Archives: Articles

By Boston Globe

DONALD TRUMP HAS promised that as soon as he becomes president of the United States, he will “rip up and rescind this catastrophic Iranian nuclear deal.” Hard-liners in Iran are cheering. One of their leaders, the powerful editor Hossein Shariatmadari, recently declared, “The wisest plan of crazy Trump is tearing up the nuclear deal.”

Extremists in the United States and Iran have joined to derail this 10-month-old deal. They share a horror scenario: an Iran that is successfully integrated into the Middle East and the wider world, increasingly free at home and responsible in its neighborhood. Militants in Washington fear that this would give Iran a regional role commensurate with its history, size, and power, while they wish to see it tied down forever. Militants in Tehran fear that cooperating with the outside world will erode their authority and possibly lead to collapse of the Islamic Republic. These are reasonable fears.

When debate over the nuclear deal was raging last year in Washington, opponents relentlessly repeated a potent argument. They insisted that the deal made no sense because Iran is untrustworthy and never keeps its promises. Now, a new kind of Iran-related panic has broken out in Washington. This year’s fear is the opposite of last year’s. Opponents of the deal say it must be junked because Iran is living up to it.

“Iran has complied,” the Congressional Research Service reported last month. Its conclusion is hard to dispute. Iran has dismantled more than 12,000 nuclear centrifuges, shipped 98 percent of its nuclear fuel to Russia, and poured cement into the core of its heavy-water reactor. This has set off waves of outrage in Washington and Tehran. The prospect that the nuclear deal might actually work terrifies hard-liners in both capitals.

Many in Washington portray Iran as recklessly irresponsible and a relentless enemy of the United States. Iran undermines that image by fulfilling its obligations under a major international accord. In a coordinated effort to throw the deal off course even at this late date, members of Congress have introduced a host of bills aimed at crippling it.

One of those bills would make it illegal for Americans to buy heavy water from Iran — water that Iran must sell under terms of the nuclear deal. Another would forbid the awarding of defense contracts to “any company that does business with hostile Iranian actors.” Others threaten unspecified steps to counter Iran’s “malign activities” and punish it for “conducting military operations in a manner that raises tensions.”

Members of Congress have even sent a strongly worded letter to Boeing urging that it not seek to sell civilian airliners to Iran. Boeing has pursued this deal, which could be the richest contract in aviation history, but the congressmen said that would be “placing profits over the safety and well-being of the American people.” This increases the possibility that Iran Air will buy its new fleet from Boeing’s European competitor, Airbus. Even Trump sees the illogic. “We give them the money, and we now say, ‘Go buy Airbus instead of Boeing,’ ” he reasoned. “So how stupid is that?”

The phrase “give them the money” reflects another misleading aspect of the US-Iran narrative. American banks are holding billions of dollars in Iranian money that was impounded after the Islamic Revolution of 1979. Under terms of the nuclear deal, that money is supposed to be returned. Estimates of the total run from $50 billion to $150 billion. Secretary of State John Kerry sounded positively jubilant when he said in a recent Washington speech that Iran had received no more than $3 billion so far. The United States has also been exceedingly slow to lift sanctions that can be imposed on foreign companies if they do business with Iran.

“The Americans have said that they would lift sanctions, and they have actually done so on paper,” Iran’s leader, Ayatollah Khamenei, complained recently, “but through other ways and methods, they are acting in a way that the result of sanctions repeal will not be witnessed at all.”

The nuclear deal is threatened not just by assaults from Congress and foot-dragging by the Obama administration. The Supreme Court has also piled on. Last month, it ruled that victims of terror attacks said to have been plotted in Iran may sue to collect up to $2 billion in impounded Iranian assets. Iran, which denies involvement in the attacks, furiously denounced this as “theft of the assets and properties of the Islamic Republic of Iran.”

Iranians opposed to the nuclear deal are doing all they can to make Iran look bad in the world. They are behind a new crackdown on dissent, the arrest of foreigners, continued executions, and ballistic missile tests — which they hope will turn Americans against the nuclear deal. Some in Washington are eagerly rushing into their trap.

The nuclear deal with Iran was a major advance for American and global security. It is in our interest to see the deal fully implemented. Opponents in Congress are trying to undermine it. The Obama administration, which worked mightily to secure the deal, has not worked hard enough to assure that Iranians see some benefit from it. If true sanctions relief does not begin soon, the coalition of “mad mullahs” in Tehran and Washington could succeed in killing or crippling the nuclear deal. That would be bad for everyone who seeks a freer Iran and a more peaceful Middle East.

Stephen Kinzer is a senior fellow at the Watson Institute for International and Public Affairs at Brown University.

11 May 2016

 

By RT News

Secret phone recordings between Brazil’s planning minister and the former president of Transperto have revealed that the minister suggested a “change” in the government to “stop the bleeding” caused by an investigation into Petrobras.
The March conversation between Planning Minister Romero Juca and former Transperto President Sergio Machado took place just weeks before impeachment proceedings were launched against Brazilian President Dilma Rousseff, newspaper Folha de Sao Paulo reported.

The dialogue centered around Operation Lava Jato, a probe into allegations of corruption at the state-controlled oil company Petrobras, of which Transperto is a subsidiary. Both Machado and Juca are being investigated under the probe.

Machado mentioned a renewed drive in the investigation against Petrobras, saying that the operation was leaving “no stone unturned.”

In response, Juca said a change of government was needed to “stop the bleeding” caused by the probe.

“I think we need to articulate a political action,” Juca said, adding that a possible government with Michel Temer as president should include a national pact.

Juca’s lawyer, Antonio Carlos de Almeida Castro, said his client would “never think of doing any interference” in the investigation, and that the conversation between Juca and Machado contained no illegalities.

The minister himself denied that he had discussed Rousseff’s impeachment with Machado.

“I want to repeal the interpretation made by Folha de Sao Paulo … I was speaking of putting an end to the paralysis of Brazil, of ending the ‘bleeding’ of unemployment, separate [politicians] who are guilty and who are not,” Juca said in response to allegations, as quoted by the BBC.

The conversation took place just weeks before Rousseff was suspended from her post amid impeachment proceedings.

The leader, who is accused of illegally manipulating finances to hide a growing public deficit ahead of her 2014 re-election, was removed from office after senators voted to suspend her by 55 votes to 22 earlier this month. Her trial may last up to 180 days.

Rousseff, who denies the allegations against her, made an appeal to the Supreme Court to stop proceedings, but the move was rejected.

She told RT that the impeachment situation is a coup attempt by the old Brazilian oligarchy.

“This coup is not like usual coups in Latin America, which normally involve weapons, tanks in the streets, arrests and torture. The current coup is happening within the democratic framework, with the use of existing institutions in support of indirect elections not stipulated in the Constitution. This coup is carried out by hands tearing apart the Brazilian Constitution,” Rousseff said.

“If there is no crime, an impeachment is illegal. And since it’s illegal, it’s a serious problem for the interim government. I’m living proof of this unlawfulness and injustice,” she added.

Meanwhile, Operation Lava Jato continues, with federal authorities investigating corruption allegations at Petrobras, where it is alleged that executives accepted bribes in return for awarding contracts to construction firms at inflated prices. The operation, launched in March 2014, has resulted in more than 100 warrants for search and seizure, temporary and preventive detention, and coercive measures.
23 May 2016

Rohingya Muslims, in camps, wait for what democracy led by a Nobel peace prize winner will bring them. So far: Nothing.

By Wayne Hay

Aung San Suu Kyi was awarded the Nobel Peace Prize in 1991 for her “non-violent struggle for democracy and human rights”. Back then, she was a campaigner for those things, spending a total of 15 years under house arrest.

She knows what it’s like to have rights and freedom taken away.

But now that she is in perhaps the ultimate position of power in Myanmar, there is no sign that she is going to defend the rights of people who have been detained simply because of who they are.

Tens of thousands of Muslims, mainly Rohingya, have been kept in camps in western Myanmar’s Rakhine State for almost four years since their homes and communities were attacked.

They were horrific events that were fanned by a powerful, nationalist Buddhist agenda – alive and well today – and it’s a movement Aung San Suu Kyi seems afraid of upsetting.

Grim prospects for democracy

After decades of campaigning against the previous military regime, her National League for Democracy party won last November’s general election and, even though the constitution prevents her from becoming president, she made it clear that she would be in charge and gave herself the title of State Counsellor.

Her choice of Religious and Cultural Affairs Minister raised eyebrows. Thura Aung Ko is a former army general and was a deputy in the same ministry under the previous military-backed government. And, so far, the new government isn’t sending any signals that it will adopt a policy to give rights to Rohingya who, in Myanmar, are widely regarded as illegal immigrants from neighbouring Bangladesh.

On his first day on the job in the new administration, Thura Aung Ko gave a media interview in which he said that Muslims and Hindus were “associate citizens”, referring to the 1982 citizenship law that places people into three categories depending on their status.

He then visited leaders of a nationalist Buddhist movement who regularly spew anti-Islam rhetoric. It’s not known what was discussed at the meeting but it sent a bad message, something Aung San Suu Kyi herself has also been guilty of.

In April, the United States embassy in Yangon released a statement, offering their condolences for people who were killed when a boat sunk off Rakhine State. The people onboard were Rohingya and that’s exactly what the US statement called them.

That led to protests outside the embassy by people who refuse to recognise the term Rohingya because it’s not one of the official ethnic minority groups in Myanmar.

The response from Suu Kyi? Government officials sent a letter to the US ambassador and other diplomats urging them to refrain from using the word Rohingya.

Yes, it’s very early days in the life of the new government and there are many problems in this country to solve. Yes, the plight of the Rohingya is a very complex issue. Yes, the new government is talking about new laws to safeguard religious freedom and to get tough on hate speech.

But it’s not enough.

Here’s what we also know: Around 100,000 people have been living in squalid conditions for almost four years. They have no rights and many have died in a desperate attempt to leave. Over the past year though, the number of departures fell, partly because people wanted to see what the new government would do for them.

What Aung San Suu Kyi has at her disposal now is the power to speak out. Words can be powerful. They can offer hope. Particularly when they come from someone who built her name on a fight for freedom and rights.

But when it comes to the Rohingya, there has been nothing but silence; meaning for them, hope is already fading so early in Myanmar’s new democracy.

Wayne Hay has been covering the Asia/Pacific region since 2001, first with Television New Zealand before joining Al Jazeera English in 2006.

22 May 2016

 

By Bill Van Auken

Five years after a US-NATO war shattered Libya, Washington is preparing to send troops into the oil-rich North African nation for a “long-term mission,” the Pentagon’s top uniformed commander said Thursday.

Marine Gen. Joseph Dunford, the chairman of the Joint Chiefs of Staff, told reporters returning aboard his plane from a meeting of NATO commanders in Brussels that the new military deployment, which could involve thousands of US troops, could happen “any day.” It awaited only a formal agreement with the new government that the Western powers and the UN are attempting to set up in Tripoli, he indicated.

General Dunford told reporters that there had been “intense dialogue” and “activities under the surface” aimed at bringing about the Libya intervention. This apparently referred to efforts by the US ambassador to Libya, Peter Bodde, and the State Department’s special envoy for Libya, Jonathan Winer, to wrest a formal request for military intervention from Fayez al-Sarraj, the unelected head of the Western-backed Libyan Presidential Council.

Under UN and US tutelage, Sarraj and his allies established this council in exile in Tunisia, returning to the Libyan capital, Tripoli, at the end of March. It is obvious that this new puppet regime has been created for the sole purpose of providing a veneer of legality to another US-NATO military intervention in the devastated country.

Sarraj’s legitimacy, however, is by no means clear. His is now one of three competing regimes, including the Islamist-dominated General National Congress (GNC) in Tripoli and the House of Representatives (HoR) based in the eastern city of Tobruk, which was previously recognized by the West as the legitimate government of Libya. Neither the GNC nor the HoR have recognized the authority of Sarraj’s presidential council.

Nor is it clear what fighting force Sarraj can rely upon and the US and its allies can arm and train. It was revealed earlier this month that US Special Operations troops have been on the ground in Libya since last year attempting to contact and assess various rival militias to see which one could be employed in the service of Washington’s interests in the country.

Ostensibly, the US and its allies are intervening to counter the rise of the Islamic State of Iraq and Syria (ISIS) inside the country. ISIS fighters, reported to number at least 5,000, have taken control of a stretch of the Libyan Mediterranean coast. It is no accident that the center of this territory is the city of Sirte, formerly the hometown of Libyan leader Muammar Gaddafi. The city was reduced to rubble by US-NATO attacks in the days leading up to the October 2011 torture and murder of Gaddafi at the hands of US-backed Islamist militiamen.

As in Iraq and Syria, Washington is justifying this new intervention in the name of combating a force that it itself spawned. Libya’s ISIS fighters came from the Islamist militias that the CIA and other Western intelligence agencies supported and armed in the bid to oust Gaddafi in 2011. Many of them were then sent into Syria, along with large stockpiles of Libyan weapons that were shipped to that country as part of an operation run out of the secret CIA station in Benghazi. That station and a separate US consulate were overrun by Libyan Islamist militiamen in September 2011, leading to the deaths of US Ambassador J. Christopher Stevens and three other Americans.

Discussions on the coming Libya intervention took place at a meeting of foreign ministers from the US, Europe and the Middle East on Monday in Vienna. Among the decisions taken was to seek exemption from an arms embargo imposed by the UN after the fall of Gaddafi so that weapons can be funneled in to forces loyal to the puppet Sarraj, though it is, as of yet, unclear who those forces are. US Secretary of State John Kerry allowed that a “delicate balance” had to be found to prevent the arms from falling into the hands of Al Qaeda-linked and ISIS elements that Washington is ostensibly fighting.

The real objective in Libya today, as in 2011, is the assertion of undisputed US-NATO hegemony over the country and its massive oil reserves, the largest on the African continent. Having turned Libya into the model of a so-called “failed state” with its first intervention, Washington appears to want to impose some kind of neocolonial regime with its pending second incursion.

The centrality of oil is manifest in the operations of the two major armed militias that are being considered for the role of Western puppet forces. The first is the so-called Libyan National Army formed under the command of Khalifa Hafter, a former Libyan army officer who became an “asset” of the CIA in the 1980s, set up near the agency’s headquarters in Langley, Virginia and then airlifted by the Americans back into Benghazi during the 2011 war for regime change.

Hafter’s forces have been moving slowly west from Benghazi toward the ISIS center of Sirte, expending most of their energies on seizing control of some 14 oil fields along the way. The fields were taken largely from the Petroleum Facilities’ Guards (PFG), whose commander, Ibrahim Jadhran, had sworn allegiance to the US-backed regime of Sarraj after previously seeking autonomy for the east and attempting to sell oil independently of the government in Tripoli.

Meanwhile, a rival militia based in the city of Misurata in northwestern Libya has been approaching Sirte from the opposite direction with similar intentions. It is widely anticipated that these two forces, apparently the principal candidates for serving as the foundation of a Western puppet force in the country, may end up battling each other rather than ISIS.

While General Dunford predicted a US-NATO intervention was imminent, he was less forthcoming about its composition.

It had been reported initially that Italy, which exercised brutal colonial rule over Libya under the fascist dictatorship of Benito Mussolini, would lead the mission, providing upwards of 5,000 troops. Among Rome’s principal concerns—aside from reasserting its old colonial ambitions—is securing the Libyan coast, which is expected to be the major route for refugees seeking to reach Italy, now that the EU has sealed off the so-called Balkan route.

On Monday, however, Italian Prime Minister Matteo Renzi said that Italy would not send troops into Libya. “While under pressure to intervene in Libya, we have chosen a different approach,” Renzi said in a statement.

For its part, Germany has reportedly rejected placing any of its troops in Libya, saying that it would only train Libyan forces in neighboring Tunisia.
The apparent disarray within NATO’s ranks reflects the competing interests of the US and the various European powers as the Libyan intervention escalates what is emerging as a new imperialist scramble for Africa.

As Washington prepares to launch another military intervention into a nation that it previously decimated through a war of aggression, its ongoing campaign in Iraq appears in growing danger. Baghdad was placed under military curfew Friday night after Iraqi security forces used tear gas and live fire to drive back thousands of antigovernment demonstrators who stormed the heavily fortified Green Zone, reaching the office of Iraq’s US-backed prime minister, Haider al-Abadi.
Initial reports indicated at least one civilian, and perhaps several, killed by security forces, and dozens wounded.

Protesters, including supporters of Shia cleric Moqtada al-Sadr, had stormed into the blast wall-enclosed Green Zone on April 30 to protest government corruption and failure to provide basic services and security. Anger has only deepened in the intervening weeks as the result of a series of terrorist bombings claimed by ISIS that have killed more than 150 people in Baghdad this month.

In the wake of the bloodshed in the Green Zone, there is a growing threat that an armed confrontation between government forces and armed Shia militias in the Iraqi capital could eclipse the so-called war against ISIS.

21 May, 2016
WSWS.org

A Conversation with Pepe Escobar. Global Research News Hour Episode 143

By Michael Welch, Pepe Escobar, and John Schertow

LISTEN TO THE SHOW
Click to download the audio (MP3 format)

As of 12 May, 2016, Dilma Rousseff, 36th President of Brazil has had her powers and duties suspended.

Michel Temer, her vice-President, has taken over those responsibilities while a 180 day impeachment process plays out in the Brazilian Senate.

Once registering personal approval ratings of over 70%, Rousseff popularity started to decline in early 2015 in the midst of accusations of involvement in a corruption scandal known as Operation Car Wash (Operação Lava Jato in Portuguese). This scandal involved the State-owned oil company Petrobras and a collection of construction companies which were using bribes to secure contracts at inflated rates. Elected officials were allegedly receiving kickbacks as part of this operation. Hundreds of thousands took to the streets of Brazil to make their displeasure known.

The impeachment, however, was instigated not by Car Wash, but by a finding that her use of loans from the public treasury to make the country’s budget surplus seem larger than it was constituted a “crime of responsibility.”

Rousseff, once considered the third most powerful woman on the planet, Ms. Rousseff now must wait out a process which could see her removed from office for good. Meanwhile, her replacement, Acting President Temer has already sparked controversy by appointing all white and male members to the Cabinet, and beginning ushering in health and education cuts.

Ms Rousseff has accused right wing elements within the halls of power of orchestrating a coup against her. And she is not alone.

Pepe Escobar has been outspoken throughout this drama in his belief that not only was the impeachment of Rousseff a coup, but that the entire affair benefits not just comprador elites within Brazil, but Washington’s imperialist ambitions as well. Escobar is our featured guest in this hour.

Filling out the show, Intercontinental Cry’s John Ahniwanika Schertow returns to give us a breakdown of how indigenous rights and indigenous struggles are being affected in the midst of the Brazil’s political turmoil.

 

The Global Research News Hour airs every Friday at 1pm CT on CKUW 95.9FM in Winnipeg. The programme is also podcast at globalresearch.ca . The show can be heard on the Progressive Radio Network at prn.fm. Listen in every Monday at 3pm ET.

Community Radio Stations carrying the Global Research News Hour:

CHLY 101.7fm in Nanaimo, B.C – Thursdays at 1pm PT

Boston College Radio WZBC 90.3FM NEWTONS during the Truth and Justice Radio Programming slot -Sundays at 7am ET.

Port Perry Radio in Port Perry, Ontario –1 Thursdays at 1pm ET

Burnaby Radio Station CJSF out of Simon Fraser University. 90.1FM to most of Greater Vancouver, from Langley to Point Grey and from the North Shore to the US Border.

It is also available on 93.9 FM cable in the communities of SFU, Burnaby, New Westminister, Coquitlam, Port Coquitlam, Port Moody, Surrey and Delta, in British Columbia Canada. – Tune in every Saturday at 6am.

Radio station CFUV 101.9FM based at the University of Victoria airs the Global Research News Hour every Sunday from 7 to 8am PT.

The original source of this article is Global Research
Copyright © Michael Welch, Pepe Escobar, and John Schertow, Global Research, 2016
22 May 2016

By Alastair Crooke

BEIRUT — Something significant happened in the last few days of April, but it seems the only person who noticed was Stephen Cohen, a professor emeritus of Russian studies at New York University and Princeton University.

In a recorded interview, Cohen notes that a section of the Russian leadership is showing signs of restlessness, focused on President Vladimir Putin’s leadership. We are not talking of street protesters. We are not talking coups against Putin — his popularity remains above 80 percent and he is not about to be displaced. But we are talking about serious pressure being applied to the president to come down from the high wire along which he has warily trod until now.

Putin carries, at one end of his balancing pole, the various elites more oriented toward the West and the “Washington Consensus“ and, at the pole’s other end, those concerned that Russia faces both a real military threat from the North Atlantic Treaty Organization and a hybrid geo-financial war as well. He is being pressed to come down on the side of the latter, and to pry the grip of the former from the levers of economic power that they still tightly hold.

In short, the issue coming to a head in the Kremlin is whether Russia is sufficiently prepared for further Western efforts to ensure it does not impede or rival American hegemony. Can Russia sustain a geo-financial assault, if one were to be launched? And is such a threat real or mere Western posturing for other ends?

What is so important is that if these events are misread in the West, which is already primed to see any Russian defensive act as offensive and aggressive, the ground will already have been laid for escalation. We already had the first war to push back against NATO in Georgia. The second pushback war is ongoing in Ukraine. What might be the consequences to a third?

In mid-April, General Alexander Bastrykin, the head of Russia’s Investigative Committee (a sort of super attorney general, as Cohen describes it), wrote that Russia — its role in Syria notwithstanding — is militarily ill prepared to face a new war either at home or abroad, and that the economy is in a bad way, too. Russia, furthermore, is equally ill prepared to withstand a geo-financial war. He goes on to say that the West is preparing for war against Russia and that Russia’s leadership does not appear to be aware of or alert to the danger the country faces.

Bastrykin does not say that Putin is to blame, though the context makes it clear that this is what he means. But a few days later, Cohen explains, the article sparked further discussion from those who both endorse Bastrykin and do precisely mention Putin by name. Then, Cohen notes, a retired Russian general entered the fray to confirm that the West is indeed preparing for war — he pointed to NATO deployments in the Baltics, the Black Sea and Poland, among other places — and underlines again the unpreparedness of the Russian military to face this threat. “This is a heavy indictment of Putin,” Cohen says of the revelations from this analysis. “It is now out in the open.”

What is this all about? For some time there have been indications that a key faction within the Kremlin, one that very loosely might be termed “nationalist,” has become deeply disenchanted with Putin’s toleration of the Washington Consensus and its adherents at the Russian central bank and in other pivotal economic posts. The nationalists want them purged, along with Prime Minister Dmitry Medvedev’s perceived Western-friendly government. Putin may be highly popular, but Medvedev’s government is not. The government’s economic policy is being criticized. The opposing faction wants to see an immediate mobilization of the military and the economy for war, conventional or hybrid. This is not about wanting Putin ousted; it is about pushing him to wield the knife — and to cut deeply.

What does this faction want apart from Russia preparing for war? They want a harder line in Ukraine and for Putin to reject U.S. Secretary of State John Kerry’s snares in Syria. In short, Kerry is still trying to force Assad’s removal and continues to push for further U.S. support for the opposition. The American government is reluctant as well to disentangle “moderates” from jihadis. The view is that America is insincere in trying to cooperate with Russia on a settlement and more intent on entrapping Putin in Syria. Perhaps this is right, as Gareth Porter and Elijah Magnier have outlined.

What this means at a more fundamental level is that Putin is being asked to side with the nationalists against the internationalists aligned with the Washington Consensus, and to purge them from power. Recall, however, that Putin came to power precisely to temper this polarity within Russian society by rising above it — to heal and rebuild a diverse society recovering from deep divisions and crises. He is being asked to renounce that for which he stands because, he is being told, Russia is being threatened by a West that is preparing for war.

The prospect of the seeming inevitability of future conflict is hardly new to Putin, who has spoken often on this theme. He has, however, chosen to react by placing the emphasis on gaining time for Russia to strengthen itself and trying to corner the West into some sort of cooperation or partnership on a political settlement in Syria, for example, which might have deflected the war dynamic into a more positive course. Putin has, at the same time, skillfully steered Europeans away from NATO escalation.

But in both of these objectives the Obama administration is acting to weaken Putin and Lavrov’s hand, and therefore strengthening the hand of those in Russia calling for a full mobilization for war. It is not coincidental that Bastrykin’s alarm-raising article came now, as the Syria ceasefire is being deliberately infringed and broken. Is this properly understood in the White House? If so, must we conclude that escalation against Russia is desired? As Cohen notes, “the Washington Post [in its editorial pages] tells us regularly that never, never, never … under any circumstances, can the criminal Putin be a strategic partner of the United States.”

Is the die then cast? Is Putin bound to fail? Is conflict inevitable? Ostensibly, it may seem so. The stage is certainly being set. I have written before on, “the pivot already under way from within the U.S. defense and intelligence arms of Obama’s own administration” toward what is often referred to as the “Wolfowitz doctrine,” a set of policies developed by the U.S. in the 1990s and early 2000s. The author of one of those policies, the 1992 U.S. Defense Planning Guidance, wrote that the DPG in essence sought to:

… preclude the emergence of bipolarity, another global rivalry like the Cold War, or multipolarity, a world of many great powers, as existed before the two world wars. To do so, the key was to prevent a hostile power from dominating a ‘critical region,’ defined as having the resources, industrial capabilities and population that, if controlled by a hostile power, would pose a global challenge.

In an interview with Vox, U.S. Secretary of Defense Ashton Carter was clear that this was broadly the bearing by which the Pentagon was being directed to sail. Then again, there is the rather obvious fact that, instead of the much-touted U.S. military pivot ostensibly being to Asia, the actual NATO pivot is being directed to Central Europe — to Russia’s borders. And NATO is plainly pushing the envelope as hard as it dares, up and against Russia’s borders.

Then there is the rhetoric: Russian aggression. Russian ambitions to recover the former Soviet Empire. Russian attempts to divide and destroy Europe. And so on.

Why? It may be that NATO simply presumes these envelope-pushing exercises will never actually come to war, that Russia somehow will back off. And that continuously poking the bear will serve America’s interest in keeping Europe together and NATO cohesive, its sanctions in place, divided from Russia. NATO is due to meet in Warsaw in early July. Perhaps, then, the Western language about Russia’s “aggression” is little more than America heading off any European revolt on sanctions by stirring up a pseudo-threat from Russia and that the Russians are misreading American true intentions, which do not go beyond this. Or do they?

The extraordinary bitterness and emotional outrage with which the American establishment has reacted to Donald Trump’s probable nomination as a presidential candidate suggests that the U.S. establishment is far from having given up on the Wolfowitz doctrine. So has Putin’s strategy of co-opting America in the Middle East been the failure that the Bastrykin faction implies? In other words, is it the case that the policy of gaining cooperation has failed and that Putin must now move beyond it, because America is not about to cooperate and is, instead, continuing the process of cornering Russia?

As the Texas Tribune reported on May 4, “For the first time since his own presidency, George H.W. Bush is planning to stay silent in the race for the Oval Office — and the younger former president Bush plans to stay silent as well.”

To get a sense of the war within the Republican Party (and the Democrats are no less conflicted), read this reaction to that story by the two-time Republican presidential candidate Pat Buchanan. Here’s a small selection:

Trump’s triumph is a sweeping repudiation of Bush Republicanism by the same party that nominated them [the Bush’s] four times for the presidency. Not only was son and brother, Jeb, humiliated and chased out of the race early, but Trump won his nomination by denouncing as rotten to the core the primary fruits of signature Bush policies … That is a savage indictment of the Bush legacy. And a Republican electorate, in the largest turnout in primary history, nodded, ‘Amen to that, brother!’
Buchanan continues in another piece: “The hubris here astonishes. A Republican establishment that has been beaten as badly as Carthage in the Third Punic War is now making demands on Scipio Africanus and the victorious Romans” — a reference to Paul Ryan’s attempts to make Trump adhere to Bush Republicanism. “This is difficult to absorb.”

But here, in this crisis, is an opportunity. America could be heading into recession, corporate profits are falling, huge swaths of debt are looking suspect, global trade is sinking and U.S. policy tools for controlling the global financial system have lost their credibility. And there are no easy solutions to the global overhang of increasingly putrid debt.

But a President Trump — were that to happen — can lay blame for any perfect economic storm on the establishment. America is all knotted up at present, as the presidential nomination melee made clear. Some knots will take time to undo, but some could be undone relatively easily, and it seems that Trump has some sense of this. It could start with a dramatic diplomatic initiative.

Historically, most radical projects of reform have started in this way: overturn a piece of conventional wisdom and unlock the entire policy gridlock — the momentum gained will allow a reformer to steamroll even the hardest resistance — in this case, Wall Street and the financial oligarchy — into making reforms.

Trump can simply say that American — and European — national security interests pass directly through Russia — which they clearly do — that Russia does not threaten America — which it clearly does not — and that NATO is, in any case, “obsolete,” as he has said. It makes perfect sense to join with Russia and its allies to surround and destroy the so-called Islamic State.

If one listens carefully, Trump seems halfway there. It would cut a lot of knots, maybe even untie the policy gridlock. Perhaps that is what he intends?

17 May 2016

By Dmitry Babich

A Russian diplomatic call to outlaw the US-sponsored policy of “regime change” is timelier than ever following recent events in Latin America.
The developments there are now routinely described as ‘institutional’ coups d’état, with popular presidents removed from power and replaced by neoliberal functionaries, enjoying almost unhidden support of the US government and American financial capital.

“What we see in the world now is an attempt by the so-called historic West to preserve its dominance in international affairs,” Russian Deputy Foreign Minister Sergey Ryabkov said at a conference on Latin American development, held in Moscow. “Latin America is not an exception to this global trend. We see attempts by the United States to interfere directly into the internal affairs of some countries in the region… Argentina, Brazil, Venezuela are just the most recent examples.”

Last week, Brazil’s leftist President Dilma Rousseff was removed from power by a very unpopular group of senators, despite having the votes of 54 million citizens, who expressed their will a year and a half ago. Rousseff was removed because of accusations of corruption. However, even the mainstream media in the United States did not consider these accusations to be well founded.

The New York Times, on the eve of Rousseff’s ousting, called accusations against her “debatable” and added that “Ms. Rousseff is right to question the motives and moral authority of the politicians who were seeking to oust her.”

In 2014-2015, a similar campaign of personal attacks and ‘character assassination’ took place in Argentina against that country’s leftist president Cristina Fernandez de Kirchner.

In both cases, the US-preferred candidates somehow managed to get to power posing as the only viable alternatives to the ousted women leaders.
In Brazil, the former vice-president Michel Temer took the reins of power without elections. Mr. Temer, whose popularity in Brazil is in single digits, has already started what RT’s expert on Latin America Juan Manuel Karg called a “realignment” of Brazil’s foreign policy. That “realignment” is supposed “to move Brazil closer to the United States and to the EU with or without Mercosur” (a bloc integrating the markets and economies of Latin American countries).

“It is worth noting that the foreign policy program of Temer’s party PMDB from 2015 does not even mention BRICS – Brazil, Russia, India, China and South Africa – an important bloc of countries which Brazil played an important role in founding in 2009,” Juan Manuel Karg writes on RT’s Spanish page.

PMDB, which stands for the Party of Brazilian Democratic Movement, is a loose union of centrist and rightist forces, which never took more votes than Ms. Rousseff’s Workers’ Party. Temer himself has a disapproval rating of 58 percent in Brazil. New Argentinian President Mauricio Macri also did not seem to be keen on following Fernandez de Kirchner’s policy of discovering new horizons for Argentina in China and Russia. During her tenure between 2007 and 2015, Cristina Fernandez de Kirchner several times met with Russian presidents Vladimir Putin and Dmitry Medvedev, allowed RT Spanish to be included in the set of TV channels accessible for Argentina’s broadest television public, and expanded trade ties with Russia. This policy so far has not been continued under Macri.

In Venezuela, the situation is even clearer: the US makes no secret of its support for the “anti-chavista” opposition to President Nicolas Maduro, the successor to leftist leader Hugo Chavez, who gave his name to “chavizmo,” an ideology combining oil sales to the US with spending the proceeds from these sales on social development.

The American media gives full support to anti-chavista opposition, despite its role in violent street protests, which have claimed the lives of several dozen people. “The US policy of support for violent protests is inexcusable, since Venezuela is not a dictatorship. The country has many anti-Maduro media outlets, people have been given a chance to elect the majority of President Maduro’s critics into parliament,” explains Andres Izarra, a cabinet minister in Mr. Maduro’s cabinet in 2014. “The Venezuelan government suggested dialogue with the government of the United States, we wanted a compromise. But Washington simply has no policy towards Latin America except the so-called regime change.”

But why is Russia concerned with US pressure on Latin American countries? Seemingly, Moscow’s economic interests are not focused on that region. The share of Latin American countries in Russia’s foreign trade, with the notable exception of Venezuela, remains relatively small; it is still dwarfed by Russia’s trade with the EU or with China.

But the point is that in recent years it became absolutely clear to Russian diplomats that the policy of “regime change” in Latin America, Syria, Ukraine and – last, but not least – Russia itself, is conducted by the same people in Washington D.C. and in Brussels, and the same technology is being used for the purpose. Therefore, the events in faraway Brazil may have a direct impact on the developments in Russia.

“Attempts to “seat out” US-led color revolutions in other countries are simply not wise,” says Joshua Tartakovsky, a US-based foreign policy analyst, who recently visited both Venezuela and Ukraine. “Sooner or later, the American enthusiasts of regime change plan to go after all the regimes which even potentially can challenge American domination. First, they will do it in the Western hemisphere, but it won’t take long before they come to Russia, China and India too. The only way to survive for BRICS is to come together and act together – before it is too late.”

Russian Foreign Minister Sergey Lavrov, unlike the official representatives of India and China, openly says that he sees the West’s attempting to bring about a “regime change” in his country. In Latin America, only the Venezuelan foreign minister has similar courage to face the facts, while the others prefer the Tartakovsky-described tactic of “seating out” the storms of Washington-inspired revolutions.

“I listened to the Western leaders who announced economic sanctions against Russia,” Lavrov said at a meeting with foreign policy experts in autumn 2014. He referred to the aftermath of the US-sponsored Ukrainian coup in 2014, which ousted the centrist Ukrainian President Yanukovich and led to a civil war.

“These Western leaders openly said that sanctions should be applied in a way that would cripple Russia’s economy and lead to popular protests. So, the West is sending us a message: we don’t even want to change the policy of the Russian Federation; we want to change the Russian Federation’s regime. In fact they are not even denying that desire of theirs.”

How far will Russia go in its support for independence of Latin American countries? Who and how can shield them from the policy of “regime change” conducted by their powerful northern neighbor? Obviously, Lavrov is not under the illusion Russian can guarantee such independence alone. At the 69th General Assembly of the United Nations in autumn 2014, the Russian foreign minister suggested making a special UN declaration on the inadmissibility of the policy of “regime change” and on “non-recognition of coups as methods of changing state power.”

At the time, the Brazilian leader Dilma Rousseff did not openly support Lavrov’s suggestion, even though she was present at that UN General Assembly. Earlier, in 2013, she even made an indignant speech at the United Nations about the NSA’s eavesdropping of Brazil’s representatives at the UN and even on the office of the president of Brazil.

Rousseff might regret not seizing the opportunity to act against “regime change” then. Now it appears to be too late – for her and, most likely, for Brazil.

Dmitry Babich was born in Moscow, in 1970. He has worked for various media outlets for 25 years, including The Moscow News and RIA Novosti news agency. He is currently working as a political analyst at Sputnik International, and is a frequent guest on BBC, Al Jazeera, CNN commenting on international affairs and history.

18 May 2016

By Bill Van Auken

Foreign ministers of the major powers, including both Washington and Moscow, ended a meeting of the International Syria Support Group (ISSG) in Vienna with no proposal for a date to resume peace talks between the Syrian government and the collection of Western-backed Islamist militias that constitute the “armed opposition.”

The so-called rebels walked out of the last round of talks in Geneva, accusing government forces of continuing to attack their positions in violation of a February 27 cessation of hostilities brokered by the US and Russia.

The government of President Bashar al-Assad and its allies, Russia and Iran, have insisted that continued operations were being carried out against the Islamic State of Iraq and Syria (ISIS) and the Al Nusra Front, Syria’s Al Qaeda affiliate, both of which are designated by the United Nations Security Council as terrorist groups and remain excluded from the shaky cease-fire.

In a communiqué issued at the close of the Vienna meeting, the ISSG member states warned that the consequences of a failure to fully implement the cessation of hostilities “could include the return of full-scale war.”

While the communiqué warned of consequences for any party violating the agreement, including “the exclusion of such parties from the arrangements of the cessation and the protection it affords them,” it gave no indications of what concrete actions would ensue.

What is painfully obvious, however, is that alleged violations by forces loyal to the government of Assad could provoke retaliation from the US, whose warplanes are already engaged in strikes on ISIS targets in Syria. At least 250 Special Operations troops have also been deployed on the ground, without the permission of Damascus and in violation of international law.

A US air strike against the city of al-Bukamal in Dayr al-Zawr province near Syria’s border with Iraq reportedly killed three children and one woman on Monday.

Violations by the so-called rebels, meanwhile, are ignored by their Western sponsors, and would be punished only by the government and its ally, Russia.

This is clearly a formula for an intensification of a conflict that has already claimed over a quarter of a million lives, while driving some 11 million Syrians from their homes. It also creates the conditions for the Syrian conflict to spill over into a wider war pitting the US against Russia.

Washington only entered into the Syrian “peace process” as a means of buying time under conditions in which Russia’s intervention on the side of the Assad government had reversed the tide of battle against the Western-backed Islamist militias and thrown the US-orchestrated war for regime change into disarray.

From the outset, the Obama administration has threatened to resort to a “Plan B” if the negotiations in Vienna and Geneva fail to achieve Washington’s original aim in stoking the bloody war in Syria: the toppling of the Assad government and the imposition of a more pliant Western puppet regime. Last month, unnamed senior US officials let it be known that “Plan B” would include the provision of more sophisticated weaponry to the “rebels,” including MANPADS, portable shoulder-fired missiles that could bring down Russian planes.

Secretary of State John Kerry, speaking to the media alongside Russian Foreign Minister Sergei Lavrov and UN special envoy Steffan de Mistura at the close of the Vienna conference, issued a direct threat to Syria’s Assad, stating, “He should never make a miscalculation about President Obama’s determination to do what is right at any given moment of time where he believes he has to make that decision.”

For his part, Lavrov charged that Washington’s key regional allies, including Turkey, are pouring more arms into Syria to fuel the conflict. Lately, he said, this has included the provision of tanks to the “rebels.”

The “main supply conduit for extremists,” the Russian foreign minister said, is a 90 kilometer stretch of the Turkish-Syrian border controlled on one side by the Turkish military and, on the other, by ISIS. He charged that there existed “a large, widely-spread network created by Turkey on its side of the border to continue and cover up these supplies.”

Kerry spent the weekend preceding the Vienna talks in Riyadh, meeting behind closed doors with representatives of the Saudi monarchy, a principal US regional ally and main supporter of the Islamist forces in Syria. The Saudi regime was the organizer of the so-called High Negotiations Committee, which was formed to represent these Salafist jihadi militias in talks with the Syrian government.

Speaking at the conference in Vienna, Saudi Foreign Minister Adel al-Jubeir advocated a speedy escalation of the war for regime change in Syria.

“We believe we should have moved to a ‘Plan B’ a long time ago,” Adel al-Jubeir told reporters. “The choice about moving to an alternative plan, the choice about intensifying the military support [to the opposition] is entirely with the Bashar regime … He will be removed, either through a political process or through military force.”

Meanwhile, Turkey, Washington’s NATO ally and also a key backer of the “rebels,” threatened Tuesday to carry out a unilateral military intervention in Syria.

President Tayyip Erdogan told a meeting in Istanbul that the Turkish military would act alone, supposedly to deal with ISIS missile attacks coming across the Syrian border and striking the town of Kilis.

“We will solve that issue ourselves if we don’t receive help to prevent those rockets from hitting Kilis,” he said. “We knocked on all doors for a safe zone at our southern border. But no one wants to take that step.”

Erdogan’s statement echoed that made by Turkish Prime Minister Ahmet Davutoglu earlier this month: “If necessary, Turkey may launch a ground military operation in Syria by itself.”

Erdogan’s remarks made clear that his concern is not ISIS, which Ankara has armed and supplied, but rather the growing strength of Syrian Kurdish forces near the Turkish border. In a thinly veiled criticism of US backing for these forces, he declared: “States which exercise control over the world’s arms industry give their weapons to terrorists. I challenge them to deny this.”

The Turkish government is committed to the war for regime change in Syria and has demonstrated, with its shoot-down of a Russian jet last November, its willingness to push this conflict into an armed confrontation with Moscow.

There is little doubt that the Saudi and Turkish regimes are openly advocating a policy that is being supported within powerful sections of the US ruling establishment and military and intelligence apparatus.

An escalation of the Syrian bloodbath also has the backing of the leading candidates in both the Democratic and Republican parties, but its initiation is almost certain to be postponed until after November in order to prevent the subject of war becoming an issue in the US presidential election.
18 May, 2016
WSWS.org

By Ramzy Baroud

On May 15th of every year, over the past 68 years, Palestinians have commemorated their collective exile from Palestine. The ethnic cleansing of Palestine to make room for a ‘Jewish homeland’ came at a price of unrelenting violence and perpetual suffering. Palestinians refer to that enduring experience as ‘Nakba’, or ‘Catastrophe’.

However, the ‘Nakba’ is not merely a Palestinian experience; it is also an Arab wound that never ceases from bleeding.

The Arab ‘Nakba’ was namely the Sykes-Picot Agreement, which divided much of the Arab world between competing Western powers. A year later, Palestine was removed from the Arab equation altogether and ‘promised’ to the Zionist movement in Europe, creating one of the most protracted conflicts in modern human history.

Despite all attempts at separating the current conflict in Palestine from its larger Arab environs, the two realities can never be delinked since they both go back to the same historical roots.

How Did This Come about?

When British diplomat, Mark Sykes, succumbed to the Spanish flu pandemic at the age of 39, in 1919, another diplomat, Harold Nicolson, described his influence on the Middle East region as follows:

“It was due to his endless push and perseverance, to his enthusiasm and faith, that Arab nationalism and Zionism became two of the most successful of our war causes.”

Retrospectively, we know that Nicolson spoke too soon. The breed of ‘Arab nationalism’ he was referencing in 1919 was fundamentally different from the nationalist movements that gripped several Arab countries in the 1950s and 60s. The rallying cry for Arab nationalism in those later years was liberation and sovereignty from Western colonialism and their local allies.

Sykes’ contribution to the rise of Zionism did not promote much stability, either. The Zionist project transformed into the State of Israel, itself established on the ruins of Palestine in 1948. Since then, Zionism and Arab nationalism have been in constant conflict, resulting in deplorable wars and seemingly perpetual blood-letting.

However, Sykes’ lasting contribution to the Arab region was his major role in the signing of the Sykes-Picot Agreement, also known as the Asia Minor Agreement, one hundred years ago. That infamous treaty between Britain and France, which was negotiated with the consent of Russia, has shaped the Middle East’s geopolitics for an entire century.

Throughout the years, challenges to the status quo imposed by Sykes-Picot failed to fundamentally alter its arbitrarily-sketched borders, which divided the Arabs into ‘spheres of influence’ to be administered and controlled by Western powers.

Yet, with the recent rise of ‘Daesh’ and the establishment of its own version of equally arbitrary borders encompassing large swathes of Syria and Iraq as of 2014, combined with the current discussion of dividing Syria into a federation, Sykes-Picot’s persisting legacy could possibly be dithering under the pressures of new, violent circumstances.

Why Sykes-Picot?

Sykes-Picot was signed as a result of violent circumstances that gripped much of Europe, Asia, Africa and the Middle East at the time.

It all started when World War I broke out in July 1914. At the time, major European powers fell into two camps: the Allies – consisting mainly of Britain, France and Russia – vs. the Central Powers – Germany and Austria-Hungary.

The Ottoman Empire soon joined the war, siding with Germany, partly because it was aware that the Allies’ ambitions sought to control all Ottoman territories, which included the Arab regions of Syria, Mesopotamia, Arabia, Egypt and North Africa.

In March 1915 – Britain signed a secret agreement with Russia, which would allow the latter to annex the Ottoman capital and seize control of other strategic regions and waterways.

A few months later, in November 1915 – Britain and France began negotiations in earnest, aimed at dividing the territorial inheritance of the Ottoman Empire should the war conclude in their favor.

Russia was made aware of the agreement, and assented to its provisions.

Thus, a map that was marked with straight lines with the use of a Chinagraph pencil largely determined the fate of the Arabs, dividing them in accordance with various haphazard assumptions of tribal and sectarian lines.

Dividing the Loot

Negotiating on behalf of Britain was Mark Sykes, and representing France was François Georges-Picot. The diplomats resolved that, once the Ottomans were soundly defeated, France would receive areas marked (a), which include the region of south-eastern Turkey, northern Iraq – including Mosel, most of Syria and Lebanon.

Area (b) was marked as British-controlled territories, which included Jordan, southern Iraq, Haifa and Acre in Palestine and the coastal strip between the Mediterranean Sea and the River Jordan.

Russia, on the other hand, would be granted Istanbul, Armenia and the strategic Turkish Straits.

The improvised map consisted not only of lines but also colors, along with language that attested to the fact that the two countries viewed the Arab region on purely materialistic terms, without paying the slightest attention to the possible repercussions of slicing up entire civilizations with a multifarious history of co-operation and conflict.

The Sykes-Picot negotiations concluded in March 1916 and was official, although it was secretly signed on May 19, 1916.

Legacy of Betrayal

WWI concluded on November 11, 1918, after which the division of the Ottoman Empire began in earnest.

British and French mandates were extended over divided Arab entities, while Palestine was granted to the Zionist movement over which a Jewish state was established, three decades later.

The agreement, which was thoroughly designed to meet Western colonial interests, left behind a legacy of division, turmoil and war.

While the status quo it has created guaranteed the hegemony of Western countries over the fate of the Middle East, it failed to guarantee any degree of political stability or engender economic equality.

The Sykes-Picot Agreement took place in secret for a specific reason: it stood at complete odds with promises made to the Arabs during the Great War. The Arab leadership, under the command of Sharif Hussein, was promised complete independence following the war, in exchange for supporting the Allies against the Ottomans.

It took many years and successive rebellions for Arab countries to gain their independence. Conflict between the Arabs and colonial powers resulted in the rise of Arab nationalism, which was born in the midst of extremely violent and hostile environments, or more accurately, as an outcome of them.

Arab nationalism may have succeeded in maintaining a semblance of an Arab identity but failed to develop a sustainable and unified retort to Western colonialism.

When Palestine – which was promised by Britain as a national home for the Jews as early as November 1917 – became Israel, hosting mostly Europeans settlers, the fate of the Arab region east of the Mediterranean was sealed as the ground for perpetual conflict and antagonism.

It is here, in particular, that the terrible legacy of the Sykes-Picot Agreement is mostly felt, in all of its violence, shortsightedness and political unscrupulousness.

100 years after two British and French diplomats divided the Arabs into spheres of influence, the Sykes-Picot Agreement remains a pugnacious but dominant reality of the Middle East.

Five years after Syria descended into a violent civil war, the mark of Sykes-Picot are once more being felt as France, Britain, Russia – and now the United States – are considering what US Secretary of State, John Kerry, recently termed ‘Plan B’ – dividing Syria based on sectarian lines, likely in accordance with a new Western interpretation of ‘spheres of influence.’

The Sykes-Picot map might have been a crude vision drawn hastily during a global war but, since then, it has become the main frame of reference that the West uses to redraw the Arab world, and to “control (it) as they desire and as they may see fit.”

The Palestinian ‘Nakba’, therefore, must be understood as part and parcel of the larger western designs in the Middle East dating back a century, when the Arabs were (and remain) divided and Palestine was (and remains) conquered.

Dr. Ramzy Baroud has been writing about the Middle East for over 20 years. He is an internationally-syndicated columnist, a media consultant, an author of several books and the founder of PalestineChronicle.com. His books include ‘Searching Jenin’, ‘The Second Palestinian Intifada’ and his latest ‘My Father Was a Freedom Fighter: Gaza’s Untold Story’. His website is: www.ramzybaroud.net.

18 May, 2016
Countercurrents.org

By Nick Beams

While the turbulence that hit global financial markets in the early part of this year has subsided somewhat, at least temporarily, the underlying recessionary trends continue to intensify. These trends are clearly seen in the world’s two major economies, the United States and China.

Earlier this week, the Financial Times pointed to the flattening of the yield curve, which measures the difference between the interest rates on higher yielding long-term 10-year treasury bonds and two-year debt, noting that it was down to its lowest level since December. A flattening of the curve, when long- and short-term rates start to converge, signals lack of investor confidence about the long-term outlook for the economy. The yield curve has not inverted—a situation which is regarded as indicating a recession—but there are other indications of slowing growth.

American corporations are in an earnings recession, with profits down for the fourth straight quarter in a row. This is the longest period of lower profit growth since the financial crisis of 2008–2009, with US firms described as struggling under the weight of a strong dollar and “sputtering growth in other developed and emerging markets.”

In the wake of the global financial crisis, the spending and credit stimulus initiated by the Chinese government provided support for the global economy, particularly for emerging markets. But the Chinese economy is now experiencing much lower rates of growth—down from levels of 10 percent a few years ago to below 7 percent—and the expansion of credit has brought fears of a financial crisis.

Earlier this month, CLSA, a leading Hong Kong based brokerage and investment firm, warned that Chinese bad debts were reaching a “crisis level.” The company has released research showing that China’s non-performing loans are as high as 19 percent of bank assets, compared to the official figure of 1.6 percent, with most of the bad debts on the books of loss-making companies. The difference is accounted for the by fact that CLSA used international standards when calculating non-performing loans, rather than looser Chinese benchmarks.

The International Monetary Fund has said that $1.3 trillion of corporate debt in China, around one sixth of business loans made by banks, has been incurred by companies that are bringing in less revenue than they owe in interest payments.

In the first three months of the year, the government and financial authorities undertook a further expansion of credit in order to try to boost the economy in the wake of the stock market crisis of last year and fears that growth could fall sharply.

But these measures appear to have set off a conflict within the ruling Communist Party regime. Earlier this month the official People’s Daily featured a front-page interview with an “authoritative figure” who said that soaring debt levels could lead to a crisis.

“A tree cannot reach for the sky,” the “figure” was quoted as saying. “Any mishandling will lead to systemic financial risk, negative economic growth and evaporate people’s savings. That’s deadly.”

The official also warned that China’s growth rate, which has fallen from 12 percent in 2010 before dropping to 8 percent in 2013 and is now down to below 7 percent, will not return to the previous levels.

The interview is being interpreted in some quarters as part of a conflict between Chinese President Xi Jinping and Chinese Premier Li Keqiang, who is regarded as the leading proponent of increased credit.

In any case, it is clear that credit expansion is not bringing the boost to the Chinese economy it once did. In the year to November 2009, total credit was expanded by an amount equivalent to 34 percent of gross domestic product. This lifted the growth rate from 6.1 percent in the first quarter of the year to a full-year level of 9.2 percent. In the year to February, credit was increased by 40 percent of GDP, but the growth rate has only barely been maintained at the official level of between 6.5 and 7 percent.

Further evidence of the ongoing slowdown in China was provided in the trade figures for April that showed a decline in both imports and exports. Exports fell by 1.8 percent year on year, following an 11.5 percent surge in March. Imports were down by 10.9 percent compared to the same month a year ago, following a 7.6 percent decline the previous month.

The contraction in global markets resulting from the China slowdown is fuelling tensions over currency values. Japan is at the centre of this growing global conflict. Despite the move by the Bank of Japan to introduce negative interest rates at the end of January in the expectation that this would start to bring down the value of the yen, the Japanese currency has risen by around 13 percent so far this year.

This prompted a warning last week from the Japanese finance minister, Taro Aso, that a persistent “one-sided” yen could lead to intervention. “We are determined to stop it,” he said, without proving any specific details as to how that might be achieved.

In an interview with the Financial Times on Monday the vice-minister for finance and international affairs, Masatsugu Asakawa, said the government regarded selling yen in international markets as a legitimate part of its policies. This was despite the commitment at the G20 meeting earlier this year that countries would not resort to devaluing their currencies in response to the downturn in global markets—a move regarded as a return to the kind of beggar-thy-neighbour policies that characterised the 1930s. The US has now put Japan on a watch list of countries that may be seeking to push down their currencies.

This move, however, was dismissed by Asakawa who told the Financial Times that Japan had not been singled out and so “we do not see this as having an immediate impact on Japan’s currency policy.”

Major Japanese manufacturers, including Toyota, which are adversely impacted by a rising yen, have issued warnings that profit levels are falling at the fastest rate since Prime Minister Abe came to power in late 2012 with promises to boost the economy through so-called Abenomics, based on central bank purchases of financial assets and an implicit commitment to ensure Japan remained competitive.

Monetary policy is also the subject of conflict in Europe, where German financial authorities are continuing their opposition to the quantitative easing and negative interest rate policies of the European Central Bank (ECB) under president Mario Draghi. Earlier this year, German Finance Minister Wolfgang Sch uble said Draghi was at least 50 percent responsible for the rise of the right-wing German populist party, the AfD.

The chief economist at Deutsche Bank, David Folkerts-Landau has written a comment for the Financial Times comparing the ECB measures to the German Reichsbank, which printed money to finance government spending in the 1920s, leading to hyperinflation.

“Today the behaviour of the European Central Bank suggests that it too has gone awry,” he wrote. When reducing interest rates to historically low levels did not stimulate growth, the ECB began purchasing sovereign debt and when that did not work, the ECB went to the next extreme and introduced negative interest rates with the result that almost half European sovereign debt is trading at negative yields.

Six years after the financial crisis, European debt keeps rising, the eurozone is as fragile as ever, insurance companies, pension funds and savings banks barely have a positive spread, growth is anaemic and debt levels in some countries, such as Italy, is not sustainable. “Monetary policy has become the number one threat to the eurozone,” he concluded.

The worsening global economic outlook will be one of the key issues at the meeting of the G7 major economies later this month, at least in closed-door discussions. While there will no doubt be efforts made to prevent divisions from erupting into the open, they will be very much present.

18 May, 2016
WSWS.org