- Ayatollah Blasts Trump's "Rants And Whoppers", Says Iran Will "Shred" Deal If US Pulls Out
Iranian Supreme Leader Ayatollah Ali Khamenei – who famously waited three months before offering a tepid endorsement of the JCPOA – largely echoed the threats of other Iranian government officials when he said Wednesday that Iran would adhere to the terms of the deal if other world powers respected it, but would “shred it” if the US were to pull out.
Speaking publicly about the future of the deal for the first time since President Donald Trump refused to decertify it five days ago, Khamenei confirmed that Iran would likely terminate the deal – and restart its nuclear program – if the US Congress decides to unilaterally rule that Iran is not in compliance, opening the door to reimposing sanctions.
The ayatollah’s proclamation puts Iran at odds with the deals other signatories, who’ve maintained that the US doesn’t have the power to terminate a multilateral accord certified by the United Nations. Khamenei welcomed the support of the other signers – Britain, France, Germany, Russia, China and the European Union – but said it would not be enough to convince Iran to stay, Reuters reported.
“Europe must stand against practical measures (taken) by America,” he said. If Trump ditched the deal, “Iran will shred it”.
US lawmakers and President Donald Trump are presently pushing for a bill that would recertify the deal with one important caveat: Iran would be subject to “triggers” – like continued ballistic missile tests or evidence that it could build a nuclear weapon within a year’s time. Violating these conditions would lead to sanctions automatically being reimposed.
However, Khamenei also vowed to continue Iran’s ballistic missile program, which the country claims is strictly for defensive purposes, suggesting that Iran wouldn’t brook the additional restrictions being considered by the US Congress.
"Or to ask why Iran has missiles – well, why do you have missiles? Why do you have nuclear weapons? We will not accept the Europeans going along with America's bullying."
The ayatollah also dismissed Trump's attacks on Iran as "rants and whoppers", adding that Iran will continue to abide by its commitments under the nuclear deal.
"I don't want to waste my time on answering the rants and whoppers of the brute US president," Khamenei said in a speech to students in Tehran, published on his Telegram channel.
The ayatollah insisted that ultimately Iran would prevail in its struggle against the US, adding that it would be unwise to underestimate the threat posed by the US because of Trump’s buffoonish persona.
"Everyone be assured that this time, too, America will be slapped and defeated by the nation of Iran."
Khamenei said the world should not be fooled by Trump's public persona.
"The US president displays stupidity, but this should not cause us to ignore America's mischief," he said.
The Trump administration has pushed for a more aggressive approach to Iran’s missile program, repeatedly insisting that, while Iran is technically complying with the terms of the pact, it is more broadly violating the “spirit” of the agreement by continuing to test missiles and (allegedly) fund terrorist groups, AFP reported.
While the US has worked itself into a lather over the Iranian missile program, the regime amusingly “punked” their American adversaries last month when they tested what was purported to be a new type of medium range ballistic missile. Intelligence sources initially trusted the Iranian media reports, but later government sources determined that Iran had never actually fired a missile, and that the footage was from a failed launch seven months ago.
On Monday, Iranian Parliament Speaker Ali Larijani said Monday that the US would face stiff consequences if it withdraws from the JCPA – informally known as the Iran deal. He added that Iran "had a developed plan and a certain law,” should the United States withdraw from the agreement on Tehran's nuclear program, adding that Washington would "regret it."
- A Failing Empire, Part 3: China & Russia Are Transforming Enemies Into Friends
Authored by Federico Pieraccini via The Strategic Culture Foundation,
In the previous articles, the military and economic means by which the United States initially aimed for global hegemony were addressed, detailing how the US became the (declining) superpower it is today. In both analyses I highlighted how the threat of US military power is no longer credible, and how sanctions and the strong-arming behavior of corporate giants and international bodies (IMF, World Bank, BIS, etc) have ceased their effectiveness. This has made the United States increasingly irrelevant, leaving in the process a vacuum to be filled by emerging powers like China and Russia, which effectively ushers in a new world order based on multipolarity. In this third and final part of the series, I will dive into the specific events that show how the military, economic and diplomatic combination of Iran, Russia and China have forged, by known as well as less-known means, an alternative world order to the unipolar American one.
Russia, China and Iran have in recent years drawn enormous benefit from the declining military and economic power of the United States, further propelled by a general mistrust of Washington's diplomatic and political abilities, both with Obama and now with Trump. The two previous articles showed that Moscow, Beijing and Tehran, even as they addressed different situations, shared similar interests and came to coordinate their military, economic and diplomatic strategy.
The success of the Euro-Asian triptych is based on the essential principle of transforming enemies into neutral players, neutral players into allies, and further improving relations with allied nations. In order for this project to be realized, economic, military and diplomatic efforts are variously employed, depending on the country and the general regional context. The flexibility shown by Moscow and Beijing in negotiations has delivered historic deals, not only in the energy sector but also in the military sphere and also in education and poverty reduction, as seen in Africa.
Saudi Arabia, Turkey and Syria are three countries that, when analysed individually, reveal this precise strategy of Russia, China and Iran. Particular attention is focused on the Middle East for several reasons. It is the region where America’s declining military power, unable to achieve its geopolitical objectives in Syria, meets with the progressive loss of Washington's economic influence, highlighted by the increasingly precarious position of the petrodollar that is about to be challenged by petroyuan deals between Saudi Arabia and China.
From Enemies to Neutrals
The military defeat of Syria's enemies was mainly due to the Syrian Arab Army (SAA) together with Iran (plus Hezbollah) and Russia's military cooperation, together with Beijing’s diplomatic and economic support. Thanks to the strategy adopted by Putin in Syria, Russia was able to stop the advanced project of the United States, Saudi Arabia, Turkey, Qatar, France, the United Kingdom, Jordan and Israel to dismantle Syria. The Russian Federation gradually entered into the Syrian conflict, and the military results immediately favored the axis of resistance, the US military unable to intervene directly to change the course of events.
The consequences of this choice have led historic allies in the region to doubt Washington’s real commitment to the region and America’s military ability to intervene in a conflict in the Middle East and North Africa (MENA) and change its course in favour of Riyadh, Doha, Ankara or Tel Aviv. The new Trump administration has showed itself not to live up to the expectations of Saudi regional hegemonic plans, even though the Kingdom agreed to buy up to $110 billion worth of US weapons and commit to further investments in the US.
Riyadh is in an even tighter position than one would ordinarily think. It has to individually support the weight of the petrodollar, which is increasingly shaky thanks to the Chinese desire to eliminate forms of payment in US dollars by switching to the petroyuan. Moreover, Riyadh sees little tangible benefits to the US militarily backing its aggressive anti-Iran policies, even though Trump has shown to different ideas than Obama on the Iran deal. Saudi Arabia shares a common interest with Israel in the region with regard to their shared anger concerning Washington’s diminishing effectiveness in the region.
From the Saudi point of view, everything went downhill within a relatively short period. The defeat in Syria that coincided with the agreement on the nuclear deal (Joint Comprehensive Plan of Action – JCPOA) between Iran and the 5+1 countries. In both these scenarios, Riyadh feels the profound betrayal of its old North American ally. The Chinese economic pressure on Riyadh to accept yuan payments for oil, coupled with the growing ability of Moscow to effectively intervene in the region, and the renewed diplomatic and political role of Iran thanks to the JCPOA agreement, has left Riyadh on a certain path to destruction. The only solution is a strategic change that could affect the region in a significant manner.
The visit of Saudi King Salman to Moscow to sign trade agreements (an investment fund of over 1 billion dollars has been created) was of symbolic importance. The King’s actions, conducted in person, reflected recognition of Russia’s new dominant role in the Middle East as a result of American intentions to withdraw influence in the region. The need for the Saudi king to appear in person in Moscow also directly concerns the succession to the throne, with Mohammed bin Salman to inherit the keys to the kingdom, in spite of the disasters in Yemen and the Gulf Cooperation Council (GCC) crisis caused by the clash with Qatar. In a situation of extreme weakness, especially with oil prices so low, the Saudi monarchy is left with few cards to play and has to initiate a dialogue with Moscow and possibly start some kind of cooperation in various fields related to energy and investment. Initially, the main excuse for the Moscow meeting between Putin and the Saudi king was to coordinate the production and sale of petroleum and gas, a necessity for both countries given falling oil prices over the last 24 months.
The first goal achieved by Putin and the Saudi king appears to be a spike in oil prices to acceptable levels, following Washington and Riyadh’s failed strategy to bankrupt Moscow by plunging oil prices.
Secondly, the meeting focused on the acceptance of Riyadh’s defeat in Syria, recognizing Assad as the only legitimate leader of the Syrian Arab Republic.
A lot is developing behind the scenes, and this is evident with Riyadh now recognizing a political solution as the only way to end the conflict, something never mentioned by Saudi state representatives. It will be very difficult for Riyadh to give up the regime-change project, even if the political, diplomatic, military and economic pressure from China and Russia increases. A common faith accompanies Riyadh and Tel Aviv, as shown with both repeatedly trying to persuade Putin to abandon his friendship with Iran and Assad, but without success. The loyalty demonstrated by Moscow to Tehran and Damascus has also had a positive effect on the Saudis, who must recognize that while Putin may have different views on certain issues, he is a man of his word; unlike the United States, where new administrations may sometimes throw friends under the bus, Putin maintains his promises, even under extreme pressure. In this sense, Trump's decision to decertify the Iran deal is a demonstration of good will to Israel and Saudi Arabia by the new administration.
Saudi Arabia finds itself with very low monetary reserves as a result of the lowered price of oil and involvement in several wars. To add to this is a military defeat in Syria and an even bigger debacle in Yemen. To cap it all off, the United States, its most valuable ally, is increasingly disinterested in the fate of the Saudi monarchy and the kingdom, thanks to increasing energy independence as a result of fracking. Adding to this, the Gulf Cooperation Council (GCC) has split as a result of the economic warfare against Qatar, representing another example of Washington not supporting Riyadh to the full extent the monarchy in Saudi Arabia would have been expecting. The reasoning for Riyadh is as simple as it gets. If Washington is not able to support Saudi Arabia militarily, but Riyadh has to bear the burden economically, then the Kingdom is in enormous trouble and needs alternatives like Russia and China. It is unthinkable for Saudi Arabia to continue supporting petrodollar hegemony while Iran becomes a regional leader in the Middle East.
The best way is by negotiating with the main players, and Russia looks like the perfect mediator, as recently announced. China is just waiting for all these disputes to settle down to bring to bear its economic power to definitively relegate to the past the last forty years of chaos in the region stemming from Saudi-Iranian rivalry.
For Riyadh, even if the attempt to separate Russia and Iran were to fail, it would nevertheless bring about relations that send a clear signal to the West. The purchase of S-400s is a clear demonstration of expanding Russian influence in the Middle East, and Riyadh perhaps has an understandable fear of American retaliation in the event that it starts to change course regarding the sale of oil in currencies other than the dollar.
Moscow has achieved a diplomatic miracle with Saudi Arabia, thanks to the military efforts in Syria, Chinese economic pressure through the issuing of petroyuan, and Iranian diplomatic success, stemming especially from the nuclear energy agreement, which has served to rehabilitate Tehran on the international political scene.
The purchase of advanced Russian weapons systems sends a clear signal and indicates that the Saudi kingdom is ready to assume a more neutral position and has started to knock on the door of the multipolar world, an acknowledgement of Chinese economic power and the military-technological predominance of the Russian Federation.
From Neutral to Friends
In transforming itself into a more neutral country, Riyadh may be attempting to balance American economic and military influence with Russian and Chinese support. The importance for Russia and China in having a neutral country with great spending capacity in the region should also be noted. In the case of Turkey, Russian intervention in Syria, coupled with Turkish aspirations to become a Euro-Asian energy centre, progressively pushed Moscow and Ankara together. As a result of effective diplomatic work following Turkey’s downing of a Russian jet, relations have gradually improved, occurring in parallel to the operational success achieved by the Syrian army and Russian Air Force against Turkish-backed terrorists. The military defeat of Turkey was already clear twelve months ago. In the last three to four months, Erdogan seems to have changed priorities, focusing on the Kurdish issue and on growing relations with Qatar (the political movement of the Muslim Brotherhood is key in both countries and essential to their relationship). In the meantime, Turkey is distancing herself from her NATO allies, gravitating more and more towards the orbit of the “axis of resistance” that consists of Iran, Iraq and Syria.
The Syria peace talks held in Astana laid the foundation for diplomatic efforts by Tehran and Moscow to persuade Ankara to abandon the military option (even though this was already clear once Russia decided to intervene). Instead, Ankara would be encouraged to open up important energy deals between Ankara and Moscow. It seems that Ankara has now decided to become an energy hub, carrying Turkish Stream gas from Russia to Europe as well as gas from Qatar and Iran. It even seems that China has every intention of connecting with the Turkish facilities for the supply of gas and oil, thus increasing Ankara’s role as a central energy-transit hub for the region.
The other aspect that has firmly convinced Erdogan to yield on Syria concerns the Kurdish issue. The Syrian Democratic Forces (SDF), consisting mainly of Kurdish fighters, operate in Syria under the command and on behalf of the US-led international coalition. Ankara has nominated the Kurds of the SDF as an armed extension of the Kurdistan Workers’ Party (PKK), considered a terrorist group in Turkey. This divergence between Washington and Ankara has continued to grow, even during the Trump administration, contrary to forecasts during the US election period.
With the progressive use of the SDF in Syria by the international coalition headed by the US, Trump and Erdogan’s strategies have ended up clashing. Trump needs to give his domestic audience the impression that the US is devoted to fighting ISIS, even if this means relying on Kurdish soldiers that entails severing relations with Turkey. Erdogan sees this as a matter of national security. The situation has escalated to a point where a few days ago, a diplomatic dispute led to the suspension of the issuing of visas from the respective embassies in Ankara and Washington. Erdogan considers American aid to the Kurds as a betrayal of the worst kind from a NATO ally. A natural reaction to these actions by the US, therefore, was the the agreement between Iraq, Iran, Syria and Turkey to preserve territorial integrity vis-a-vis the Kurdish issue.
The blessing of the Chinese and Russians is evident in this situation. In order to pacify the region, rebuild it and incorporate it into the One Belt One Road project, the Maritime Silk Road, and the North-South Transport Corridor, wars have to stop and diplomacy must prevail. For Ankara, it is a unique opportunity to exit the war in Syria without appearing as one of the defeated factions (hence the Turkish participation in the Astana talks with Russia and Iran). At the same time, Turkey emphasizes the importance of its geographical position as a centre for energy distribution on the Eurasian supercontinent. This is all at the expense of the US, with Turkey breaking free from Washington’s pressure.
Moscow has already removed all sanctions against Turkey, and vice versa, greatly increasing trade with considerable prospects for growth in the coming years. As for weapons sales to Saudi Arabia, Russian influence is expanding, thanks to the S-400 systems in the process of being sold to Ankara over the vehement protests of many NATO countries. The S-400 system is a further effort to deter US aggression, but is also the first indication of Ankara’s will to diversify, this time militarily, constituting a pillar of the new multipolar world order.
Ankara, after numerous diplomatic and military failures, has rebuilt its role in the region alongside Iran and Qatar, in a context where its partnership with Moscow and Beijing will guarantee Erdogan a margin of maneuver to progressively disengage from the NATO system that has brought so many problems to the country. A future entry into the Shanghai Cooperation Organization (SCO) could seal Ankara’s passage into the multipolar world, becoming in the process a fully fledged ally of Moscow and Beijing. In the meantime, it is already possible to say that Moscow and its allies have succeeded in the unlikely task of turning a nation that was on the brink of a direct involvement in Syria in the effort to remove Assad into one of the most important guarantors of Syria’s territorial integrity. Erdogan has agreed to Assad staying in power into the near future, and has even agreed to help fight terrorists in Syria, as evidenced with the recent Turkish military operations in Idlib.
How deep these new friendships between Moscow, Riyadh and Ankara are yet to be tested. Erdogan and the Saudi monarchs have been known not to keep their word. At it stands, this appears to be an economic, political and military masterpiece of the Iranian, Russian and Chinese triad. The war in Syria has almost been won; the terrorist groups supported by the Saudis and Turks have been neutralized; and the conditions for a full Eurasian economic and military integration of Riyadh and Ankara have been set.
Supporting Friends in need.
Ultimately, it is worth pointing out the contribution of Russia, China and Iran to the Syrian government and people. Over the six years of aggression against the Syrian Arab Republic, Iran has never failed to contribute in terms of manpower, equipment and logistical support in the battle against terrorism. Moscow, in the early stages of the conflict, even before intervening directly, took steps to settle the Syrian foreign debt to Russia, and in fact lent money by providing armaments, energy and logistics as a way of actively contributing to the defeat of terrorists in Syria.
The People's Republic of China has already paved the way for the future of Syria in economic terms, declaring the country an important transit route and a final destination of a part of the Belt and Road Initiative (BRI). Chinese economic power will allow Damascus to rebuild a nation devastated by six years of terrorism and foreign aggression. With Russian military capabilities, Damascus will have all the necessary means to end the conflict and stabilize the country, laying the foundation to prevent any future Western aggression. From a political and diplomatic point of view, the joint actions of Tehran, Beijing and Moscow, together with Damascus, are an integral part of the axis that stretches from Iran to Iraq and Syria and arrives at the Mediterranean, or could even go to Turkey. With the combination of economic, military and political elements, Syria has survived almost unprecedented aggression, emerging as the winner, thus ensuring its ability to determine its future autonomously without external impositions.
* * *
Series Conclusions
The path traced by Moscow, Beijing and Tehran is expected to stabilize the Middle East, thanks to the resolution of the Syrian conflict. Some key elements of this global change we are witnessing are: Chinese economic pressure on the Saudis to accept payment for oil in yuan; the eradication of terrorism in Iraq and neighbouring countries, thereby circumventing sanctions imposed on Iran by the US and its allies; and transforming Turkey into a regional energy-distribution centre.
The RPC intervenes economically in a number of regions, particularly in the Middle East, to support Russian military power through money, diplomacy, economic investment (OBOR) and by providing liquidity to allies, as seen with Moscow when it was hit with Western sanctions. For Beijing, the decline in terrorism is a key factor in fostering China's development of the Silk Road 2.0 infrastructure, allowing Beijing to enter into areas destroyed in the Middle East to offer easy reconstruction plans. At the moment, Syria, Egypt, Libya and Pakistan seem to hold great importance for China's future strategies.
Russia and China lead organizations such as the BRICS, the UEE, the SCO, and the AIIB. The grand strategy is to support the creation of an alternative to the US dollar-based neoliberal world order and to contain the effects of declining US empire. Nations will increasingly have to choose between two systems: whether the multipolar world order, based on friendship and win-win cooperation, or the unipolar one, based on the America’s declining military and economic power.
Strong Chinese economic support, together with Russian military might as well as Iran’s importance in the Middle Eastern region, are successfully shielding countries like Syria from American military interventions, driving a wedge between old US allies and paving the way for Washington’s planned economic and military isolation in the region. Thus, countries similarly facing US pressure, such as South Korea, Mexico and Venezuela, will increasingly gravitate toward the multipolar world led by Russia and China, accelerating the decline and influence of the United States beyond the Middle East.
The multipolar world order is here to stay. The US is no longer the lone superpower but rather one among two other nuclear-armed powers. The sooner the US realizes this, the better it will be for humanity and for peace around the world.
- Chinese Army Documents Leak Set To Embarrass Beijing
Authored by Jan van der Made via RFI,
In the vaults of Amazon.com’s self publishing market place, a growing series of books exposing China’s dark secrets is seeing the light. Six books with colorful covers, which constitute the “China Secrets” series, introduce a reader to the fascinating world of China’s internal – or neibu – documents. But many questions remain.
Since 2015, unnoticed by the large majority of the China watchers, the books, with titles like The China 1989 Army Documents, Spying against the United States, Spying against India and others can now be bought on Amazon.
Author Ben Keiler [probably a pseudonym] claims the documents are being put before the public “for the first time ever”.
They shed a new and unique light on events as diverse as the 1989 Tian’anmen Square massacre and the martial law imposed in Tibet three months before, the China-India border conflict culminating in hostilities in Bhutan earlier this year
It also offers detailed descriptions of the state of Chinese army intelligence gathering in respect of the US, South Korea, Japan and other countries, since the founding of the People’s Republic of China in 1949.
Real or not?
In total some 500 pages, filled with copies of documents, military maps and tables have been published.
The big question is: are the documents real?
For centuries, sinologists have struggled with the question of authentification of documents.
Andrew Nathan and Perry Link published the Tiananmen Papers in 2001, a book with translated secret documents leaked or provided by “Zhang Liang,” a pseudonym, that minutely describe the policy process that lead to the Tian’anmen crackdown on June 4, 1989 in Beijing.
They said in the preface that the documents went through a meticulous five-stage process of selection before publication was decided, and they still cannot confirm their veracity completely.
Keiler criticizes the lack of access to the original documents in the Tiananmen Papers, saying that they “contain not a single copy of an original [ ] and this fact makes it easy to challenge the content.”
Indeed, Keiler’s 1989 Army documents do show copies of maps and documents that list in minute detail the of the People’s Liberation Army [PLA]’s troops before and during the attack on Tian’anmen Square on June 4, 1989.
The square had been occupied for weeks by students demanding an end to corruption, more transparency and a chance to participate in the politcal process. China's leaders had imposed martial law, and moved the army against Beijing's demonstrating civilians.
Internal map showing the advances of the PLA into Tian'anmen Square on June 4, 1989
There is a minute-to-minute army account of how PLA troops fight themselves through the crowds reaching the square and removing the remaining students by 04:00 am, as planned.
In a preceding chapter of the book, Keiler illustrates – again showing highly classified neibu material – how the PLA crackdown in Tibet, in March 1989, served as an example for the Tian’anmen attack.
The author reproduces PLA policy documents and lists of material, including guns and vehicles used, down to the amount of bullets handed out to the martial law troops who were to control the Tibetan protesters.
Who is Ben Keiler?
None of the Chinawatchers contacted by RFI was familiar with Ben Keiler or his work, but some expressed doubts:
“If the documents were authentic, major publishers would have been interested, and the Chinese Government would have reacted strongly against Amazon. So far I have not seen a prima facie case to do this,” says Steve Tsang, director of the China Institute at the School for Oriental and African Studies [SOAS] in London.
Perry Link, one of the two editors of the Tian’anmen Papers says that “one needs to be skeptical of these things, and yet it would be a mistake to reject them out-of-hand,” while Nathan insists that the documents can’t be authenticated “just by looking at them. It requires a lot of research,” he says.
Others were more forthcoming. Michael Dillon, founder of the Center for Contemporary Chinese Studies at the University of Durham and author of Deng Xiaoping, the Man who Made Modern China, said, after “a preliminary look,” that he found the “level of detail [of the 1989 Army Documents] is convincing,” but admitted that it was not possible to be certain if they were originals.
He also pointed out that the lack of the significant red stamps and handwritten autographs of relevant leaders on some of the documents presented could mean they are just a draft or print out.
"[They]cast doubt on when and how they were issued and used. Even if they are genuine we cannot be sure that they were final drafts,” he says.
But Song Yongyi, librarian with California State University, who himself did extensive work exposing cannibalism during the Cultural Revolution in the Guangxi Autonomous Region, going through massive amounts of secret documents, said that one set of documents about the Korean War looked very familiar to him.
“When I was collecting documents about PRC history, I did see some of them. They are government publications [on] internal and classified level,” he writes in an email to RFI.
Other volumes of the “China Secrets” series dig deep into Chinese intelligence sources, showing the detailed level of knowledge Beijing had of military positions of the Indian army during the 1962 border war, South Korean positions during the 1950-53 Korea war; always with many illustrations of colorful maps and [parts of] documents and extensive commentary.
What does Keiler want?
The identity of the author, as well the way he obtained the documents is shrouded in mystery.
“Questions regarding who’s behind the China Secrets Series are secret and will not be answered,” he says in the preface.
“Years of efforts and movements of persons went into the effort to make it as difficult as possible to hide the methods and all the persons involved” in obtaining the documents.
The reason: under China’s stringent security laws and regulations, leakers of “state secrets” may face the death penalty.
But Keiler explains why the risk may be taken: in the preface of the China 1989 Army Documents, he says that by exposing details about army units involved in the crackdown, “people responsible can be named and if possible persecuted … once places, units and names are known and officers can no more hide behind a screen of [a] 'state secret' it will become more difficult to find persons ready to use machine guns against civilians the next time such an incident happens in China.”
Internal document showing PLA troops that got rewarded after the 1989 Tian'anmen crackdown
Publication of Chinese intelligence on the US, India, South Korea and other countries would give researchers and, ultimately, politicians, a better insight in how the Chinese military acts under extreme circumstances.
Meanwhile, production goes on. In 2017 some six volumes were produced, and 11 more are on the way.
Among the new books will be the first publication of top secret documents on decoding, China’s 1979 war with Vietnam, a history on Chinese army mapping and a book on the Tibetan uprising in 1959 and the Chinese crackdown.
Until now, the Chinese government has offered no reaction regarding the leaks.
- Staggering Chart Shows Your Personal Share Of Your State's Underfunded Pension
Back in March we shared the staggering results of a Bankrate survey which found that the average American household couldn’t afford to write a measly $500 check in the event of an unexpected emergency (see: “The Reality Is, Half Of Americans Can’t Afford To Write A $500 Check”). Of course, as we note frequently, while the talking heads of daytime financial TV shows love to reference surging economic indicators like unemployment figures, the fact is that the number of Americans not participating in the work force remains near all-time highs and wage growth, despite “full employment” levels, has been practically non-existent since the great recession.
Given the above, we can only presume that the average person in New Jersey, Connecticut, Illinois, Kentucky, etc. is going to have a somewhat difficult time producing their $10,000 – $27,000 share of their state’s massive pension and debt obligations.
As CNBC points out today via S&P Global Ratings, decades of budget mismanagement and hollow pension promises to public employees has resulted in a mountain of debt that many states are unlikely to ever repay.
New Jersey has set aside just 31 percent of what it needs to pay pensions costs. Kentucky, (31 percent) Illinois (36 percent) Connecticut (41 percent) and Hawaii (541 percent) are the worst off.
States with the best funding levels include Wisconsin (98 percent), South Dakota (97 percent), New York (93 percent), Tennessee (88 percent) and North Carolina (87 percent).
In New Jersey, the funding gap represents nearly 42 percent of the Garden State’s Gross State Product – or more than $27,000 for every resident, according to S&P Global Ratings.
Other underfunded states include Connecticut ($22,700 per person), Hawaii ($15,700), Illinois ($15,900) and Alaska ($18,200).
That compares with Nebraska, where the underfunding represents just $242 for every resident. Taxpayers in South Dakota ($598 per person), Idaho ($472), Iowa ($752), and Tennessee ($806) also face relatively low risk of having to make up for unfunded state liabilities.
Of course, we can’t help but notice that 8 of the 10 worst funded states in America just happen to be “deep blue” bastions of liberalism. Could it be that perpetually higher taxes and overly burdensome regulations end up being negative for state budgets in the long term?
- All Hail Chinese Emperor Xi Jinping: Will He 'Make China Great Again'?
Authored by Mike Shedlock via Maven.net/MishTalk,
At the nineteenth Communist Party meeting, Chinese president Xi Jinping consolidated his hold on power.
But can he make China great again? What would it take?
New Yorker columnist Jiayang Fan notes At the Communist Party Congress, Xi Jinping Plays the Emperor.
Perhaps no event embodies the unyielding abstruseness and the unforgiving hierarchy of China’s ruling Communist Party as much as its Party Congress, the government’s most important leadership conference. Attended by some twenty-three hundred delegates from across the country, it is held every five years in Beijing’s Great Hall of the People—and when the weeklong meeting finally begins, one can be certain that the crucial politicking has already concluded. What proceeds is a choreographed spectacle bearing fastidiously scripted speeches, pro-forma elections of what has heretofore been determined (a leadership reshuffle in the seven-member Politburo, the highest echelon of power), and, in the case of the 19th Communist Party Congress, which opened today, high-spirited, propagandistic posters reminding the masses that “Life in China Is Good! Everyday Is Like a Holiday!”
This is a message that Xi Jinping, who was appointed President at the previous Party Congress, in 2012, is eager to instill in a country that continues to grapple with a vertiginous pace of change and the outsize influence of politics in everyday life. Xi is almost certainly guaranteed another five-year term, if not longer. Since taking office, he has sought to launch the greatest ideological campaign since the days of Mao.
Xi has made clear from the outset, he is intent on both defining a new world order and restoring to Chinese culture its former esteem.
Yet Xi’s mission should be regarded in the context of a collective and profound post-traumatic stress disorder, the result of almost two centuries of cataclysmic events in China. For every Tang Taizong, who ushered in the golden years of the Tang Dynasty, there were many others like Empress Dowager Cixi, who usurped the throne, crippled the path of progress, and contributed to the downfall of the Qing Dynasty.
As Xi made clear today, during his three-hour address to the Party Congress, he sees this moment as “a new historic juncture in China’s development”—and himself as the man to seize it. He seems to believe that the more power he amasses, the easier it will be for him to enact the kind of monumental changes necessary to transform China into the world’s leading superpower. In this sense, he is positioning himself as a savior with a cause noble enough to justify his autocratic turn. The logic is akin to that which animated the ambition of many of the Middle Kingdom’s five-hundred-odd emperors. Sure, Xi has rerouted all tributaries of power to run upstream to him, but isn’t it in the service of rejuvenation?
Xi has also used his growing power to curb that of his citizens. Under his rule, China has become increasingly repressive. The media is censored and civil society has been muted. Activists have been silenced and human-rights lawyers arrested. More than a million officials have been disciplined. Despite paying lip service to the constitution—the Party devoted an entire plenary session during the 18th Congress to a discussion of “judicial independence”—Xi is steering the country away from the rule of law and toward the rule of the Party.
Xi’s vision for China’s future suggests a great leap backward, in which old lessons remain unlearned.
Bravo!
I wrote on this very subject a few days ago: King Dollar is Dead? Biggest Paradigm Shift in 100 Years: China and Electric Cars at Forefront.
A paradigm change is indeed underway, but it will be led by cars (autonomous driving and electrification), demographics (aging boomers), the demise of pension plans, a revolt by millennials, and a squashing of the current political class.
A currency crisis is inevitable but it's too soon to say that gold will be back in the picture. Some suggest SDRs, but I dismiss that idea.
King dollar is certainly not dead yet, and contrary to popular belief, having the reserve currency is more of a curse than a blessing.
Why Dollar is King
-
The dollar is king because the US has open capital markets, property rights, and the world's biggest bond markets.
-
The US also has a Bill of Rights granting freedom of speech and protection from unwarranted searches. China imprisons people for speaking their mind.
-
China is a long way from competing with the US on those important issues. In addition, China repeatedly resorts to capital controls to stop monetary flight.
China will not supplant the US for at least two decades and may not ever.
I expounded on the topic in Marc Faber Banned from CNBC. Here are a few snips.
What Made the US Great?
The Constitution's Bill of Rights is what makes the US great. There is nothing else like it in the world. It's a unique constitution put together by a unique set of educated lawyers and other scholars.
The First Amendment grants freedom of speech and freedom of the press.
That's what enables Faber to say what he did. And that's a good thing, whether you agree with him or not! China imprisons or kills people for saying something the state disagrees with. Numerous countries in Europe would fine Faber for such remarks.
The First Amendment prohibits state-sponsored religion. Many Republicans who allegedly want a strict constitution, ought to take a closer look. School prayer does not fit in.
Democrats might wish to consider the Second Amendment.
Everyone should appreciate the right to be secure in their home. That's the Fourth Amendment.
The Sixth Amendment grants a speedy trial.
Reader Comments
The subject came up a third time today. In response to the above articles, reader Brindu had this to say:
Hello Mish
In your section "What Makes the US Great", you used the points made earlier in " King Dollar". This will be very educational for readers who normally don't dwell on constitutional issues.
I have another point worth adding: "A credible, independent and impartial court system accessible to all.".
To illustrate how the Constitution and the Bill of Rights worked real time, I reflected back to Nixon and the Watergate era (1972-74). Many of your readers were too young to remember or not even born. Here is a summary of relevant events showing how the points you listed under "What makes the US Great?" worked in actual practice.
-
Daniel Ellsberg leaked the Pentagon Papers to the NYT. Nixon went to court to stop publication, but the judge ruled against Nixon, saying there was no threat to national security. The NYT published the Pentagon papers in its entirety, This is a classic example of the first amendment at work. Many foreign leaders asked why Nixon did not shut down the press. (The UK has something called the Official Secrets Act and can shut down newspapers).
-
Nixon's aides broke into Ellsberg's psychiatrist's office looking for dirt. They went to jail. This is a classic example of the 4th amendment at work.
-
Judge John Sirica systematically sent a dozen or more Nixon's aides (Haldeman, Erlichman, Dean etc.) to jail as Nixon watched helplessly. Again, foreigners, unfamiliar with the US separation of powers asked why Nixon just did not throw Judge Sirica in jail. Imagine a judge acting independently in China or in Erdogan's Turkey? This is a classic example of an independent judiciary at work.
The parliamentary systems in Europe and Canada are inferior in protecting individual rights like our Bill of Rights. Under parliamentary law, the UK can shut down newspapers. They can wiretap, open mail without a warrant. There is no double jeopardy- in some places, they can try you again and again on the same charge even if you are acquitted.
At one time, Australia did not allow its citizens to own foreign accounts. The UK, in the 1960's has capital outflow due to 90%+ marginal taxes. Folks were mailing British pounds abroad and the Government scanned outgoing mail to intercept this.
Like you said, "The Constitution's Bill of Rights is what makes the US great. There is nothing else like it in the world."
US Dollar Not Dead Yet
Chinese history speaks for itself. Absolute power in the hands of a man whose actions are rubber-stamped by a mock-up Congress will not make China great.
Wake me up when China has a Bill of Rights granting freedom of speech and protection from unwarranted searches.
Add an independent judiciary, a free-floating currency, and the world's largest bond market to the list of China needs.
-
- Drone Footage Reveals A First Look Of Trump's Border Wall Prototypes
Over the past four weeks, workers have been toiling (mostly in intense 90+ degree heat) to put final touches on eight possible versions of President Donald Trump’s long-promised border wall, ahead of an October 26 deadline to finish the prototype border-wall designs located just a few dozen years from the border that divides San Diego from Tijuana. U.S. Customs and Border Protection awarded eight contracts to six companies to build the prototypes. Four are made of reinforced concrete, and another four incorporate additional construction materials. Construction began on Sept. 26, giving companies 30 days to finish, according to the Arizona Republic.
By Wednesday, five of the wall designs had already been completed and were fenced off with caution tape, but – as the following video shows – crews were still at work on others, installing vertical concrete panels on one design, using cranes and bulldozers to place them upright. Another two prototypes were in various stages of construction on the demonstration site, located about 2 miles east of San Diego’s Otay Mesa border crossing, in the foothills of the Otay Mountains. At roughly 30 feet, the designs dwarf the petite, primary fence that currently designates the international boundary — it’s made of rusted Vietnam War-era landing mats. They are also nearly twice the height of the secondary metal-mesh fence, which ends near where the prototypes are being built.
Their height, officials quoted by the AZ Republic said, is intended to make a statement to criminals and would-be unauthorized crossers: Stay away.
“The 30 feet is very impressive,” said Mario Villareal, the division chief for the San Diego Sector Border Patrol. “What we’re trying to accomplish is by putting tactical infrastructure on the border, by having all-weather roads, by putting Border Patrol agents on the immediate border is the deterrence.”
Of course, whether the border-wall prototypes “keep people away”, is what matters, and will be closely scrutinized in the coming weeks. After they are done, CBP will move to the “test and evaluation” of each of the eight structures.
What do the prototypes look like?
One built by a Maryland company uses concrete at the base with the top two-thirds featuring blue metal panels. Another, built by an Alabama company, has a wide concrete base that gives way to a thinner frame halfway up the structure. Also, only one of the completed designs incorporates see-through features that would allow Border Patrol agents to monitor activity on the other side of the border.
Initially, Trump called for a solid reinforced concrete design, and several of the finished prototypes seemed to fit that description. Under advisement from CBP, the administration later included “see-through features” in its call for submissions. A second design by the Alabama company features metal bars for the first half of the prototype, narrowly spaced and resembling the bollard-style fencing commonly used at the border in Arizona’s urban areas. But the top half has what appears to be solid concrete panels.
Quoted by the AZ Republic, Border Patrol Agent Theron Francisco said the ability to see across the border can be beneficial. It’s an option they don’t have now with landing-mat fencing in the area. “It’s good to be able to see through the south side. We can see them, they can see us,” he said. “But in a way, it can be negative because we’re always being watched. They always can see us. It goes both ways.” Meanwhile, the concrete design is made up of three long, concrete frames that gently slope upward from the U.S. side, but are completely vertical on the south side. The concrete is a light tan, nearly the same color as the dusty soil it stands on.
The cost of eight contracts ranges from $320,000 to $480,000. CBP has already appropriated the funds to pay for them. However, funding for additional construction is still up in the air and remains the object of major political disagreement in Congress.
And until we find out if Trump’s wall will ever amount to anything more than a pipe dream, here is drone footage taken earlier today of the Border Wall prototypes.
- Yield Curve Inverts, Yuan Slides As China GDP Growth Slows
Despite all the talk of deleveraging, China did anything but according to its most recent data but the lagged impact of the tumbling credit impulse is starting to show up in the broader macro data. Despite the National Congress being under way (and recent credit spikes and positive PBOC hints) GDP growth limped lower to the expected +6.8% YoY, and fixed asset investment growth was the weakest in over 17 years…
Ahead of tonight's data dump, China macro data had been disappointing notably, having tumbled for over a month to its weakest since August 2016…
"A further acceleration in growth would surprise many investors who have taken their lead from measures to slow the property market, credit tightening moves and the government’s 6.5-percent or so growth objective for this year," said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney.
But amid The National Congress, and demands for calm in all markets, expectations for tonight's data were for the usual spot on 'meet' or even a 'beat' of well-managed expectations (following People’s Bank of China Governor Zhou Xiaochuan's hints last weekend that expansion may accelerate in the second half to 7 percent).
China GDP YoY: MEET +6.8% vs +6.8% Exp (+6.9% prior) – missed the whisper number of +6.9% YoY
China Retail Sales YoY: BEAT +10.3% vs +10.2% Exp (+10.1% prior)
China Fixed Assets Investment YoY: MISS +7.5% vs +7.7% Exp (+7.8% prior) – lowest since Feb 2000
China Industrial Production YoY: BEAT +6.6% vs +6.5% Exp (+6.0% prior)
"Caution is needed in the Byzantine world of Chinese statistics," said Pauline Loong, managing director at research firm Asia-Analytica in Hong Kong. The data "traditionally deliver exactly what its leaders want to hear –- and what its leaders want the public and the market to hear – ahead of any sensitive political event."
As a reminder, The IMF is convinced that China will overtake the eurozone GDP in 2019…
Offshore Yuan had sold off heading into the data and extended losses after (remember Q3 was notable strength reverse into notable weakness after PBOC verbally intervened)
Still, China's inverted yield curve suggests not everyone is so excited about the future…
- "It's A Mad Max Situation" – Puerto Rico Doctors Practice Medicine In 'Post-Apocalyptic' Conditions
Authored by Mac Slavo via SHTFplan.com,
Nearly four weeks after Hurricane Maria devastated the island of Puerto Rico, doctors are experiencing “post-apocalyptic” conditions. The reality doctors in Puerto Rico are facing is similar to that from a dystopian novel.
Doctors are conducting surgical procedures in sweltering 95-degree heat, experience malfunctioning X-ray machines, and have seen medications literally melting. “We’re practicing disaster medicine in real life,” said Dr. William Kotler, a senior resident in emergency medicine at Florida Hospital in Orlando, who spent two weeks volunteering on the island earlier this month. “We improvise if we have to, with very little resources.”
Arriving one week after Hurricane Maria made landfall, Dr. Kotler and four other emergency physicians from Florida Hospital in Orlando, finished up a volunteer mission on the devastated island. They were the first medical relief team the hospital sent to the island.
“We went in blind,” said Dr. Julian Trivino, who was among the first team of volunteers.
A second team arrived on October 8th and will stay for two weeks to assist those who need medical attention. When the physicians arrived in the town of Aguadilla on the northwestern tip of the island, the local hospital was in bad shape. The hurricane had almost completely taken down the entire electrical grid and knocked out communications.
“I got there and immediately had a patient with serious head injuries from a car accident,” said Trivino, who is the chief resident in emergency medicine.
Access to electricity was so poor that Trivino couldn’t conduct a CT scan, but he was able to do an X-ray. To review the films, he had to go outside and hold the films up to the sunlight to see anything. Afterward, he used one of the team’s two satellite phones to arrange for the patient to go to a trauma center.
Dr. Trivino must use sunlight to examine x-rays since electricity is sporadic in Puerto Rico.
The physicians are also becoming increasingly concerned that Puerto Rico could be headed toward a full-blown health crisis.
“Trauma centers are overwhelmed. Basic surgeries are being postponed. I’ve seen people lose digits because they couldn’t be treated in time,” said Kotler.
And the heat is making conditions even more extreme. At a hospital in Carolina on the northeastern coast, Kotler and Trivino had to perform an emergency surgery; attaching a temporary pacemaker to a patient whose heart rate was abnormally slow.
“It was 95 degrees in this ER room. She was sweating profusely and vomiting,” said Kotler.
“I held her hand and stroked her head. It’s what I could do to comfort her.”
But there were also several patients who suffered the ultimate fate. In Aguadilla, it was a 42-year-old man in cardiac arrest.
“He had a fever of 107 degrees. It was burning hot in the hospital. We scrambled to find ice packs to cool him down,” said Kotler. Nonetheless, he died the next day.
“If you have a major heart attack in Puerto Rico, right now, the odds are stacked against you,” said Trivino.
It isn’t just the sweltering heat that’s causing a post-apocalyptic medical crisis either. A lack of clean drinking water is compounding the problems. In one town, the medical team encountered an orphanage where children were on the verge of dehydration. The physicians flew in pallets of fresh drinking water to save the kids’ lives. Because of the lack of water, Dr. Raul Hernandez, an internist based in San Juan, is bracing for an outbreak and possibly several deaths from waterborne diseases. He said Leptospirosis, a bacterial disease spread through the urine of infected animals such as rodents, is becoming a growing concern. Due to a lack of safe drinking water, people are drinking from whatever water sources they can find just to survive, he said. If that water contains urine from an infected rat, the disease will spread, he said. So far, at least two deaths have been attributed to Leptospirosis in Puerto Rico.
Dr. Miguel Acevedo led the second team of emergency physicians from Florida Hospital. “They say it could take six to nine months for power to be restored fully in Puerto Rico. No hospital can plan to survive on generators for that long,” he said.
What doctors are dealing with in Puerto Rico is a “Mad Max kind of situation,” said Acevedo.
“The reality here is post-apocalyptic,” he said. “You can’t understand the seriousness of it unless you see it.”
- A Look Inside The Secret Swiss Bunker Where The Ultra Rich Hide Their Bitcoins
Somewhere in the mountains near Switzerland’s Lake Lucerne lies a hidden underground vault containing a vast fortune.
It’s no ordinary vault, according to Quartz. Built inside a decommissioned Swiss military bunker dug into a granite mountain, it’s precise location is a closely guarded secret, and access is limited by myriad security precautions.
But instead of gold bars, the bunker contains hard drives on which customers’ bitcoins are being kept in what’s call “cold storage” – i.e. the owners’ private keys are protected by an air-gapped hard drive. The vault is one of many operated by Xapo, an early bitcoin company known for its cold storage wallet products and a debit card that pays for transactions in digital currencies.
The company won’t disclose how much bitcoin is stored in the vault, but one employee who spoke with Quartz said he sometimes takes customers with millions of dollars in bitcoin on tours of the vaults where their fortune is stored. Xapo was founded by Argentinian entrepreneur and current CEO Wences Casares, whom Quartz describes as “patient zero” of bitcoin among Silicon Valley’s elite. Cesares reportedly gave Bill Gates and Reed Hoffman their first bitcoins.
As Quartz explains, the bitcoin vault doesn’t store actual bitcoin units. Instead, what’s being stored are the owners’ private cryptographic keys that allow the owner to access and transfer his or her bitcoins by matching the key with a public key that’s used to identify the coin on the blockchain. Gaining unauthorized access to someone’s private keys is akin to making off with a gold bar.
The inexorable rise in bitcoin’s valuation has been marred by notable hacking incidents like the collapse of Mt. Gox, which ushered in the longest bear market in bitcoin’s history. Security fears appear to have subsided as bitcoin’s price has soared to all-time highs, but incidents like the collapse of the DAO have inspired investors with substantial bitcoin wealth to look into protecting it.
To store the coins, Xapos contracts Deltalis, the company that technically operates the 10,000-square-foot data-center that now inhabits the decommissioned bunker.
Server racks for banks, and any client who needs secure data processing, fill a cavity dug over 320 meters deep in the granite mountain. The Swiss military built the facility in 1947, and it served as the army’s secret headquarters during the Cold War, Agence-France Presse has reported. Inside, walls covered with detailed maps and ancient radio electronics serve as vestiges of its military past.
To enter Xapo’s private vault in the Deltalis data center, visitors must endure an exhausting series of security procedures.
Streiff leads us to a concrete facade jutting out of the mountainside, the bunker’s entrance. We step through about a foot of concrete and enter the lobby. I sign in as I would at any office building, except I also have to present my fingerprints and be photographed. After that I step through a “man-trap”—a phone booth-sized cylinder made of bullet-proof glass that shuts me in until an operator opens the door on the opposite side.
Once through the man-trap, we touch our ID cards and pass through a set of steel revolving doors, then walk down a 100-meter long passageway through the granite. At the end of the passageway are two red steel doors that I’m told can survive a nuclear blast. Streiff invites me to try to close one—my 90 kg (198 pound) frame can’t budge it. “They’re closed every night,” he tells me, showing me how to hang off the handle and use his body’s momentum to gradually swing it shut.
Streiff and Kon are taking me to see Xapo’s “private suite,” an ultra-secure, customized, portion of the data center. We pass through a second man-trap and then end up in front of a nondescript white door. “This is further than anyone outside Xapo has been,” Streiff tells me, as he unlocks it. Inside is a space about the size of a walk-in closet containing a cooling unit, and yet another door. But that’s as far as they’ll let me go, and I’m not allowed to take photographs.
Security is similarly tight inside the vault. Nobody is allowed the enter the “cold room” where the bitcoins are stored on air-gapped hard drives. To protect against an electromagnetic pulse attack, the cold room is equipped with a Faraday cage, a type of barrier meant to block electromagnetic fields.
Beyond that door, I rely on what Carlos Rienzi, Xapo’s head of security, tells me later, when I’m back in London. Rienzi chose the vault for Xapo, and he designed the private suite and its security protocols. His “threat model,” as computer security jargon goes, is to protect against attacks from “well-funded terrorist groups or hackers.”
There are two more portals inside the suite: the first leads to an operators’ room, and the second to a “cold room.” The cold room is encircled with steel slabs to form a Faraday cage: a barrier that protects against a possible electromagnetic pulse (EMP) attack that could wipe out the data—and thus the keys to the bitcoin—stored in the room. For digital assets like bitcoin, thick walls and a secret location are not enough. A shield against invisible modes of attack like an EMP bomb must be provided for.
No one, not even the operator, enters the cold room. Its door is sealed with tape—like a crime scene—to ensure it’s not tampered with. The cold room contains hardware, which is never connected to the internet, used to sign bitcoin transactions. Signing a transaction can be performed offline. The operator accesses that hardware using “special cabling,” sending encrypted data to the hardware for signing. Finally, before a transaction can be approved, two more sign-offs, in two other vaults located on separate continents, must be performed.
I ask Rienzi if he feels pretty confident about the security measures he has in place in Switzerland. “We are under attack 24/7,” he tells me, referring to the terrorists and hackers he designed the vault to guard against. “This is not a race. It is a chess game. You have to think about the opponent’s next movement. You can never relax.”
Of course, all the security measures in the world can’t protect investors from a sudden plunge in the bitcoin price. However, the digital currency’s indomitable – for now – performance has silenced at least one of its most prominent critics. Then said, unlike precious metal specie, one carefully targeted EMP would be all it takes to sever the ownership chain for a long, long time.
Still, with the digital currency recently reaching yet another record high, despite relentless jawboning and rhetoric by everyone from Jamie Dimon to central bankers to China, we can only imagine the business of protecting bitcoin fortunes is set to boom.
Digest powered by RSS Digest
Saving...