kept hidden.”

As Douthat concludes, “This is either an extraordinary and vicious slander or an act of revelation that should be the undoing of just about every figure mentioned in its pages. It has an apocalyptic feel either way.”

His full testimony is below (pdf link)

Testimonyxcmvx Xenglish Corrected Final Version by Zerohedge on Scribd

via RSS https://ift.tt/2LrGcBx Tyler Durden

The war drums are starting to beat again.

The North Korean media lashed out at the “double-dealing” US for “hatching a criminal plot” against Pyongyang, days after Donald Trump told Secretary of State Mike Pompe to cancel his upcoming trip to North Korea. In an editorial, Rodong Sinmun, the official newspaper of the North’s ruling party, said that US units based in Okinawa, Japan were staging drills aimed at “infiltration into Pyongyang.” The paper was citing an unnamed South Korean media outlet.

The US “is busy staging secret drills involving man-killing special units while having a dialogue with a smile on its face,” the paper wrote, adding that Pyongyang cannot help but note “the double-dealing attitudes” of Washington.

Resorting to language last week during the peak of the tensions between the US and North Korea, the newspaper said that “such acts prove that the US is hatching a criminal plot to unleash a war against the DPRK [North Korea] and commit a crime which deserves merciless divine punishment.”

The editorial, which did not mention the Pompeo visit, urged Washington to give up the “pointless military gamble” and implement the Singapore agreement, in which the leaders pledged to work towards a complete denuclearisation of the Korean Peninsula.

It wasn’t clear which drills the North was referring to; Okinawa is host to nearly half of the 47,000 US troops based in Japan. The troops repeatedly hold military exercises in the area.

A spokesman at the US Embassy in Seoul told Reuters that he had no information about the military exercise mentioned in the paper.

Relations between the two states have experienced ups and downs in the past year. One year ago, “dotard” Trump and the “short and fat” Kim Jong-un engaged in fierce verbal exchanges, threatening each other with “fire and fury” and “hammers of war.” Later, however, relations took a U-turn, with Trump and Kim holding a summit in Singapore and the North agreeing to dismantle its nuclear testing site. After the meeting, Trump even claimed that there is no longer a nuclear threat from Pyongyang.

Relations and negotiations, however, have been all but deadlocked since U.S. President Donald Trump’s summit with North Korean leader Kim Jong Un in Singapore in June.

Since then, Pyongyang has called for a declaration of peace as part of security guarantees designed to encourage it to abandon its nuclear weapons and ballistic missiles, while the Trump administration said a peace deal and other concessions will only come after more progress on denuclearisation. In part to reassure North Korea, Trump canceled or delayed joint military drills with South Korea, but smaller exercises continue.

Pompeo has pressed for tangible steps toward North Korea’s abandonment of its nuclear arsenal while Pyongyang is demanding that Washington first make concessions of its own.

This culminated last Friday, when Trump tweeted that “sufficient progress” towards denuclearization of the Korean Peninsula was not being made, and he blamed China for hindering the progress, due to the ongoing trade spat between Washington and Beijing. “I have asked Secretary of State Mike Pompeo not to go to North Korea, at this time,” he revealed.

…Additionally, because of our much tougher Trading stance with China, I do not believe they are helping with the process of denuclearization as they once were (despite the UN Sanctions which are in place)…

— Donald J. Trump (@realDonaldTrump) August 24, 2018

Even so, Trump sent his “warmest regards and respect” to Kim, and said that Pompeo “looks forward to going to North Korea in the near future,” once the current US-China trade dispute is resolved Meanwhile, China expressed “serious concern” about Trump’s comments, which it called “irresponsible.”

It is unclear if North Korea will now telegraph that it is resuming its nuclear program development, although if prior verbal spat are any indication, this may be the most likely next step.

via RSS https://ift.tt/2wqXn0w Tyler Durden

Authored by Alasdair Macleod via The Mises Institute,

Last week’s collapse of the Turkish lira has dominated the headlines, and it is widely reported that this and other emerging market currencies are in trouble because of the withdrawal of dollar liquidity. There are huge quantities of footloose dollars betting against these weak currencies, as well as commodities and gold, on the basis the long-expected squeeze on dollar liquidity is finally upon us.

Doubtless Triffin’s dilemma is dominating these speculators’ thoughts, telling them demand for the dollar as the reserve currency is infinite. This article points out that foreign financial entities as a whole already possess most of the excess liquidity created by monetary expansion of the dollar since the Lehman crisis. Admittedly, ownership of dollars is unlikely to be evenly distributed across correspondent banks representing all foreign nations. But this is no reason to say dollars are not under-owned by foreign users, and we must not forget dollars are also available in the foreign exchanges, as always, for credible buyers. Nor must we forget that the reason for the enormous quantity of currency derivatives ($75 trillion in US dollars alone) is that future demand for dollars is already significantly hedged.

No, the reason certain EM currencies are losing purchasing power is the fault of individual governments and their central banks, who do not seem to realize that their unbacked fiat currencies are valued purely on trust, both that of their own people and on the foreign exchanges. And as we should know, trust is not something to be toyed with.

Furthermore, comments that China is in trouble from trade tariffs and being undermined by a strong dollar are wide of the mark. Geopolitics dominates here. America’s occasional successes in attacking the rouble and yuan are no more that transient pyrrhic victories. She is not winning the currency war against China and Russia. China is not being deflected from her strategic goals to become, in partnership with Russia, the Eurasian super-power, beyond the reach of American hegemony.

This article looks beyond the short-term rush into the dollar, which is driven predominantly by hot money, to gain a more balanced perspective on the dollar’s future.

Collapsing Currencies Are Nothing New

Collapsing currencies are becoming widely discussed. Until recently, it was Venezuela, once supported by luminaries such as Professor Stiglitz, that hogged the headlines on collapsing currencies. That has now changed because President Trump has started to throw his weight around. The Iranian rial, the Turkish lira and the Russian rouble have all suffered, mainly due to American currency and trade sanctions, triggering a loss of international confidence in their currencies. Even the Chinese yuan, surely that most managed of currencies, is down 9% from its peak in April.

With some 180 currencies backed by nothing other than the faith and credit of their issuers, there will always be winners and losers, with more losers than winners when measured against a strengthening dollar. Doubtless, monetary policy has much to do with it, with the Fed leading the way on tightening, and many other central banks not even reluctantly following.

To illustrate how much the monetary environment has changed in recent months, it is worth looking at the fiat money quantity, which is essentially the sum of true money in circulation (mainly cash, checking accounts and deposits) plus bank reserves (commercial bank deposits) on the Fed’s balance sheet.

The chart above shows that by last June, FMQ had stated to contract, as the fall in reserves on deposit at the Fed began to bite and the growth in bank deposits has stalled. The chart also shows that FMQ is still $5.8 trillion above its pre-crisis growth path. Despite this, the small rise in the Fed Funds Rate, coupled with the contraction of bank reserves is driving commentators to worry about a developing global liquidity crisis.

The contraction of bank reserves on the Fed’s balance sheet involves money not in public circulation, though, so the question arises as to whether their contraction restricts bank lending. The answer must be an emphatic no, because when reserves totaled less than $10bn through most of 2007-08, there was no problem expanding bank credit. True, there have been rule changes aimed at reducing the maximum level of bank balance sheet gearing, but at just short of two trillion dollars of bank reserves, we are nowhere near bumping into that headroom.

Existing Foreign Ownership of Dollars Cannot be Ignored

The commentary that is evolving is of global dollar shortages, as noted above. Before attributing the collapse of emerging market currencies to the Fed’s monetary policy, we should take the trouble to establish who actually owns the dollar liquidity, at least at the margin. There can be no doubt there is ample liquidity, as shown by the relationship of actual FMQ to where it would be if we hadn’t had the Lehman crisis, illustrated in the chart above. But is it true that foreigners are being starved of dollars?

There are two components which should make an analyst sit up and take notice. First, of that $5.8 trillion gap between current FMQ and its long-run growth path, $1.95 trillion is bank reserves on the Fed’s balance sheet. That is the figure the Fed is trying to “normalize”; in other words, reduce it towards the pre-banking crisis level, which was in the low tens of billions.

The last date we have for foreign ownership of dollar liquidity was 1 July 2017, when bank reserves at the Fed were $2.33 trillion. At that time, foreign-owned cash and near-cash in the US banking system was $4.217 trillion.4 Therefore, the sum of bank reserves and foreign-owned dollar bank deposits totaled $6.55 trillion, and FMQ was $6.33 trillion above its long-run trendline. In other words, besides money not in public circulation by virtue of it being parked at the Fed, the difference between the super-inflated level of FMQ and where it would otherwise be without the 2007/08 crisis is entirely due to dollar liquidity in foreign hands.

Since then, the US balance of payments has deteriorated a further $570bn adding a potential half-trillion dollars to foreign ownership. Therefore, we can still assume that the excess post-Lehman liquidity in the commercial banks is entirely due to foreign ownership. Official figures put in a new light the general assumption that the rash of currency troubles in emerging market currencies is solely due to the Fed’s tightening.

The level of foreign ownership of dollars, is of course, only one factor in prospective currency valuations. US residents’ and corporations’ ownership of foreign assets is another, but their liquid investments in foreign currencies total no more than a few hundred billion dollars equivalent and appears to be mainly hedged through derivatives.5  Additionally, it should be noted that trade imbalances are the most important factor behind the creation of cross-border currency imbalances, strongly disfavoring the US dollar.

The Dollar Problem Is Government, not Business

From our analysis of dollar ownership, it is clear there is no shortage of dollars in foreign hands. These will be held through correspondent banks in the normal way. Furthermore, when it comes to trade settlement, there is no problem accessing them in the foreign exchanges for credible commercial borrowers. The lending decision is in the hands of correspondent banks, not the Wall Street behemoths. The problems facing countries like Turkey are entirely of their governments’ making, their irresponsible borrowing, and have little to do with dollar shortages.

The fact is that modern economic practices, which have jettisoned sound money, have given governments everywhere a carte blanche to indulge in inflationary financing. Pity the ordinary Turk. After decades of near-100% annual inflation, the Central Bank of Turkey knocked six zeros off the lira on 1 January 2005, making one new lira worth $0.74. Today it is only $0.15, having lost nearly half its purchasing power this year alone. It is immaterial to the ordinary Turk that America is playing hardball with Turkey over tariffs. Calls by Erdogan to sell dollars and gold to buy lira cuts no ice with him. He knows his liras are potentially worthless, to be disposed of as quickly as possible.

Indeed, loss of confidence in unbacked currencies is the greatest threat to their credibility, a fact which almost all governments and their central banks are reluctant to accept. Central bankers are all trained in mathematical economics, which allows no room for subjectivity in currency valuation, so when their currency is rejected, they are always surprised.

The failure of all fiat currencies is probably inevitable, eventually. However, the emergence of these problems today prompt memories of the Asian crisis in the late nineties. Commercial operators in these countries had built industrial capacity on borrowed dollars and Japanese yen, at a time when derivative insurance against currency exposure was less developed. Today’s equivalent borrowers around the world are not collectively exposed to currency risks to the same extent. This cannot be said of governments themselves, which almost without exception have increased their borrowing since the last credit crisis, and that is where the problem lies.

Beware the Chinese and the Russians

Two currencies that have suffered on the foreign exchanges are the Chinese yuan and the Russian rouble. In the latter case, Russia is disentangling herself from the dollar and the Western banking system, which for a country that is the largest supplier of global energy seems bound to end up challenging the dollar’s global trading status.

Meanwhile, China’s yuan has fallen nearly 9% against the dollar since mid-April, despite having foreign exchange reserves of over $3 trillion equivalent, mostly held in dollars. China is America’s biggest creditor by far. She could have easily defended her currency, but if she had done so, she would have probably destabilized the dollar.

Imagine, for a moment, if China deliberately sells $200bn from her reserves. She doesn’t have to buy only yuan, she could buy euros or yen. Redistributing her foreign exchange portfolio makes sense anyway. However, the geopolitical message from any such action would be potentially catastrophic for US Government finances at a time when its budget deficit is increasing. So why has China chosen instead to let her currency decline?

China is probably mulling over a number of considerations. Major-General Qiao Liang, the People Liberation Army’s strategist, informed the Chinese leadership of how the Americans use the dollar as a weapon back in 2015.6 ;He recounted how the Americans used a policy of strengthening the dollar to undermine the currencies of its opponents, which is what appears to be happening today. So far, they have failed to undermine China, despite having tried to do so on a number of occasions which he specifically identifies.

According to Qiao Liang, China has so far avoided confrontation with the US (he refers to it as a policy of “Tai chi”). Undoubtedly, this continues to be China’s strategy, which explains China’s refusal to be provoked into aggressive action over trade policies. There is a realistic hope that the problem will resolve itself with a compromise, because President Trump may be tempted to secure a trade agreement ahead of the US’s mid-term elections in November. Meanwhile, China’s Tai chi is to allow the yuan to weaken against the dollar, in the knowledge that President Trump is on record desiring a weaker dollar to help make American exporters more competitive and a weaker yuan compensates Chinese businesses for US tariffs.

While there are significant problems with Qiao Liang’s analysis, it is valuable as an insight into the Chinese leadership’s thinking. America has already scuppered a potential North-east Asia free trade zone with Japan and South Korea, which would have represented a rival in size to America and the EU. If it had gone ahead, there would have been three global currencies emerging for trade purposes: the dollar, euro and yuan. Therefore, the Chinese leadership sees America’s actions as targeting not just China, but also her future partners in free trade agreements.

It is for this reason that China decided some time ago to expand into Eurasia, where the Americans have little political influence. China’s Tai chi is to not stand and fight in the Pacific but to move west.

Therefore, while there may be an easing of the Sino-American trade dispute ahead of America’s mid-term elections, the Chinese are prepared in case it fails to transpire. In any event China is likely to step up her plans for expansion westwards, continuing to lend support to her Asian partners, and perhaps to some of her other global interests as well. That support is increasingly likely to involve the deployment of her dollar war-chest. China is probably the largest foreign creditor through her banks of the US banking system, in addition to her ownership of US Treasuries. In deploying these assets, it has always been her style to do so without disrupting markets, but those resources are now needed elsewhere.

China has already provided Iran with a lifeline, allowing her to sell oil for yuan, which can be hedged for gold through the futures markets. Turkey is also an important partner in China’s silk road project, giving access to the Mediterranean. Both Turkey and Iran have been driven by America to become client states of China. America by its actions today has already lost them.

We now turn to Russia. Russia is the second largest exporter of oil at over 11% of the world total and the largest exporter of natural gas by far. She has deliberately cut herself off from the dollar by selling down her dollar reserves in favor of physical gold. She has established her own bank settlement system alternative to SWIFT, linking into China. Be in no doubt, these are significant measures.

The desire to free herself from a weaponized dollar is understandable, but to turn her back on the common currency for pricing energy is likely to have major implications for the dollar’s future status. It probably explains why, underneath the rhetoric, America is using every excuse to destabilize Russia’s finances.

Energy sales to Europe can be paid for in euros, and sales within Asia can be paid in yuan and roubles. But the secondary message appears to be this: Russia must believe it can win the financial war against America, perhaps with China’s tacit support. If this is the case, the dollar will quickly lose its hegemonic strength and will destroy itself. To protect herself from this inevitable outcome, she must learn to do without the dollar, and protect her own currency with gold.

Conclusion

For now, and probably for only a few months ahead of the US mid-term elections in November, President Trump is forcing currency difficulties on his enemies by aggressive trade policies, including sanctions, and by weaponizing the dollar. It is a trick that has been used by successive American administrations for a considerable time. The Chinese are particularly wary of a currency war being waged against her yuan and are unlikely to escalate tensions unnecessarily. They are playing for and winning a longer game.

President Trump’s actions over trade, which appear to have some short-term successes, are driving countries away from her sphere of influence. Ultimately this will prove counterproductive. Speculators buying into Trump’s short-termism and the Fed’s normalization policies are for the moment driving the dollar higher, without realizing that foreigners, far from suffering from a shortage of dollars, already own all the excess dollar liquidity created since the Lehman crisis. This seems certain to lead to the dollar’s downfall.

Therefore, the dollar is rising only on short-term considerations, driven by nothing more substantial than speculative flows. Once these abate, the longer-term prospects for the dollar will reassert themselves, including the escalating budget and trade deficits, record levels of foreign ownership of the dollar, and rising prices fueled by a combination of earlier monetary expansion and the extra taxes of trade tariffs.

And if that’s not enough, the erosion of its hegemony coupled with China’s future demands for infrastructure capital seem bound to lead to a fundamental reallocation of capital to the detriment of the dollar. No wonder China and Russia decided to corner the market for physical gold.

via RSS https://ift.tt/2NmG5ZP Tyler Durden