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China’s Pivot to World Markets, Washington’s Pivot to World Wars

NOVANEWS

And the Debacle of the Latin American Left

First published by GR in August 2016

China and the United States are moving in polar opposite directions: Beijing is rapidly becoming the center of overseas investments in high tech industries, including robotics, nuclear energy and advanced machinery with collaboration from centers of technological excellence, like Germany.

In contrast, Washington is pursuing a predatory military pivot to the least productive regions with collaboration from its most barbaric allies, like Saudi Arabia.

China is advancing to global economic superiority by borrowing and innovating the most advance methods of production, while the US degrades and debases its past immense productive achievements to promote wars of destruction.

China’s growing prominence is the result of a cumulative process that advanced in a systematic way, combining step-by-step growth of productivity and innovation with sudden jumps up the ladder of cutting edge technology.

China’s Stages of Growth and Success

China has moved from a country, highly dependent on foreign investment in consumer industries for exports, to an economy, based on joint public-private investments in higher value exports.

China’s early growth was based on cheap labor, low taxes and few regulations on multi-national capital.  Foreign capital and local billionaires stimulated growth, based on high rates of profit.  As the economy grew, China’s economy shifted toward increasing its indigenous technological expertise and demanding greater ‘local content’ for manufactured goods.

By the beginning of the new millennium China was developing high-end industries, based on local patents and engineering skills, channeling a high percentage of investments into civilian infrastructure, transportation and education.

Massive apprenticeship programs created a skilled labor force that raised productive capacity.  Massive enrollment in science, math, computer science and engineering universities provided a large influx of high-end innovators, many of whom had gained expertise in the advanced technology of overseas competitors.

China’s strategy has been based on the practice of borrowing, learning, upgrading and competing with the most advanced economics of Europe and the US.

By the end of the last decade of the 20th century, China was in a position to move overseas. The accumulation process provided China with the financial resources to capture dynamic overseas enterprises.

China was no longer confined to investing in overseas minerals and agriculture in Third World countries.  China is looking to conquer high-end technological sectors in advanced economics.

By the second decade of the 21st century Chinese investors moved into Germany, Europe’s most advanced industrial giant.  During the first 6 months of 2016 Chinese investors acquired 37 German companies, compared with 39 in all of 2015.  China’s total investments in Germany for 2016 may double to over $22 billion dollars.

In 2016, China successfully bought out KOKA, Germany’s most innovative engineering company.  China’s strategy is to gain superiority in the digital future of industry.

China is rapidly moving to automate its industries, with plans to double the robot density of the US by the year 2020.

Chinese and Austrian scientists successfully launched the first quantum-enabled satellite communication system which is reportedly ‘hack proof’, ensuring China’s communications security.

While China’s global investments proceed to dominate world markets, the US, England and Australia have been trying to impose investment barriers. By relying on phony ‘security threats’, Britain’s Prime Minister Theresa May blocked a multi-billion dollar Chinese investment-heavy nuclear plant (Hinckley Point C). The pretext was the spurious claim that China would use its stake to “engage in energy blackmail, threatening to turn off the power in the event of international crises”.

The US Committee on Foreign Investment has blocked several multi-billion dollar Chinese investments in high tech industries.

In August 2016 Australia blocked an $8 billion-dollar purchase of a controlling stake in its biggest electricity distribution network on specious claims of ‘national security’.

The Anglo-American and German empires are on the defensive.  They increasingly cannot compete economically with China, even in defending their own innovative industries.

In large part this is the result of their failed policies.  Western economic elite have increasingly relied on short-term speculation in finance, real estate and insurance, while neglecting their industrial base.

Led by the US, their reliance on military conquests (militaristic empire-building) absorb public resources, while China has directed its domestic resources toward innovative and advanced technology.

To counter China’s economic advance, the Obama regime has implemented a policy of building economic walls at home, trade restrictions abroad and military confrontation in the South China Seas – China’s strategic trade routes.

US officials have ratcheted up their restrictions on Chinese investments in high tech US enterprises including a $3.8 billion investment in Western Digital and Philips attempt to sell its lighting business.  The US blocked ‘Chen China’s planned $44 billion takeover of Swiss chemical group ‘Syngenta’.

US officials are doing everything possible to stop innovative billion dollar deals that include China as a strategic partner.

Accompanying its domestic wall, the US has been mobilizing an overseas blockade of China via its Trans-Pacific-Partnership, which proposes to exclude Beijing from participating in the ‘free trade zone’ with a dozen North America, Latin American and Asian members.  Nevertheless, not a single member-nation of the TPP has cut back its trade with China.  On the contrary, they are increasing ties with China – an eloquent comment on Obama’s skill at ‘pivoting’.

While the ‘domestic economic wall’ has had some negative impacts on particular Chinese investors, Washington has failed to dent China’s exports to US markets.  Washington’s failure to block China’s trade has been even more damaging to Washington’s effort to encircle China in Asia and Latin America, Oceana and Asia.

Australia, New Zealand, Peru, Chile, Taiwan, Cambodia and South Korea depend on Chinese markets far more than on the US to survive and grow.

While Germany, faced with China’s dynamic growth, has chosen to ‘partner’ and share, up-scale productive investments, Washington has opted to form military alliances to confront China.

The US bellicose military alliance with Japan has not intimidated China.  Rather it has downgraded their domestic economies and economic influence in Asia.

Moreover, Washington’s “military pivot” has deepened and expanded China’s strategic links to Russia’s energy sources and military technology.

While the US spends hundreds of billions in military alliances with the backward Baltic client-regimes and the parasitical Middle Eastern states, (Saudi Arabia, Israel), China accumulates strategic expertise from its economic ties with Germany, resources from Russia and market shares among Washington’s ‘partners’ in Asia and Latin America.

There is no question that China, following the technological and productive path of Germany, will win out over the US’s economic isolationist and global militarist strategy.

If the US has failed to learn from the successful economic strategy of China, the same failure can explain the demise of the progressive regimes in Latin America.

China’s Success and the Latin American Retreat

After more than a decade of growth and stability, Latin America’s progressive regimes have retreated and declined.  Why has China continued on the path of stability and growth while their Latin American partners retreated and suffered defeats?

Brazil, Argentina, Venezuela, Uruguay, Paraguay, Bolivia and Ecuador, for over a decade, served as Latin America’s center-left success story.  Their economies grew, social spending increased, poverty and unemployment were reduced and worker incomes expanded.

Subsequently their economies went into crisis, social discontent grew and the center-left regimes fell.

In contrast to China, the Latin American center-left regimes did not diversify their economies:  they remained heavily dependent on the commodity boom for growth and stability.

The Latin American elites borrowed and depended on foreign investment, and financial capital, while China engaged in public investments in industry, infrastructure, technology and education.

Latin American progressives joined with foreign capitalist and local speculators in non-productive real estate speculation and consumption, while China invested in innovative industries at home and abroad.  While China consolidated political rulership, the Latin American progressives “allied” with strategic domestic and overseas multi-national adversaries to ‘share power’, which were, in fact, eagerly prepared to oust their “left” allies.

When the Latin commodity based economy collapsed, so did the political links with their elite partners.  In contrast, China’s industries benefited from the lower global commodity prices, while Latin America’s left suffered.  Faced with widespread corruption, China launched a major campaign purging over 200,000 officials.  In Latin America, the Left ignored corrupt officials, allowing the opposition to exploit the scandals to oust center-left officials.

While Latin America imported machinery and parts from the West; China bought the entire Western companies producing the machines and their technology – and then implemented Chinese technological improvements.

China successfully outgrew the crisis, defeated its adversaries and proceeded to expand local consumption and stabilized rulership.

Latin America’s center-left suffered political defeats in Brazil, Argentina and Paraguay, lost elections in Venezuela and Bolivia and retreated in Uruguay.

Conclusion

China’s political economic model has outperformed the imperialist West and leftist Latin America.   While the US has spent billions in the Middle East for wars on behalf of Israel, China has invested similar amounts in Germany for advanced technology, robotics and digital innovations.

While President Obama and Secretary of State Hillary Clinton’s “pivot to Asia” has been largely a wasteful military strategy to encircle and intimidate China, Beijing’s “pivot to markets” has successfully enhanced its economic competitiveness.  As a result, over the past decade, China’s growth rate is three times that of the US; and in the next decade China will double the US in ‘robotizing’ its productive economy.

The US ‘pivot to Asia’, with its heavy dependence on military threats and intimidation has cost billions of dollars in lost markets and investments.  China’s ‘pivot to advanced technology’ demonstrates that the future lies in Asia not the West. China’s experience offers lessons for future Latin American leftist governments.

First and foremost, China emphasizes the necessity of balanced economic growth, over and above short-term benefits resulting from commodity booms and consumerist strategies.

Secondly, China demonstrates the importance of professional and worker technical education for technological innovation, over and above  business school and non-productive ‘speculative’ education so heavily emphasized in the US.

Thirdly, China balances its social spending with investment in core productive activity; competitiveness and social services are combined.

China’s enhanced growth and social stability, its commitment to learning and surpassing advanced economies has important limitations, especially in the areas of social equality and popular power.  Here China can learn from the experience of Latin America’s Left.  The social gains under Venezuela’s President Chavez are worthy of study and emulation; the popular movements in Bolivia, Ecuador and Argentina, which ousted neo-liberals from power, could enhance efforts in China to overcome the business- state nexus of pillage and capital flight.

China, despite its socio-political and economic limitations, has successfully resisted US military pressures and even ‘turned the tables’ by advancing on the West.

In the final analysis, China’s model of growth and stability certainly offers an approach that is far superior to the recent debacle of the Latin American Left and the political chaos resulting from Washington’s quest for global military supremacy.

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Dollar Blow: China Launches New ‘Yuan-Ruble’ Payment Mechanism

NOVANEWS

The US received a major blow to its global hegemony, and one which is sure to trigger more fighting talk from hawks in Washington.

This week it was announced that China has established a ‘payment versus payment‘ (PVP) system to clear Chinese yuan and Russian ruble transactions. The aim, we’re told, is to to “reduce risks and improve the efficiency” of its foreign exchange system.

The new mechanism, which could rival the long-held monopoly of the US SWIFT inter-bank payment system (allowing for simultaneous settlement of transactions in two different currencies) was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.

However, financial oligarchs in Wall Street will view this move as an act of aggression in challenging the preeminence of the US dollar as the planet’s global reserve currency – which is inextricably tied and nearly completely dependent on the US ‘Petrodollar’ to prop-up the value of the US fiat currency. Georgetown University scholars note here:

Since petrodollars and petrodollar surpluses are by definition denominated in U.S. dollars, then purchasing power is dependent on the U.S. rate of inflation and the rate at which the U.S. dollar is exchanged (whenever there is need for convertibility) by other currencies in international money markets. It follows that whenever economic or other factors affect the U.S. dollar, petrodollars will be affected to the same magnitude. The link, therefore, between the U.S. dollar and petrodollar surpluses, in particular, has significant economic, political, and other implications.

First, the placement of petrodollar surpluses of the Arab oil exporting nations in the United States may be regarded politically as hostage capital. In the event of a major political conflict between the United States and an Arab oil-exporting nation, the former with all its military power can confiscate or freeze these assets or otherwise limit their use.

China to Buy Saudi Oil in Yuan

This breaking development coincides with other recent moves, including news that China will “compel” Saudi Arabia to trade oil in yuan. If this happens, the rest of the global oil market could follow suit, which would spell catastrophe for the U.S. dollar as the world’s reserve currency.

Yuan pricing of oil is coming, economist says from CNBC.

These two stories are absolutely linked. This is full-frontal challenge to the Anglo-American World Order.

Russia and China are also working behind the scenes to shore-up their precious metal/gold trading standards, possibly in preparation of a new ‘gold-backed’ currency valuation initiative.

Zero Hedge adds:

CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi [Yuan] internationalization. Russia, however, is a top priority: the world’s biggest oil producer recently became the largest source of oil for China, the world’s top energy consumer.

To be sure, the monetary convergence between Beijing and Moscow is hardly new. The most notable recent development took place in April, when the Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade. As the South China Morning Post reported at the time, the new office was part of agreements made between the two neighbours “to seek stronger economic ties” since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.

At the time, Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon, to which we said that If Russia – the world’s fourth largest gold producer after China, Japan and the US – is indeed set to become a major supplier of gold to China, the probability of a scenario hinted by many over the years, namely that Beijing is preparing to eventually unroll a gold-backed currency, increases by orders of magnitude.

***

Expect that the West not to take this major financial challenge by China and Russia lying down. Washington may use its North Korea, Myanmar or Philippines cards – as a means to increase its leverage in Asia, in an effort to extract Chinese concessions, and head-off China’s new financial ascendancy.

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Expanding Horizons Key to BRICS’ Second Golden Decade

NOVANEWS

Unseen in the West, the BRICS summit in Xianmen marks a new step in the development of this international institution. Zhao Minghao reports the three main objectives of the summit and the concept of “BRICS Plus”.

The first BRICS foreign ministers’ meeting was convened in September 2006, which marked the foundation of the BRICS mechanism. In the 10 years since then, BRICS has become an important international economic bloc representing some of the world’s key emerging economies and developing countries.

In that time, BRICS member states have increased their share in the global economy from 12 percent to 23 percent, their trade has grown from 11 percent to 16 percent, and investment has increased from 7 percent to 12 percent. Most importantly, the contribution made by BRICS economies to global economic growth now stands at more than 50 percent.

With the Trump administration’s “America First” policy in play, the global economy now faces the major risk of declining multilateralism. If both developed and emerging economies continue to turn more inward-looking and back away from coordinating their macro-economic policies, the flickering flame of global economic recovery could be snuffed out.

In recent months, many economists including Managing Director of the International Monetary Fund (IMF) Christine Lagarde have stated that the global economy is finally showing positive momentum 10 years after the financial crisis. The US, Europe and Japan have witnessed steady growth and Russia, Brazil and South Africa have reportedly improved economic figures as well. China and India, meanwhile, have maintained medium to high economic growth rates.

The BRICS Xiamen Summit aims to usher in the second golden decade of the mechanism.

First, BRICS nations aim to set down new measures to boost trade in services, investment and e-commerce. In 2015, export of BRICS members’ trade in services reached about $540 billion, a mere 11.3 percent of the world’s total. With the middle classes expanding in BRICS countries, there is plenty of opportunity for cooperation in healthcare, tourism, education and other sectors.

In addition to this, BRICS countries have been committed to implementing schemes to facilitate investment, including measures to improve efficiency in the administrative approval process and the openness of industries. The BRICS E-commerce Working Group was established in August to help develop small- and medium-sized e-commerce enterprises into the new driving force behind the bloc’s future economic and trade cooperation.

Second, BRICS nations are looking to proactively promote the improvement of global governance. Apart from reform of existing international mechanisms such as the UN Security Council and the IMF, BRICS countries have already established cooperation mechanisms in anti-terrorism, space, cyber security, and energy security. As major energy exporters and consumers, BRICS countries will also deepen cooperation in increasing strategic energy reserves, developing renewable energy and enhancing energy efficiency.

Third, BRICS member nations are looking to enhance cooperation on national and regional security hotspots. During the seventh Meeting of High Representatives for Security Issues in July, it was agreed that deeper political and security cooperation would be the key to strengthening the BRICS mechanism. The political situation in the Middle East and North Africa was the main focus of attention, while issues relating to Afghanistan were made on several occasions in the joint declaration [1].

Most importantly, the Xiamen Summit put forward the concept of “BRICS Plus.” This places the focus on BRICS member countries to deepen relations with other developing countries to support and safeguard their interests, with the ultimate goal of expanding its international influence. Talks between BRICS and African state leaders were arranged during the 2013 BRICS Summit in Durban, South Africa, while India invited leaders of countries that border the Bay of Bengal to the Goa Summit last year. This year, leaders of countries such as Mexico, Egypt and Tajikistan are attending the Xiamen Summit as part of the BRICS Plus initiative.

There is no doubt that BRICS cooperation is not without its challenges. China, Russia and India need to better manage the negative impact of geopolitical factors between their countries, and help build a stronger collective identity for the economic bloc. BRICS also needs to focus on turning cooperation documents into real actions instead of dwelling on empty talk.

It is estimated that by 2021, the BRICS New Development Bank will have made $32 billion in loans. The bank’s African office also started operations in South Africa in August.

It is clear that such international mechanisms under the BRICS framework need to play a more complimentary role in global governance to a much greater extent in the future than they do now.

This article was originally published by Global Times (China).

Note

[1] BRICS Leaders Xiamen DeclarationVoltaire Network, 4 September 2017.

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US Sanctions Continue to Backfire: China Opens $10 Billion Credit Line for Iran

NOVANEWS

Assisting Tehran with sidestepping an ongoing Washington sanctions regime against the country, China has opened a $10 billion line of credit intended to finance energy, transportation, water and other key Iranian infrastructure projects.

Following the ground-breaking 2015 Joint Comprehensive Plan of Action (JCPOA) between Iran and Russia, the US, China, France, the UK, as well as Germany and the EU, to end its nascent nuclear weapons program, Tehran — in honoring the terms of the unprecedented treaty — has nonetheless seen Washington implement a host of new sanctions against the Middle Eastern country, including asset freezes and limits on global financial transfers.

According to Iranian Central Bank President Valiollah Seif, Chinese state-owned CITIC investment company has opened a $10 billion credit line to several banks in Iran to be used to fund wide-ranging infrastructure projects in the country, according to a report by the Times of Israel.

The significant credit line will primarily use euros and yuan to bypass the US sanctions.

Seif indicated that the $10 billion, alongside an additional previous $15 billion of Chinese investment into other unnamed projects in the country, show “a strong will for continuation of cooperation between the two countries,” according to Pakistan’s geo.tv media outlet.

China is seen to be opening trade to the region as part of a trillion-dollar “One Belt, One Road” strategy to increase ties to Africa and Europe. China is the biggest recipient of Iranian oil, and accounts for almost a third of Tehran’s overall trade.

In pledges to significantly increase trade with Iran, Beijing previously opened two credit lines equalling $4.2 billion, to build high-speed railway lines between Tehran and the cities of Mashhad and Isfahan, according to the Iran Daily, hot on the heels of an €8 billion credit agreement between Tehran and Seoul’s Exim bank signed in August.

While western banks remain cautious, particularly as Washington has imposed what many consider to be unnecessary financial blocks on Tehran, negotiations are progressing between banks in Austria, Denmark and Germany to provide a $22 billion credit line to Iran.

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Gold, Oil and De-Dollarization? Russia and China’s Extensive Gold Reserves, China Yuan Oil Market

The 1944 Bretton Woods international monetary system as it has developed to the present is become, honestly said, the greatest hindrance to world peace and prosperity. Now China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over the world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it.

Shortly before the end of the Second World War, the US Government, advised by the major international banks of Wall Street, drafted what many mistakenly believe was a new gold standard. In truth, it was a dollar standard in which every other member currency of the International Monetary Fund countries fixed the value of their currency to the dollar. In turn, the US dollar was fixed then to gold at a value equal to 1/35th of an ounce of gold. At the time Washington and Wall Street could impose such a system as the Federal Reserve held some 75% of all world monetary gold as a consequence of the war and related developments. Bretton Woods established the dollar which then became the reserve currency of world trade held by central banks.

Death Agony of a Defective Dollar Standard

By the end of the 1960’s with soaring US Federal budget deficits from costs of the Vietnam War and other foolish spending, the dollar standard began to show its deep structural flaws. A recovered Western Europe and Japan no longer needed billions of US dollars for financing reconstruction. Germany and Japan had become world class export economies with higher efficiency than US manufacturing owing to a growing obsolescence of US basic industry from steel to autos and basic infrastructure. Washington should then have significantly devalued the dollar against gold in order to correct the growing world trade imbalance. Such a dollar devaluation would have boosted US manufacturing export earnings and reduced the trade imbalances. It would have been a huge pus for the real US economy. However for Wall Street banks it spelled huge losses. So instead, the Johnson and then Nixon administrations printed more dollars and in effect exported inflation to the world.

The central banks of especially France and Germany reacted to the deafness in Washington by demanding US Federal Reserve gold for their US dollar reserves at $35 per unce s in the Bretton Woods 1944 agreement. By August 1971 the redemption of gold for inflated US dollars had reached a crisis point where Nixon was advised by a senior Treasury official, Paul Volcker, to rip up the Bretton Woods system.

By 1973 gold was allowed by Washington to trade freely and was no longer the backing of a sound US dollar. Instead, an engineered oil price shock in October 1973 that sent the dollar price of oil higher by 400% in a matter of months, created what Henry Kissinger then called the petrodollar.

The world needed oil for the economy. Washington, in a 1975 deal with the Saudi monarchy, insured that Arab OPEC would refuse to sell one drop of their oil to the world for any currency other than US dollars. The value of the dollar soared against other currencies such as the German Mark or Japanese Yen. Wall Street banks were awash in petrodollar deposits. The dollar casino was open and running, and the rest of the world was being fleeced by it.

In my book, Gods of Money: Wall Street and the Death of the American Century, I detail how the major New York international banks such as Chase, Citibank and Bank of America used the petrodollars then to recycle Arab oil profits to oil-importing countries in the developing world during the 1970’s, laying the seeds for the so-called Third World Debt Crisis. Curiously, it was the same Paul Volcker, a protégé ofDavid Rockefeller and Rockefeller’s Chase Manhattan Bank, who this time, in October, 1979 as Chairman of the Fed, triggered the 1980s debt crisis by pushing Fed interest rates through the roof. He lied and claimed it was to nip inflation. It was to save the dollar and the Wall Street banks.

Today, the dollar is a strange phenomenon to put it mildly. The United States since 1971 has gone from being a premier industrial nation to a giant debt-bloated casino of speculation.

With Fed Funds interest rates between zero and one percent the past nine years—unprecedented in modern history—the major banks of Wall Street, the ones whose financial malfeasance and murderous greed created the 2007 Subprime crisis and its 2008 global financial Tsunami, set about to build a new speculative bubble. Rather than lend to debt-bloated cities for urgently-needed infrastructure or other productive avenues of the real economy, instead they created another colossal bubble in the stock market. Major companies used cheap credit to buy their own stocks back, thereby spurring the stock prices on Wall Street exchanges, a rise fed by hype and myths about “economic recovery.” The S&P-500 stock index rose by 320% since the end of 2008. I can assure you those paper stock rises are not because the real US economy has grown 320%.

American households earn less in real terms each year over decades. Since 1988 median household income has been stagnant amid steadily rising inflation, a declining real income. They must borrow more than ever in history. Federal Government debt is at an unmanageable $20 trillion with no end in sight. American industry has been closed and production shipped offshore, “outsourced” is the euphemism. Left behind is a high-debt, rotted out “service economy” where millions work two even three part-time jobs just to keep afloat.

The only factor keeping the dollar from total collapse is the US military and Washington’s deployment of deceptive NGOs around the world to facilitate plundering of the world economy.

So long as Washington dirty tricks and Wall Street machinations were able to create a crisis such as they did in the Eurozone in 2010 through Greece, world trading surplus countries like China, Japan and then Russia, had no practical alternative but to buy more US Government debt—Treasury securities—with the bulk of their surplus trade dollars. Washington and Wall Street smiled. They could print endless volumes of dollars backed by nothing more valuable than F-16s and Abrams tanks. China, Russia and other dollar bond holders in truth financed the US wars that were aimed at them, by buying US debt. Then they had few viable alternative options.

Viable Alternative Emerges

Now, ironically, two of the foreign economies that allowed the dollar an artificial life extension beyond 1989—Russia and China—are carefully unveiling that most feared alternative, a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.

For several years both the Russian Federation and the Peoples’ Republic of China have been buying huge volumes of gold, largely to add to their central bank currency reserves which otherwise are typically in dollars or euro currencies. Until recently it was not clear quite why.

For several years it’s been known in gold markets that the largest buyers of physical gold were the central banks of China and of Russia. What was not so clear was how deep a strategy they had beyond simply creating trust in the currencies amid increasing economic sanctions and bellicose words of trade war out of Washington.

Now it’s clear why.

China and Russia, joined most likely by their major trading partner countries in the BRICS (Brazil, Russia, India, China, South Africa), as well as by their Eurasian partner countries of the Shanghai Cooperation Organization (SCO) are about to complete the working architecture of a new monetary alternative to a dollar world.

Currently, in addition to founding members China and Russia, the SCO full members include Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and most recently India and Pakistan. This is a population of well over 3 billion people, some 42% of the entire world population, coming together in a coherent, planned, peaceful economic and political cooperation.

If we add to the SCO member countries the official Observer States—Afghanistan, Belarus, Iran and Mongolia, states with expressed wish to formally join as full members, a glance at the world map will show the impressive potentials of the emerging SCO. Turkey is a formal Dialogue Partner exploring possible SCO membership application, as are Sri Lanka, Armenia, Azerbaijan, Cambodia and Nepal. This, simply said, is enormous.

BRI and a Gold-Backed Silk Road

Until recently Washington think tanks and the Government have sneered at the emerging Eurasian institutions such as SCO. Unlike BRICS which is not made up of contiguous countries in a vast land-mass, the SCO group forms a geographic entity called Eurasia. When Chinese President Xi Jinpingproposed the creation of what then was called the New Economic Silk Road at a meeting in Kazakhstan in 2013, few in the West took it seriously. The name officially today is the Belt, Road Initiative (BRI). Today, the world is beginning to take serious note of the scope of the BRI.

It’s clear that the economic diplomacy of China, as of Russia and her Eurasian Economic Union group of countries, is very much about realization of advanced high-speed rail, ports, energy infrastructure weaving together a vast new market that, within less than a decade at present pace, will overshadow any economic potentials in the debt-bloated economically stagnant OECD countries of the EU and North America.

What until now was vitally needed, but not clear, was a strategy to get the nations of Eurasia free from the dollar and from their vulnerability to further US Treasury sanctions and financial warfare based on their dollar dependence. This is now about to happen.

At the September 5 annual BRICS Summit in Xiamen, China, Russian President Putin made a simple and very clear statement of the Russian view of the present economic world. He stated,

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

To my knowledge he has never been so explicit about currencies. Put this in context of the latest financial architecture unveiled by Beijing, and it becomes clear the world is about to enjoy new degrees of economic freedom.

China Yuan Oil Futures

According to a report in the Japan Nikkei Asian Review, China is about to launch a crude oil futures contract denominated in Chinese yuan that will be convertible into gold. This, when coupled with other moves over the past two years by China to become a viable alternative to London and New York to Shanghai, becomes really interesting.

China is the world’s largest importer of oil, the vast majority of it still paid in US dollars. If the new Yuan oil futures contract gains wide acceptance, it could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. That would challenge the two Wall Street-dominated oil benchmark contracts in North Sea Brent and West Texas Intermediate oil futures that until now has given Wall Street huge hidden advantages.

That would be one more huge manipulation lever eliminated by China and its oil partners, including very specially Russia. Introduction of an oil futures contract traded in Shanghai in Yuan, which recently gained membership in the select IMF SDR group of currencies, oil futures especially when convertible into gold, could change the geopolitical balance of power dramatically away from the Atlantic world to Eurasia.

In April 2016 China made a major move to become the new center for gold exchange and the world center of gold trade, physical gold. China today is the world’s largest gold producer, far ahead of fellow BRICS member South Africa, with Russia number two.

China has now established a vast storage center in the Chinese Qianhai Free Trade Zone next to Shenzhen, the city of some 18 million immediately north of Hong Kong on the Pearl River Delta. Now China is completing construction of a permanent gold vault facility, including a bonded warehouse, trading floor and related offices areas. The 105-year-old Hong Kong-based Chinese Gold and Silver Exchange Society is in a joint project with ICBC, China’s largest state bank and its largest gold importing bank, to create the Qianhai Storage Center. It begins to become clear why Washington deceptive NGOs such as the National Endowment for Democracy tried, unsuccessfully, to create an anti-Beijing Color Revolution, the Umbrella Revolution in Hong Kong in late 2014.

Now to add the new oil futures contract traded in China in Yuan with the gold backing will lead to a dramatic shift by key OPEC members, even in the Middle East, to prefer gold-backed Yuan for their oil over inflated US dollars that carry a geopolitical risk as Qatar experienced following the Trump visit to Riyadh some months ago. Notably, Russian state oil giant, Rosneft just announced that Chinese state oil company, CEFC China Energy Company Ltd. Just bought a 14% share of Rosneft from Qatar. It’s all beginning to fit together into a very coherent strategy.

The dollar imperium is in its painful death agony and its patriarchs are in reality denial otherwise known as the Trump presidency. Meanwhile the saner elements of this world are about building constructive, peaceful alternatives. They are even open to admit Washington, under honest rules, to join them. That’s remarkably generous isn’t it?

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An Economic Lesson for China and Russia

NOVANEWS

Is there anyone in Trump’s government who is not an imbecile?

After years of endless military threats against Russia—remember CIA deputy director Mike Morell saying on TV (Charlie Rose show) that the US should start killing Russians to give them a message, and Army Chief of Staff Mark Milley threatening “We’ll beat you harder than you have ever been beaten before”—now the US Treasury Secretary Steven Mnuchin threatens China. If China doesn’t abide by Washington’s new sanctions on North Korea, Mnuchin said the US “will put additional sanctions on them [China] and prevent them from accessing the US and international dollar system.”

Here is the broke US government $20 trillion in public debt, having to print money with which to buy its own bonds, threatening the second largest economy in the world, an economy on purchasing power parity terms that is larger than the US economy.

Take a moment to think about Mnuchin’s threat to China. How many US firms are located in China? It is not only Apple and Nike. Would sanctions on China mean that the US firms could not sell their Chinese made products in the US or anywhere outside China? Do you think the global US corporations would stand for this?

What if China responded by nationalizing all US factories and all Western owned banks in China and Hong Kong?  

Mnuchin is like the imbecile Nikki Haley. He doesn’t know who he is threatening.  

Consider Mnuchin’s threat to exclude China from the international dollar system. Nothing could do more harm to the US and more good to China.

A huge amount of economic transactions would simply exit the dollar system, reducing its scope and importance.  Most importantly, it would finally dawn on the Chinese and Russian governments that being a part of the dollar system is a massive liability with no benefits. Russia and China should years ago have created their own system.  Being part of Washington’s system simply lets Washington make threats and impose sanctions. 

The reason Russia and China are blind to this is that they foolishly sent students to the US to study economics.  These students returned completely brainwashed with neoliberal economics, “junk economics” in Michael Hudson’s term. This American economics makes Russian and Chinese economists de facto American stooges. They support policies that serve Washington instead of their own countries.

If China and Russia want to be sovereign countries, they must pray that Mnuchin does cut them off from the dollar system that exploits them. Then Russia and China will have to put in place their own system and learn real economics instead of propaganda posing as economics that serves Washington’s interest.

Posted in China, RussiaComments Off on An Economic Lesson for China and Russia

BRICS and the Fiction of “De-Dollarization”

NOVANEWS

Next week in early September 2017, the member states of BRICS, will be meeting in Xiamen, Fujian Province, China.

This article was first published by Global Research in April 2015.

*    *    *

The financial media as well as segments of the alternative media are pointing to a possible weakening of the US dollar as a global trading currency resulting from the BRICS (Brazil, Russia, India, China, South Africa) initiative. 

One of the central arguments in this debate on competing World currencies hinges on the BRICS initiative to create a development bank which, according to analysts, challenges the hegemony of Wall Street and the Washington based Bretton Woods institutions.

The BRICS New Development Bank (NDB) was set up to challenge two major Western-led giants – the World Bank and the International Monetary Fund. NDB’s key role will be to serve as a pool of currency for infrastructure projects within a group of five countries with major emerging national economies – Russia, Brazil, India, China and South Africa. (RT, October 9, 2015, emphasis added)

More recently, emphasis has been placed on the role of China’s new Asia Infrastructure Investment  Bank (AIIB), which, according to media reports, threatens to “transfer global financial control from Wall Street and City of London to the new development banks and funds of Beijing and Shanghai”.

There has been a lot of media hype regarding BRICS.

While the creation of BRICS has significant geopolitical implications, both the AIIB as well as the proposed BRICS Development Bank (NDB) and its Contingency Reserve Arrangement (CRA) are dollar denominated entities. Unless they are coupled with a multi-currency system of trade and credit, they do not threaten dollar hegemony. Quite the opposite, they tend to sustain and extend dollar denominated lending. Moreover, they replicate several features the Bretton Woods framework.

Towards a Multi-Currency Arrangement? 

What is significant, however, from a geopolitical standpoint is  that China and Russia are developing a ruble-yuan swap, negotiated between the Russian Central Bank, and the People’s Bank of China,

The situation of the other three BRICS member states (Brazil, India, South Africa) with regard to the implementation of (real, rand rupiah) currency swaps is markedly different. These three highly indebted countries are in the straightjacket of IMF-World Bank conditionalities. They do not decide on fundamental issues of monetary policy and macro-economic reform without the green light from the Washington based international financial institutions.

Currency swaps between the BRICS central banks was put forth by Russia to:

“facilitate trade financing while completely bypassing the dollar. “At the same time, the new system will also act as a de facto replacement of the IMF, because it will allow the members of the alliance to direct resources to finance the weaker countries.” (Voice of Russia)

While Russia has formally raised the issue of a multi-currency arrangement, the Development Bank’s structure does not currently “officially” acknowledge such a framework:

We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system]” (Governor of the Russian Central Bank, June 2014, Prime news agency)

India, South Africa and Brazil have decided not to go along with a multiple currency arrangement, which would have allowed for the development of bilateral trade and investment activities between BRICs countries, operating outside the realm of dollar denominated credit. In fact they did not have the choice of making this decision in view of the strict loan conditionalities imposed by the IMF.

Heavily indebted under the brunt of their external creditors,  all three countries are faithful pupils of the IMF-World Bank. The central bank of these countries is controlled by Wall Street and the IMF. For them to enter into a “non-dollar” or an “anti-dollar” development banking arrangement with multiple currencies, would have required prior approval of the IMF.

The Contingency Reserve Arrangement

The CRA is defined as a “framework for provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.” (Russia India Report April 7, 2015). In this context, the CRA fund does not constitute a “safety net” for BRICS countries, it accepts the hegemony of the US dollar which is sustained by large scale speculative operations in the currency and commodity markets.

In essence the CRA operates in a similar fashion to an IMF precautionary loan arrangement (e.g. Brazil November 1998) with a view to enabling highly indebted countries to maintain the parity of their exchange rate to the US dollar, by replenishing central bank reserves through borrowed money.

The CRA excludes the policy option of foreign exchange controls by BRICS member states. In the case of India, Brazil and South Africa, this option is largely foreclosed as a result of their agreements with the IMF.

The dollar denominated $100 billion CRA fund is a “silver platter” for Western “institutional speculators” including JP Morgan Chase, Deutsche Bank, HSBC, Goldman Sachs et al, which are involved in short selling operations on the Forex market. Ultimately the CRA fund will finance the speculative onslaught in the currency market.

Neoliberalism firmly entrenched

An arrangement using national currencies instead of the US dollar requires sovereignty in central bank monetary policy. In many regards, India, Brazil and South Africa are (from the monetary standpoint) US proxy states, firmly aligned with IMF-World Bank-WTO economic diktats.

It is worth recalling that since 1991, India’s macroeconomic policy was under under the control of the Bretton Woods institutions, with a former World Bank official, Dr. Manmohan Singh, serving first as Finance Minister and subsequently as Prime Minister.

Moreover, while India is an ally of China and Russia under BRICS, it has entered into a  new defense cooperation deal with the Pentagon which is (unofficially) directed against Russia and China. It is also cooperating with the US in aerospace technology. India constitutes the largest market (after Saudi Arabia) for the sale of US weapons systems. And all these transactions are in US dollars.

Similarly, Brazil signed a far-reaching Defense agreement with the US in 2010 under the government of Luis Ignacio da Silva, who in the words of the IMF’s former managing director Heinrich Koeller, “Is  Our Best President”, “… I am enthusiastic [with Lula’s administration]; but it is better to say I am deeply impressed by President Lula, indeed, and in particular because I do think he has the credibility”  (IMF Managing Director Heinrich Koeller, Press conference, 10 April 2003 ).

In Brazil, the Bretton Woods institutions and Wall Street have dominated macro-economic reform since the outset of the government of Luis Ignacio da Silva in 2003. Under Lula, a Wall Street executive was appointed to head the Central Bank, the Banco do Brazil was in the hands of a former CitiGroup executive. While there are divisions within the ruling PT party, neoliberalism prevails. Economic and social in Brazil is in large part dictated by the country’s external creditors including JPMorgan Chase, Bank America and Citigroup.

Central Bank Reserves and The External Debt

India and Brazil (together with Mexico) are among the World’s most indebted developing countries. The foreign exchange reserves are fragile. India’s external debt in 2013 was of the order of more than $427 Billion, that of Brazil was a staggering $482 billion, South Africa’s external debt was of the order of $140 Billion. (World Bank, External Debt Stock, 2013).

External Debt Stock (2013)

Brazil  $482 billion

India   $427 billion

South Africa  $140 billion

All three countries have central banks reserves (including gold and forex holdings) which are lower than their external debt (see table below).

Central Bank Reserves (2013)

Brazil  $359 billion

India:  $298 billion

South Africa $50 billion

The situation of South Africa is particularly precarious with an external debt which is almost three times its central bank reserves.

What this means is that these three BRICS member states are under the brunt of their Western creditors. Their central bank reserves are sustained by borrowed money. Their central bank operations (e.g. with a view to supporting domestic investments and development programs) will require borrowing in US dollars. Their central banks are essentially “currency board” arrangements, their national currencies are dollarized.

The BRICs Development Bank (NDB)

On 15 July 2014, the group of five countries signed an agreement to create the US$100 billion BRICS Development Bank together with a US dollar denominated  ” reserve currency pool” of US$100 billion. These commitments were subsequently revised.

Each of the five-member countries  “is expected to allocate an equal share of the $50 billion startup capital that will be expanded to $100 billion. Russia has agreed to provide $2 billion from the federal budget for the bank over the next seven years.” (RT, March 9, 2015).

In turn, the commitments to the Contingency Reserve Arrangement are as follows;

Brazil, $18 billion

Russia $18 billion

India  $18 billion

China $41 billion

South Africa $5 billion

Total $100 billion

As mentioned earlier, India, Brazil and South Africa, are heavily indebted countries with central bank reserves substantially below the level of their external debt.  Their contribution to the two BRICs financial entities can only be financed:

  • by running down their dollar denominated central bank reserves and/or
  • by financing their contributions to the Development Bank and CRA, by borrowing the money, namely by “running up” their dollar denominated external debt.

In both cases, dollar hegemony prevails. In other words, the Western creditors of these three countries will be required to “contribute” directly or indirectly to  the financing of the dollar denominated contributions of Brazil, India and South Africa to the BRICS development bank (NDB) and the CRA.

In the case of South Africa with Central Bank reserves of the order of 50 billion dollars, the contribution  to the BRICS NDB will inevitably be financed by an increase in the country’s (US dollar denominated) external debt.

Moreover, with regard to India, Brazil and South Africa, their membership in the BRICS Development Bank was no doubt the object of behind closed doors negotiations with the IMF as well as guarantees that they would not depart from the “Washington Consensus” on macro-economic reform.

Under a scheme whereby these countries were to be in be in full control of their Central Bank monetary policy, the contributions to the Development Bank (NDB) would be allocated in national currency rather than US dollars under a multi-currency arrangement. Needless to say under a multi-currency system the contingency CRA fund would not be required.

The geopolitics behind the BRICS initiative are crucial. While the BRICS initiative from the very outset has accepted the dollar system, this does not exclude the introduction, at a later stage of a multiple currency arrangement, which challenges dollar hegemony.

Posted in China, RussiaComments Off on BRICS and the Fiction of “De-Dollarization”

BRICS: Turning Point to the New World Economic System, China’s Crucial Role

NOVANEWS

Interview to the Peoples Daily

Interview of China’s People’s Daily with renowned author and former foreign minister of Yugoslavia Zivadin Jovanović

As the host of this summit, what new elements can China bring to the BRICS?

ZJ: First of all, it is natural that China, one of the founders and the host country of the BRICS Summit will reaffirm remarkable achievements of BRICS cooperation and development, in the democratization of the world trade, development and financial institutions and in bringing the world economy out of recession. At the same time, China is expected to offer the best ways how to deal with new challenges in the field of global trade, investments, and rapid changes in economic structure and technology. Speaking of “new elements”, those in my opinion, may be – further expansion of the BRICS membership in line with real roles and potentials of emerging economies; timely contemplating challenges of the new industrial revolution bringing enormous development potentials but also unprecedented changes in economic, social and working force structures; reinforcing struggle for principle based international trade and investment cooperation, against autarchy, protectionism, economic, financial or any other form of confrontation.

2. What kind of role has BRICS played in the global governance? Has the role of the BRICS in the world changed in the past few years? What role should the BRICS play in the future?

ZJ: BRICS, especially China, has played crucial role in reforming global economic governance toward building up new just economic world order free of domination, exclusiveness and exploitation. BRICS is the symbol of the New Economic Order based on sovereign equality, inclusiveness, shared benefits and responsibilities, win win cooperation. Establishment of the New (BRICS) Development Bank, of Asia Infrastructure Investment Bank, Belt and Road Fund and a number of other new specialized economic, financial and monetary institutions established by BRICS, or by China as a leading member has already changed the world economy governance. This process of paramount importance is not finished. New challenges, obstacles and even open resistance to the democratization of the world economic relations do call for vigor new initiatives of BRICS and emerging economies, in general.

3. How do you assess the performance of the BRICS in the past few years? What kind of characteristics does BRICS have?

ZJ: Establishment and the role of BRICS is of historic importance for the present and for the future of the world economic relations and development. BRICS represent a turning point from the world system of domination to the world sovereign equality and equal chances for all. From the system of deepening economic and social gaps to the system of equitable distribution of wealth and human well-being centered strategies. From sewing interventionism and destabilization aimed at controlling the earth’s wealth to solidifying peace, development and sovereign control of natural wealth of every country. BRICS establishment ushered irreversible process of ending the era of domination of few the richest and opening new era of equal opportunities and inclusive sustainable development for all. BRICS is led by conviction that only equitable and sustainable development serves the interest of peace, stability and well being of mankind. What make BRICS strong, trustworthy and with bright future are its openness, equality and distinctive efficiency. New (BRICS) Development Bank, for instance, brings its decisions on credit demands solely on economic merits, free of any political conditionality.

4. China has played a leading role in the process of cooperation of BRICS. What should China do to lead the BRICS to a better future?

ZJ: Reinforcing win win cooperation which is symbol of China’s global approach to international economic cooperation, continued adherence to the principle of sovereign equality and harmonizing bilateral and multilateral approaches to the development strategy and other challenges will be the best way to lead BRICS to even better future. While remaining open for equitable cooperation with developed parts of the world, the development strategies of BRICS countries should be designed to facilitate economic exchange among themselves and among emerging economies, in general.

5. China has been the second largest economy in the world. What kind of positive influence has China made to the reform of world economic and financial system?

ZJ: China commands great potentials not only for own modern socioeconomic and cultural development but also for the growth of the global world economy. The fact that China has risen to the post of second largest economy of the world with real possibility to take the lead as the first one in not distant future, is proof by itself of unprecedented potentials and clear vision of the future of equal chances for all. Chinese strategy of reforms and opening led not only to the fastest GDP growth in the world but also to strengthening of science, innovation and green development technologies. By introducing the concept of win win cooperation and later Global multidimensional Belt and Road Initiative China in fact presented new pattern of international cooperation based on long term common objectives, not on shortsighted calculations and temporary gains. All this made China worldwide distinct, highly desirable partner in both – practical cooperation and in building New World Order.

China has gained strong international support in pursuing win win cooperation especially from developing countries. This naturally led to China’s very positive influence in promoting reforms of the world economic and financial institutions opening the door that the interest and voices of less developed parts of the world be better understood and respected. Coordination of efforts within BRICS, SCO and other integrations made China’s influence in G20, WTO, IMF and UN institutions much more visible and efficient. No doubt that China’s influence to further reform the world economic and financial systems will grow from strength to strength. China’s membership to WTO and entering of renminbi into the IMF basket of international currencies (SDR) make China’s influence stronger and stronger. Finally, the institutions which China, BRICS, or SCO have already established, such as New Development Bank, AIIB, BRI Fund and others, are pillars of the emerging new global financial and economic systems.

6. BRICS voices the interest of developing countries. How should both developed countries and developing countries enhance cooperate to boost world economic growth?

ZJ: First of all, by pursuing open, unhindered trade, investment and transfer of new technologies. Developing countries should be supported particularly in strengthening their inter-connectivity through expansion and modernization of infrastructure. To be in harmony with sustainable peace economic cooperation should be free of shortsighted geopolitical calculations characteristic of the cold war and unipolar periods. There is no way of returning back to the system of domination.

Posted in ChinaComments Off on BRICS: Turning Point to the New World Economic System, China’s Crucial Role

‘Economic War with China Is Everything,’ North Korea a ‘Sideshow’: White House Chief Strategist

NOVANEWS

Calling tensions with North Korea a “sideshow,” the White House Chief Strategist said that China and the U.S. are in an “economic war,” and that China is winning.

 

The United States is currently engaged in an “economic war” with China to maintain its position as the world’s top hegemon, and appears to be losing it, White House Strategist and former editor of the right-wing publication Breitbart News, Steve Bannon said in an unexpected interview published Wednesday.

“We’re at economic war with China. It’s in all their literature. They’re not shy about saying what they’re doing. One of us is going to be a hegemon in 25 or 30 years and its gonna be them if we go down this path,” Bannon said to author and professor Robert Kuttner.

“The economic war with China is everything. And we have have to be maniacally focused on that. If we continue to lose it, we’re five years away, I think, ten years at the most, of hitting an inflection point from which we’ll never be able to recover,” he continued.

Bannon indicated that the current tensions and threats surrounding the Democratic People’s Republic of Korea (DPRK), also known as North Korea, are just a “sideshow” for the battle for global hegemony with China. He said he is pressuring within the Trump administration to use the tensions in Korea as a way to impose economic pressure on China.

“We’re going to run the tables on these guys [China]. We’ve come to the conclusion that they’re in an economic war and they’re crushing us,” he said.

Although Trump has repeatedly engaged in beligerant rhetoric toward the DPRK, saying that the U.S.’s arsenal is “locked and loaded” and that the North Korean people will face “fire and fury,” Bannon directly rejected the potential for a military confrontation on the peninsula.

“There’s no military solution [to the DPRK’s nuclear threats], forget it. Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us,” Bannon said.

The DPRK has continued its program to develop ballistic missiles and nuclear weapons in spite of pressure and threats demanding that they halt the efforts. They claim that the weapons act as a deterrent to a potential U.S. invasion or regime change attempt.

Bannon went on to explain how he was acting withing the Trump administration to push anti-China economic policies, such as the recently announced Section 301 complaint from the 1974 Trade Act targeting China’s alleged “unfair” trade practices. His struggle is within the administration also, where he said he fights “every day” against the “apparatus” to pressure those within the administration to follow his line and sideline those who don’t.

China has been pushing for a “double freeze” plan, which would involve the U.S. halting its military exercises on the Korean Peninsula, which is a key demand of the DPRK, in exchange for Pyongyang stopping its missile tests. On Tuesday, U.S. Department of State spokesperson Heather Nauertscoffed at the idea that such a deal would take place. Bannon however, indicated he might consider such a deal, but that such prospects were remote.

Trump is currently embroiled in criticism domestically and internationally for placing the blame for violence on “both sides” of the recent neo-Nazi and white-nationalist rally that took place in Charlottesville, Virginia, that resulted in a death and numerous injuries when a white-nationalist drove a car into a group of counter-protesters.

Bannon however, dismissed white nationalists as “a collection of clowns.”

“Ethno-nationalism – it’s losers. It’s a fringe element. I think the media plays it up too much,” he said.

While he rejected “ethno-nationalism” in the interview, he made clear that he was embracing economic nationalism, as embodied in his anti-China crusades. “If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats,” he said. “I want them to talk about racism every day.”

As a former editor of the far-right wing publication Breitbart News, Bannon is considered to be a major figure within the U.S. far-right, and a major ideological force within the Trump administration as the White House Chief Strategist.

Posted in USA, China, North KoreaComments Off on ‘Economic War with China Is Everything,’ North Korea a ‘Sideshow’: White House Chief Strategist

What’s Behind N Korea Summoning Envoys to UN, Russia, China

NOVANEWS

A North Korean woman is reflected in a rain puddle as she walks past the country's national flag along the Kim Il Sung Square on Sunday, July 21, 2013, downtown Pyongyang, North Korea

© AP Photo/ Wong Maye-E

The meeting of key North Korean ambassadors in Pyongyang could help temporarily defuse the increased tensions on the Korean Peninsula, according to political analyst Dmitry Mosyakov.

Earlier, media reported that North Korea has summoned several key ambassadors to Pyongyang for a meeting in the wake of the ongoing tensions over the North Korean nuclear and missile program and a new round of UN sanctions.

“North Korea seems to be hosting what appears to be a meeting of foreign diplomatic missions’ chiefs after calling its ambassadors to major countries back to Pyongyang,” Yonhap news agency reported, citing a source in the North Korean government.

According to the report, the source said that North Korean Ambassador to the United Nations Ja Song-nam, Ambassador to China Ji Jae-ryong and Ambassador to Russia Kim Hyong-jun would take part in the meeting; however, it was still unclear who else would participate in the upcoming gathering.Dmitry Mosyakov, a senior analyst at the Institute for Oriental Studies of the Russian Academy of Sciences, suggested that the move would help defuse the ongoing tensions, at least for a while.

“I think this may be the best option possible in the current situation. Possibly, they will discuss a new, maybe less hardline, approach,” Mosyakov told Sputnik.

According to the expert, summoning ambassadors is usually an emergency measure.

Navy vessels are moored in port at the U.S. Naval Base Guam at Apra Harbor, Guam March 5, 2016
© REUTERS/ MAJOR JEFF LANDIS,USMC (RET.)/NAVAL BASE GUAM/HANDOUT/FILE PHOTO

“This practice is applied in such emergency situations as that we’re witnessing now. Almost every country in the world represented by the UN Security Council wants Pyongyang to reign in its nuclear and missile program,” Mosyakov said.

He added, “Those ambassadors are very important in terms of notifying the international community of Pyongyang’s policy. It is clear that the move is directly related to the current crisis.”

The expert pointed out that it is difficult to speculate on the agenda of the ambassadors’ meeting, but expressed hope that a compromise will be reached.

Tensions on the Korean Peninsula have recently intensified due to North Korea’s multiple nuclear tests and ballistic missile launches conducted in violation of UN Security Council resolutions. Last month, Pyongyang conducted two tests of intercontinental ballistic missiles.

The US and North Korea have exchanged a series of warmongering statements during the past week. Russian Foreign Minister Sergei Lavrov said Friday that Russia opposes North Korea’s possession of nuclear weapons, adding that the risk of the Washington-Pyongyang conflict turning into a war is “very high.”Russia has repeatedly voiced concern over the escalation on the Korean peninsula. During Chinese President Xi Jinping’s visit to Moscow earlier this summer, the Russian and Chinese foreign ministries issued a joint statement proposing ways to de-escalate the situation. Moscow and Beijing called on Pyongyang to stop nuclear tests and urged Washington and Seoul to refrain from conducting joint drills.

Mosyakov noted that the Russian-Chinese proposal has the potential to pave the way for some kind of a compromise.

Related:

S Korea, US Going to Continue Putting Pressure on N Korea Amid Missile Threats
China Imposes Ban on Imports From North Korea, Yields to Trump’s Calls
No Sign of N Korea’s Preparations for SLBM Launch Test – S Korea
North Korea Summons Ambassadors to UN, China, Russia for Meeting in Pyongyang

Posted in China, North Korea, RussiaComments Off on What’s Behind N Korea Summoning Envoys to UN, Russia, China

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