Jul 02

Today’s News 2nd July 2018

  • Russian Military Signs Contract For First Batch Of Fifth-Generation Jet Fighters

    The Russian military approved the first state procurement contract for a dozen fifth-generation stealth fighter aircraft, said Deputy Defense Minister of Russia Alexei Krivoruchko on Saturday.

    Krivoruchko told reporters that a batch of the Sukhoi Su-57, a stealth, single-seat, twin-engine multirole fifth-generation stealth fighter will be delivered to the Russian military in the near term.

    Speaking highly of the work by the Sukhoi aircraft manufacturer on the production of the fifth-generation fighter jet, Krivoruchko added that engineers are concluding the last round of tests on the aircraft’s second-stage engines.

    The aircraft will be manufactured at Komsomolsk-on-Amur Aircraft Plant, based in Komsomolsk-on-Amur in the Russian Far East, which is the largest aircraft-manufacturing company in the country.

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    The Su-57 is a Russian multi-role fighter of the fifth generation, developed by Sukhoi aircraft manufacturer. The jet fighter is designed to fly at supersonic speeds, have super maneuverability, stealth technology, and advanced sensors to challenge the North Atlantic Treaty Organization’s (NATO) fifth-generation aircraft.

    The first flight of the Su-57 occurred in early 2010 in the Komsomolsk-on-Amur region.

    Yury Slyusar, director of the United Aircraft Corporation, informed RIA Novosti that the first batch of SU-57s should be delivered to the Russian military in 2019.

    Earlier this year, we uncovered unverified photos and video footage circulating Twitter, showing two new Russian Su-57 stealth fighters landing at Khemimim air base, near Latakia, in northwestern Syria.

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    Footage analysis verifies that the video was indeed taken in Syria as the jets made a landing at Russia’s master air base located south of Latakia:

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    Russia has deployed a wide variety of high-tech weapons to the proxy war in Syria to showcase and test their performance. Most military strategists believe that deployment of the Su-57 to Syria was to directly challenge America’s fifth-generation fighter aircraft (Lockheed Martin F-22 Raptor and Lockheed Martin F-35 Lightning II) and let the world know: Russia has fifth-generation fighter aircraft for a fraction of the cost.

    Russia is now open for business, and for those in the market for a cheaper stealth fighter, the promo clip of the Su-57 is below:

  • Turkey And India Have Leverage In Trump's Iran Sanction War

    Authored by Tom Luongo,

    Both India and Turkey have said they will defy President Trump’s call for them to stop buying Iranian oil once the U.S. reapplies sanctions in November.  That isn’t really news.

    Both of them defied the Obama administration in 2012, albeit in different way. Turkey changed its banking rules to monetize gold and used its gold reserves as a means to launder Iranian oil payments for third parties through its banking system.

    India bypassed cutting off Iran from the U.S. dollar by beginning a goods-for-oil swap program.

    Today, however, the geopolitical background is far different.  Today, Iran can and does list its oil for sale in Shanghai’s futures market payable in Chinese Yuan.  Turkey can recycle its Yuan it receives from its large trade deficit with China to up its purchases of Iranian oil if need be.

    But, more importantly, both India and Turkey have geopolitical freedoms they didn’t have in 2012.  I have covered the Turkey angle on this at length.  India, on the other hand, I haven’t.

    Iran has become Turkey’s biggest oil importer.

    Turkey, a NATO ally, is dependent on imports for almost all of its energy needs. In the first four months of this year, Turkey bought 3.077 million tons of crude oil from Iran, almost 55 percent of its total crude supplies, according to data from Turkey’s Energy Market Regulatory Agency (EPDK).

    President Recep Tayyip Erdoğan last year said Turkey was looking to raise the volume of its annual trade with Iran to $30 billion from $10 billion.

    And it doesn’t look like this will change with Trump’s sanctions.

    With President Erdogan winning re-election he now goes into the NATO Summit with Trump on July 11-12th with a lot of leverage.  Erdogan has openly courted Russia on energy supplies.

    It just began construction on its first nuclear power plant being built by Russia which is due to begin generating power by 2023.  But, in the near term, Turkey is in bed with Gazprom on the Turkish Stream pipeline, which is ready to begin the land-based portion.

    The permits have not been issued however.  Turkey has been dragging its feet on this.  And with good reason, Erdogan knows Turkish Stream is a bargaining chip for him with Trump at the NATO summit.

    Turkey’s NATO status is becoming problematic and it’s why I don’t really expect Trump to take the U.S. out of the treaty organization just yet.  He wants to lessen our involvement and may very well announce a major funding cut at the Summit, but if his regime change strategy for Iran (and Germany) is to succeed he can’t completely alienate Erdogan just yet.

    India’s Silk Road Goes Through Iran

    The biggest tell that the U.S. is having to resort to begging to keep its geostrategic allies in line came from the most unlikely source though, U.N. Ambassador and neoconservative Buffoon herself, Nikki Haley.

    While urging India to curb its Iranian oil purchases, Haley said the United States supported India’s project to help Iran build a major port complex in Chabahar, which is being developed as part of a new transportation corridor for landlocked Afghanistan.

    Calling the port project “vital,” Haley said, “We know the port has to happen and the U.S. is going to work with India to do that.”

    Haley acknowledged that the port project will also benefit Iran even as Washington tries to cut Tehran off from international markets.

    “We realize we’re threading a needle when we do that,” she said.

    This is blatant pandering on Haley’s part to keep India from jumping ship towards the Russia/China/Iran alliance.  The port development project at Chabahar has been delayed for months because of Trump’s threatening to scuttle the JCPOA and make it difficult for Indian companies to do business with Iran.

    It’s a major infrastructure project meant to position India, technically, outside of China’s One Belt, One Road (OBOR) project which has poured more than $50 billion into India’s biggest rival, Pakistan under the rubric of CPEC — The China Pakistan Economic Corridor.

    So, this admission by Haley that the port and railroad upgrades in Iran have to go forward to appease India is telling as to who really has the leverage here.

    Ultimately, India will be allowed to bypass the dollar for its oil trade with Iran, if the U.S. wants to remain a serious influencer of policy.  It is already a member of the Shanghai Cooperation Organization (SCO) and Iran now has a free-trade pact with the Eurasian Economic Union, which India is exploring becoming affiliated with.

    As much as India may not like the OBOR project from the perspective of national price, its leadership recognizes it will ultimately benefit India tremendously.

    So will Turkey.  Trump will talk a big game about sanctioning China but doing so would crash the global economy.  So, it’s all noise.

    China National Petroleum Company (CNPC) is taking over for France’s Total on the important South Pars B gas field.  While India and Iran continue to haggle over the South Azadegan oilfield development plan.

    A lot of these deals between India and Iran have the stink of U.S. meddling in them, trying to keep them in limbo while furious haggling goes on behind the scenes.  There’s a reason why Haley went to India.

    And then there’s another reason why a major “2+2” meeting between the U.S. and India between Secretaries of Defense and State, James Mattis and Mike Pompeo and their Indian counterparts was just unilaterally postponed by the U.S.

    The upcoming summit with Putin in Helsinki.  This will not sit well with India as this is the latest in a series of delays because of uncertainty at the State Department under Trump.

    In the end, expect India and Turkey to mostly get their way in the coming months on energy and defense policy.  They both understand that Trump is simply trying to manage the retreat of the U.S. empire from Eurasia as best as he can and both are more than willing to play it against the Russia/China/Iran axis to get the best deals they can for themselves.

    *  *  *

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  • Chris Hedges: The Coming Collapse

    Authored by Chris Hedges via TruthDig.com,

    The Trump administration did not rise, prima facie, like Venus on a half shell from the sea. Donald Trump is the result of a long process of political, cultural and social decay. He is a product of our failed democracy. The longer we perpetuate the fiction that we live in a functioning democracy, that Trump and the political mutations around him are somehow an aberrant deviation that can be vanquished in the next election, the more we will hurtle toward tyranny. The problem is not Trump. It is a political system, dominated by corporate power and the mandarins of the two major political parties, in which we don’t count. We will wrest back political control by dismantling the corporate state, and this means massive and sustained civil disobedience, like that demonstrated by teachers around the country this year. If we do not stand up we will enter a new dark age.

    The Democratic Party, which helped build our system of inverted totalitarianism, is once again held up by many on the left as the savior. Yet the party steadfastly refuses to address the social inequality that led to the election of Trump and the insurgency by Bernie Sanders. It is deaf, dumb and blind to the very real economic suffering that plagues over half the country. It will not fight to pay workers a living wage. It will not defy the pharmaceutical and insurance industries to provide Medicare for all. It will not curb the voracious appetite of the military that is disemboweling the country and promoting the prosecution of futile and costly foreign wars. It will not restore our lost civil liberties, including the right to privacy, freedom from government surveillance, and due process. It will not get corporate and dark money out of politics. It will not demilitarize our police and reform a prison system that has 25 percent of the world’s prisoners although the United States has only 5 percent of the world’s population. It plays to the margins, especially in election seasons, refusing to address substantive political and social problems and instead focusing on narrow cultural issues like gay rights, abortion and gun control in our peculiar species of anti-politics.

    This is a doomed tactic, but one that is understandable. The leadership of the party, the Clintons, Nancy Pelosi, Chuck Schumer, Tom Perez, are creations of corporate America. In an open and democratic political process, one not dominated by party elites and corporate money, these people would not hold political power. They know this. They would rather implode the entire system than give up their positions of privilege. And that, I fear, is what will happen. The idea that the Democratic Party is in any way a bulwark against despotism defies the last three decades of its political activity. It is the guarantor of despotism.

    Trump has tapped into the hatred that huge segments of the American public have for a political and economic system that has betrayed them. He may be inept, degenerate, dishonest and a narcissist, but he adeptly ridicules the system they despise. His cruel and demeaning taunts directed at government agencies, laws and the established elites resonate with people for whom these agencies, laws and elites have become hostile forces. And for many who see no shift in the political landscape to alleviate their suffering, Trump’s cruelty and invective are at least cathartic.

    Trump, like all despots, has no ethical core. He chooses his allies and appointees based on their personal loyalty and fawning obsequiousness to him. He will sell anyone out. He is corrupt, amassing money for himself—he made $40 million from his Washington, D.C., hotel alone last year—and his corporate allies. He is dismantling government institutions that once provided some regulation and oversight. He is an enemy of the open society. This makes him dangerous. His turbocharged assault on the last vestiges of democratic institutions and norms means there will soon be nothing, even in name, to protect us from corporate totalitarianism.

    But the warnings from the architects of our failed democracy against creeping fascism, Madeleine Albright among them, are risible. They show how disconnected the elites have become from the zeitgeist. None of these elites have credibility. They built the edifice of lies, deceit and corporate pillage that made Trump possible. And the more Trump demeans these elites, and the more they cry out like Cassandras, the more he salvages his disastrous presidency and enables the kleptocrats pillaging the country as it swiftly disintegrates.

    The press is one of the principal pillars of Trump’s despotism. It chatters endlessly like 18th-century courtiers at the court of Versailles about the foibles of the monarch while the peasants lack bread. It drones on and on and on about empty topics such as Russian meddling and a payoff to a porn actress that have nothing to do with the daily hell that, for many, defines life in America. It refuses to critique or investigate the abuses by corporate power, which has destroyed our democracy and economy and orchestrated the largest transfer of wealth upward in American history. The corporate press is a decayed relic that, in exchange for money and access, committed cultural suicide. And when Trump attacks it over “fake news,” he expresses, once again, the deep hatred of all those the press ignores. The press worships the idol of Mammon as slavishly as Trump does. It loves the reality-show presidency. The press, especially the cable news shows, keeps the lights on and the cameras rolling so viewers will be glued to a 21st-century version of “The Cabinet of Dr. Caligari.” It is good for ratings. It is good for profits. But it accelerates the decline.

    All this will soon be compounded by financial collapse. Wall Street banks have been handed $16 trillion in bailouts and other subsidies by the Federal Reserve and Congress at nearly zero percent interest since the 2008 financial collapse. They have used this money, as well as the money saved through the huge tax cuts imposed last year, to buy back their own stock, raising the compensation and bonuses of their managers and thrusting the society deeper into untenable debt peonage. Sheldon Adelson’s casino operations alone got a $670 million tax break under the 2017 legislation. The ratio of CEO to worker pay now averages 339 to 1, with the highest gap approaching 5,000 to 1. This circular use of money to make and hoard money is what Karl Marx called “fictitious capital.” The steady increase in public debt, corporate debt, credit card debt and student loan debt will ultimately lead, as Nomi Prins writes, to “a tipping point—when money coming in to furnish that debt, or available to borrow, simply won’t cover the interest payments. Then debt bubbles will pop, beginning with higher yielding bonds.”

    An economy reliant on debt for its growth causes our interest rate to jump to 28 percent when we are late on a credit card payment. It is why our wages are stagnant or have declined in real terms—if we earned a sustainable income we would not have to borrow money to survive. It is why a university education, houses, medical bills and utilities cost so much. The system is designed so we can never free ourselves from debt.

    However, the next financial crash, as Prins points out in her book “Collusion: How Central Bankers Rigged the World,” won’t be like the last one. This is because, as she says, “there is no Plan B.” Interest rates can’t go any lower. There has been no growth in the real economy. The next time, there will be no way out. Once the economy crashes and the rage across the country explodes into a firestorm, the political freaks will appear, ones that will make Trump look sagacious and benign.

    And so, to quote Vladimir Lenin, what must be done?

    We must invest our energy in building parallel, popular institutions to protect ourselves and to pit power against power. These parallel institutions, including unions, community development organizations, local currencies, alternative political parties and food cooperatives, will have to be constructed town by town. The elites in a time of distress will retreat to their gated compounds and leave us to fend for ourselves. Basic services, from garbage collection to public transportation, food distribution and health care, will collapse. Massive unemployment and underemployment, triggering social unrest, will be dealt with not through government job creation but the brutality of militarized police and a complete suspension of civil liberties. Critics of the system, already pushed to the margins, will be silenced and attacked as enemies of the state. The last vestiges of labor unions will be targeted for abolition, a process that will soon be accelerated given the expected ruling in a case before the Supreme Court that will cripple the ability of public-sector unions to represent workers. The dollar will stop being the world’s reserve currency, causing a steep devaluation. Banks will close. Global warming will extract heavier and heavier costs, especially on the coastal populations, farming and the infrastructure, costs that the depleted state will be unable to address. The corporate press, like the ruling elites, will go from burlesque to absurdism, its rhetoric so patently fictitious it will, as in all totalitarian states, be unmoored from reality. The media outlets will all sound as fatuous as Trump. And, to quote W.H. Auden, “the little children will die in the streets.”

    As a foreign correspondent I covered collapsed societies, including the former Yugoslavia. It is impossible for any doomed population to grasp how fragile the decayed financial, social and political system is on the eve of implosion.

    All the harbingers of collapse are visible: crumbling infrastructure; chronic underemployment and unemployment; the indiscriminate use of lethal force by police; political paralysis and stagnation; an economy built on the scaffolding of debt; nihilistic mass shootings in schools, universities, workplaces, malls, concert venues and movie theaters; opioid overdoses that kill some 64,000 people a year; an epidemic of suicides; unsustainable military expansion; gambling as a desperate tool of economic development and government revenue; the capture of power by a tiny, corrupt clique; censorship; the physical diminishing of public institutions ranging from schools and libraries to courts and medical facilities; the incessant bombardment by electronic hallucinations to divert us from the depressing sight that has become America and keep us trapped in illusions.

    We suffer the usual pathologies of impending death. I would be happy to be wrong. But I have seen this before. I know the warning signs. All I can say is get ready.

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  • US May Deploy Marines To Taiwan Embassy, Risking China Fury

    Looks like a duck, swims like a duck, and quacks like a duck… but when does an embassy “American Institute” finally gain official status as an embassy? Some say that the moment the Marine security detail shows up — a specially trained unit attached to every American embassy throughout the world — it’s pretty much a done deal. 

    File image via VOA News

    CNN has reported a new bombshell in US-China-Taiwan relations which is already sending shock waves throughout the region as it seems to negate the official US stance of the “One China Policy” — but which landed with a whimper in Western media over the weekend.

    CNN reports:

    The State Department has requested that US Marines be sent to Taiwan to help safeguard America’s de facto embassy there, two US officials tell CNN, prompting China to urge the US to “exercise caution.”

    One US official said that while the request for a Marine security guard was received several weeks ago, it has not yet been formally approved and coordination about its deployment is ongoing between the State Department’s Diplomatic Security Service and the Marines.

    Considering that unnamed officials leaked news of the impending Marine guard deployment to the “de facto embassy” in Taiwan, it appears well on its way to happening, which would constitute the first time in almost 40 years that US Marines will stand guard over a diplomatic post in Taiwan. 

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    As to the uncertain question of whether or not the US has actually pulled the trigger, CNN continues:

    A spokesperson for the State Department would not say whether the request had been made, telling CNN, “We do not discuss specific security matters concerning the protection of our facility or personnel.”

    The initial Chinese response has been predictably firm but restrained as news of the request for Marines came a mere days after Secretary of Defense Jim Mattis concluded his first – supposedly conciliatory – trip to Beijing and as tensions loom over Trump’s threatening to impose an additional round of tariffs on Beijing.

    Chinese Foreign Ministry spokesman Lu Kang responded as follows when asked about the potential Marine embassy security deployment at a news conference on Friday: “That the US strictly abides by its ‘one China’ pledge and refrains from having any official exchanges or military contact with Taiwan are the political preconditions for China-US relations,” he said. “The US is clear about the Chinese position and knows it should exercise caution on this issue to avoid affecting overall bilateral ties.”

    Since 1979 the American Institute in Taiwan (AIT) has been considered Washington’s “officially unofficial” embassy in Taipei, Taiwan (established as part of the Taiwan Relations Act), and is staffed by State Department personnel who provide services in a quasi-embassy capacity. It was that year that the US initiated its One China Policy — de-recognizing the Republic of China (also known as Taiwan or the ROC) while formally recognizing the People’s Republic of China (the PRC) instead. 

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    The AIT “undertakes a wide range of activities representing US interests, including commercial services, agricultural sales, consular services, and cultural exchanges,” according to the US State Department.

    During their meeting last week, President Xi Jinping reportedly told Mattis that China will not give up “any inch of territory” in the Pacific Ocean, though not naming Taiwan specifically. Mattis told reporters afterward that the talks had been “very, very” good and had previously praised the developing “military-to-military relationship” between the two countries. 

    However, CNN cites two anonymous senior defense officials who said said that Chinese officials raised the issue of Taiwan “multiple times” and “expressed their concerns” during their meetings with Mattis over recent developments like the Taiwan Travel Act, passed in March, which encourages more frequent diplomatic exchanges and visits between US and Taiwanese officials. 

    According to CNN, Mattis responded by saying he would not give any “direction to military components to do anything differently” regarding Taiwan. The defense officials told CNN, “It wasn’t an area that we wanted deep discussion on because we expect it to be an irritant.”

    No doubt the onslaught of recent developments centering on the American Institute is immensely worrying for the Chinese, as earlier this month the US launched the official opening of the Institute’s new state of the art facility, which cost $255 million to build, and the naming of a new “director” of the AIT’s Tapei office — career American diplomat William Brent Christensen — essentially filling the role of de facto US ambassador to Taiwan. 

    China’s Foreign Ministry had lodged a formal protest with the US upon the opening ceremony for the new building, which had State Department representatives in official attendance, though no cabinet-level officials, as the Trump administration quietly sought to assure China that the opening would be low-key.

    Meanwhile, President Trump while speaking to Fox Business on Sunday refused to back down on prior threats to further ratchet up tariffs on Chinese goods: “The tariffs are – well, in fact, It could go up to $500 [billion], frankly, if we don’t make a deal, and they want to make a deal,” Trump said during an interview. “I will tell you, China wants to make a deal, and so do I, but it’s got to be a fair deal for this country.”

    A brief reminder on the latest state of developing tit-for-tat trade war:

    Already, the White House has imposed a 25% tariff on $50 billion worth of Chinese goods containing ‘industrially significant technologies” in an escalating, tit-for-tat conflict between the world’s two largest economies.

    In response, China slapped tariffs worth $34 billion on 545 American goods. In mid-June, Trump warned that if Beijing went through with the tariffs, he would impose tariffs on an additional $200 billion worth of goods.

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    Maybe, but for now trade wars remain mostly bluster. If and when they escalate to their full potential, as shown below, watch out below. That may happen as soon as July 6, when tariffs of 25% on some $34BN in Chinese products will go into effect.

    In a remark now driving world headlines, Trump added, “The European Union is possibly as bad as China just smaller, OK,” Trump said. And concluded, “It’s terrible what they did to us.”

    Trump tweeted in March that trade wars are “good, and easy to win” — yet when combined with potentially explosive geopolitical issues such as what may appear in Chinese eyes a practical abandonment of the One China Policy (a status quo already subject to differing interpretations), the trade war is already proving not in the least bit “easy” with “winning” looking increasingly like a relative and elastic term.

  • Germany's Interior Minister Seehofer To Resign After Clash With Merkel Over Migrants

    Update 2: No statement from Merkel tonight (contrary to earlier reports) however Seehofer did speak to reporters and said that he offered to quit as German interior minister, and that he wants to avoid Merkel government collapse.

    He also added that he will stay in politics if Angela Merkel’s CDU backs down in the two parties’ deadlock over migration, DPA reports.

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    Update: After several hours of negotiations, it appears that Chancellor Merkel and CSU leader Horst Seehofer have been unable to reach an agreement, and according to N-TV, Seehofer told the CSU board meeting the he offered to resign as Germany’s interior minister and as CSU party chairman amid the clash over Germany’s migration policy, sparing Merkel the need to fire him and potentially preserving the political alliance.

    Seehofer and his party spent hours finding a response to a hard-fought agreement to reduce migration into the European Union and so-called “secondary migration” between member states hammered out by Merkel at a leaders’ summit last week.  Now “he wants to step down as party chairman and interior minister” as he enjoys “no support”, the sources said.

    However, this is where things get complicated because dpa adds that CSU caucus chief Alexander Dobrindt opposes the resignation and will not accept it, putting Germany at a political impasse and potentially in a political crisis in which the CDU and CSU alliance may now break. According to N-tv the meeting of the CSU governing body is now suspended.

    If Seehofer does resign, it is unclear whether the CSU would seek to remain in coalition with Merkel’s CDU and offer a replacement interior minister. Alternatively, it could break up the two parties’ decades-long alliance, effectively depriving Merkel of her majority in parliament and pitching Germany into uncharted political waters.

    According to Spiegel editor Melanie Amann, Seehofer sees few options for the CSU: Either to stand firm on the immigration dispute and risk undermining the ruling coalition, or to back down and damage the party’s credibility, reports Spiegel editor Melanie Amann. The third option, offering to leave his post, was possibly in an attempt to boost party members’ support of his strategy.

    Earlier, Bavarian state premier Markus Soeder, a leader of the hard-line faction, told the closed-door meeting that the CSU doesn’t want to bring down Merkel’s government but will stand up for what is right, dpa reported.

    What happens next is up to the CSU, which faces a stark choice: if it does not want to lose in the Bavarian-election this coming October, it needs to confront Merkel on the migrant crisis, or risk losing even more votes to the AdF as described below.

    Meanwhile, according to a CDU statement, Angela Merkel will pursue the migrant pacts reached with its EU partners. As Bloomberg adds, Merkel faced down an allied party that’s demanding she tighten Germany’s defenses against migration, escalating a political crisis could leave her without a parliamentary majority.

    The news has sent the EUR surging, perhaps on the assumption that a political crisis in Germany has been averted with Seehofer’s resignation, instead of his termination, although if the CSU refuses Seehofer’s resignation, leading to a political impasse, it is unclear just how the German ruling coalition will continue at this point.

    In other words, the key question now is whether CSU is still in a coalition with the CDU. Judging by the EUR reaction, the answer appears to be yes, for now, although as Bloomberg’s Mark Cranfield notes, “EUR/USD’s rebound on last week’s EU migrant deal looks like being short lived if Interior Minister Horst Seehofer’s resignation is accepted. This would weaken Angela Merkel’s grip on power as the ruling coalition — which was already shaky — threatens to split apart.”

    The pair looked vulnerable even after Friday produced its best gain in June because it failed to recapture the 1.17 handle. That suggests the broad 1.15-1.17 band prevails for the near term. Short-dated volatility also avoided spiking higher.

    As European traders wake up to the Seehofer announcement, they are likely to push the euro toward the lower end of that recent range.

    Translation for the US traders: don’t be surprised if the EUR is below 1.16 when you wake up on Monday following a deterioration in Germany’s political crisis. 

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    EARLIER:

    German Chancellor Angela Merkel is fighting for her political future on Sunday desperate to placate conservative rebels in her ruling coalition over immigration with a last-minute European deal, even as central EU states called the deal into doubt. If she is unsuccessful in convincing her political ally, CSU leader Horst Seehofer, that the deal will stick and limit immigration into Germany, she faces a political crisis that could end her parliamentary majority and, potentially, her career.

    With CSU’s two week ultimatum to reach an agreement on pushing back immigrants into Germany to their nations of origin set to expire tonight, Merkel’s centre-right CDU party and its conservative Bavarian CSU allies are holding separate meetings to weigh the results of last week’s EU summit, which agreed on collective measures by the bloc’s 28 members to reduce immigration, AFP reports.

    Merkel hopes the deals with European migrant discontents – mostly Italy which threatened to veto last week’s summit until the last minute – and German neighbors will deter Interior Minister and CSU leader Seehofer from defying her by turning away at the border asylum seekers already registered in other EU nations. Such a unilateral move would force her to fire him, prompting a CSU walkout that would cost her her majority in parliament.

    According to a document sent to coalition partners, Merkel sought to assuage the hardliners with deals with 16 other countries to return already-registered migrants if they reached Germany. The EU and bilateral deals were “only possible because the chancellor enjoys respect and authority throughout Europe,” Germany’s EU Commissioner and CDU politician Guenther Oettinger said in an interview with the Frankfurter Allgemeine Sonntagszeitung weekly. “That is very valuable for Germany, no-one should destroy it.“

    The German leader, who recently won a historic, third mandate, has warned that the issue of migration could decide the very future of the EU itself.

    But a potential dealbreaker emerged when several central European nations including Poland, Hungary, the Czech Republic and Slovakia denied they had agreed to accept returned migrants.

    Over the weekend, signs of reconciliation emerged after Merkel and CSU head Horst Seehofer met at the chancellery in Berlin late Saturday to discuss how to avoid a government crisis, according to Bild, and while Merkel’s CDU party published a position paper saying “we want to further reduce the number of refugees arriving in Germany”, it also caused new conflict with its statement that 14 EU countries had made a “political commitment” to take back refugees who originally arrived on their soil but moved on to Germany. As a result, Germany’s ARD reported that the government leaders in the Czech Republic, Hungary and Poland denied having made any commitment at the summit.

    This has prompted fears that a tentative deal could fall apart in the last minute: “Given the different statements from some EU member countries, one can doubt whether all of the decisions at the EU Council will become reality,” head of the CSU parliamentary group Alexander Dobrindt told Bild am Sonntag newspaper.

    As a reminder, in a marathon overnight session on Friday, EU leaders agreed to consider setting up “disembarkation platforms” outside the EU, most likely in North Africa, in a bid to discourage migrants and refugees boarding EU-bound smuggler boats. Member countries could also create processing centres to determine whether the new arrivals are returned home as economic migrants or admitted as refugees in willing states.

    At the national level, Merkel also proposes that migrants arriving in Germany who first registered in another EU country should be placed in special “admissions centres” under restrictive conditions, according to a document she sent to the CSU and coalition partners the Social Democratic Party (SPD).

    “There will be a residency obligation reinforced with sanctions,” the document states.

    On Friday, a happy Merkel told reporters that the hard won EU and bilateral deals were “more than equivalent in their effect” to Seehofer’s demands.

    And, indeed, the initial signs were positive, with the CSU’s Bavarian state premier Markus Soeder saying on Saturday that “what has been achieved in Brussels is more than we originally thought.

    But as German dpa news agency adds on Sunday, Seehofer himself was hardly as enthusiastic and said he was not happy with the results of EU summit which he said is not as effective as turning away unilaterally at Germany’s borders people who have registered already in another EU country. Seehofer also rejected so-called “anchor centres” within Germany.

    Meanwhile, the opposition from the 4 core Central European nations prompted Alexander Dobrindt, the CSU caucus leader in the national parliament in Berlin, to warn that it raises doubts about whether the EU deal on migration will be fully implemented.

    The stakes of today’s discussions are momentous not only for Merkel, but also for the CSU, which fears losing its absolute majority in Bavaria’s state parliament. As AFP eloquently notes, “the “Free State” with its beer-and-lederhosen Alpine traditions, powerful industries and impenetrable dialect has a more conservative bent than other German regions.“

    The big danger for the CSU is that if it is seen as caving too far, it may lose even more support to Germany’s the anti-refugee, anti-Islam phenomenon, the AfD, which succeeded in entering Federal parliament for the first time after the last German elections, at the expense of establishment parties. Opinion polls point to the AfD making a similarly spectacular entrance to Bavaria’s parliament in October.

    The big problem for Seehofer is that weeks of “Merkel-bashing” have failed to help the CSU, as a Forsa poll last week showed around 68% of Bavarians backed Merkel’s quest for a Europe-wide answer to migration rather than Germany going it alone.

    How the CSU resolves this dilemma will impact the fate of Merkel, and could have dramatic consequences for the future of Europe.

    * * *

    Finally, putting it all together is the following twitter thread from Lars Pelleniat laying out the various possible outcomes:

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  • Surprise! US Taxpayers, Not Illinoisans, Will Cover Most Of The Public Funding For Obama-Land Fiasco In Chicago

    Authored by Mark Glennon via WirePoints.com,

    Only now has it become apparent that federal taxpayers, not Illinoisans, will be funding most of the public support for the controversial Obama Center to be built on Chicago’s Southside.

    Wirepoints has learned from administrative officials and legislators that at least $139 million — 80% of the public funding for the center — almost certainly will be reimbursed by the federal government. The project was already under attack for a number of other reasons, including a First Amendment “compelled speech” claim that it would force taxpayers to fund private, political advocacy.

    The center was initially pitched as a privately funded presidential library. Many Illinois taxpayers therefore were angered to learn that at least $174 million was included in the state’s 1,246-page budget presented in May to rank and file General Assembly members only hours before their vote. Nor will the center be a presidential library.

    However, it turns out that federal taxpayers will be the ones compelled to make the subsidy. The Illinois appropriation is for roadway and transit reconfigurations needed to accommodate the center, and 80% of such spending is generally reimbursable by the federal government. Wirepoints has confirmed with state officials that federal reimbursement of at least $139 million is highly likely.

    Stoking the controversy is the stated mission of the center, which is partly political. The Original Request for Proposals said the center would “enhance the pursuit of [President Obama’s] initiatives beyond 2017.” Former President Obama has further commented to the same effect. As the Chicago Tribune put it, “As he’s long maintained, Obama said he envisions his center as a place where young people from around the world can meet each other, get training and prepare to become the next generation of leaders.”

    The center is already subject to a federal lawsuit with a First Amendment claim based on taxpayer support for a private, political purpose. A lawsuit of that type is difficult to win, but it may be bolstered by the recent Janus decision by the United States Supreme Court. Janus was based on the prohibition of compelled speech, and that same doctrine underpins the First Amendment claim about the center.

    Here are the details and background:

    Contrary to its clear, initial description as a presidential library, it won’t be one. The center will be owned and run by the Obama Foundation, not the National Archives and Records Administration, as are presidential libraries. Obama’s records, artifacts and papers will not be there.

    Initial claims that it would be funded entirely with private money also evaporated. “Construction and maintenance will be funded by private donations, and no taxpayer money will go to the foundation,” the foundation’s spokeswoman said. The interpretation was that assured 100 percent private funding.

    Obama Center rendering, to be built on part of Jackson Park

    WTTW, a public television station in Chicago, askedthe obvious question when the idea of state funding first floated:

    “How could could a public financing proposal fly in a state that is bleeding red ink, especially when the Obamas have promised 100 percent private funding?”

    That’s easy to answer in Illinois. Chicago politicians asked for it and they get what they want. “Another fast one by Chicago pols,” as one Illinois paper put it.

    “To give credit where credit is due, when Chicago/Illinois politicians come together on a scheme to fleece the public and demonstrate that they are a law unto themselves, they think big.”

    The federal lawsuit was filed by Protect our Parks, a not-for-profit. It alleges that the transfer of land from Chicago’s Jackson Park to the Obama Foundation, at no cost, violated state law a number of ways. It was a “bait and switch,” the legal complaint says. The land was transferred under the pretense of being a privately funded presidential library but in fact will be used for a private purpose.

    The First Amendment claim in the lawsuit is particularly interesting. The suit was filed prior to Illinois’ appropriation of money for the center. The claim is based, instead, on authorization for a special property tax levy for the center. Using any source of taxpayer money for a private political purpose may violate the First Amendment because it is compelled speech.

    But now, with the state appropriation completed and federal reimbursement uncovered, much more money is at issue and it’s a matter for all Americans.

    And just last week the United States Supreme Court delivered the Janus opinion, which was particularly firm on the prohibition of compelled speech. From the majority opinion:

    Forcing free and independent individuals to endorse ideas they find objectionable is always demeaning, and for this reason, one of our land­ mark free speech cases said that a law commanding “in­ voluntary affirmation” of objected-to beliefs would require “even more immediate and urgent grounds” than a law demanding silence.

    “Compelling a person to subsidize the speech of other private speakers raises similar First Amendment con­cerns,” added the court. That’s what’s alleged in the lawsuit against the Obama Foundation — forcing taxpayers to subsidize the a center to be used to preach Obama’s politics.

    Jackson Park today

    It’s conceivable federal reimbursement will not materialize. Illinois could elect to pay towards the center though a bond offering, in which case, we are told by state officials, reimbursement is not available. The state could also essentially elect to use its access to federal reimbursement for other projects. Again, however, those possibilities are not anticipated, according to our sources, and federal reimbursement is fully expected.

    Indeed, when a few Republican lawmakers objected to inclusion of funding for the center in the budget, they were told by party leadership not to be concerned because of the federal reimbursement. Illinois Rep. Jeanne Ives (R-Wheaton), told me this:

    “During the budget discussion, when objections were raised about spending $172 million on infrastructure improvements for the Obama project, we were assured by Republican leadership not to worry since 80 percent of the cost would be picked up by the federal government.”

    Some may argue that spending for roadway and transit reconfiguration isn’t really part of the project. That’s specious. The spending is necessitated entirely by the project. It’s part and parcel of the center.

    The precise amount of taxpayer money to go towards the Obama Center is subject to some interpretation and dispute, though it’s at least $174 million. A specific appropriation for $180 million is in Section 105 on page 664 of the new Illinois budget, though we are told the current cost estimate is just $174. Another $12 million is appropriated in Section 100 on that page for a transit station, though there’s some opinion that the station is separate from the center. Together with other transit station money, the Washington Examiner pegged the grand total Illinois appropriation at $224 million. Accordingly, the 80% reimbursed by federal taxpayers may be significantly higher than $139 million.

    That difference in the numbers matters little.

    Nor does it matter whether the First Amendment claim is truly viable in court.

    What matters is that funding by any taxpayers for the center is wrong and that the public has been duped. A privately funded presidential library morphed into a monument to hubris and the arrogance of power: Obamaland.

  • Fact Check: Did Obama Detain 90,000 Children At The Border?

    President Trump’s 2020 campaign manager Brad Parscale recently tweeted that “Over 90,000 kids were detained under Obama. And no one cared.” 

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    What followed was a barrage of angry tweets and an attempt by AP prove the claim false by conflating two narratives; the first being that Trump is putting separated migrant children in prison-like conditions – which the left quickly abandoned after it was revealed that viral photographs depicting the caged migrant children actually happened under Obama.

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    That claim then morphed into outrage over the Trump administration separating 20% of minors who enter the country from their parents – around 2,000 kids, while ignoring the fact that the Obama administration was also separating children from their parents, while widespread abuse of detained migrants under previous administrations was reported by the ACLU and the University of Arizona.  

    One woman interviewed was detained for nearly a month in CADC while she was six months pregnant. She was shackled during transport to and from the facility. At the facility, she was denied monitoring or treatment for an ovarian cyst that posed a risk to herself and the fetus, and received no response to her requests for prenatal vitamins or extra padding for her bed.68 (Her case is described more fully in the box below.) Another woman interviewed was separated from her breastfeeding baby daughter, who was less than two months old, while she was detained in Eloy for two weeks. –University of Arizona

    and

    Among those findings are that women did not receive adequate medical or mental health care,were often mixed together with women serving criminal sentences, and were often transferred from faraway states. In most cases, researchers found that women were separated from at least one child. –ACLUAZ.org

    Also overlooked is the fact that 80% of children entering the United States are separated from their parents when they’re shoved across the border with a human trafficker, and that migrants can seek asylum in the United States through one of the several U.S. consulates in Mexico.

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    The previously silent left became suddenly outraged after President Trump’s “zero tolerance” policy of enforcing existing immigration law resulted in approximately 2,000 minors being separated from their parents. To end this, Trump signed Executive Order #13841 on June 25, ordering that detained families not be separated unless the parents pose a danger to the child, while the Trump administration pledged to reunite separated families.  

    The “Fact Check” 

    Two days after Parscale’s tweet, AP published the article “NOT REAL NEWS: Obama didn’t separate 90,000 migrant families,” conflating the “separated families” narrative with the “children in cages” narrative – while pointing to a “conservative website” (which they don’t link to) as the source of the claim. 

    “The claim, published on a conservative website, was repeated on social media throughout the week as President Donald Trump faced criticism over his administration’s “zero tolerance” immigration policy” –AP

    What website? Who said that? Parscale said detained, not separated.

    The false claim appears to stem from a January 2016 Senate subcommittee report that investigated how the Department of Health and Human Services, under the Obama administration, placed thousands of unaccompanied children illegally entering the country. 

    The subcommittee report found that from October 2013 through 2015 the federal agency placed nearly 90,000 children with a sponsor, after they were detained at the border without a legal guardian. The majority of those sponsors, the report found, were a parent or legal guardian living in the country. –AP

    Note how AP simply says that the 90,000 children were placed with a sponsor… Unfortunately, they’re missing a giant link in the chain; the detention centers the kids are placed in first.

    Taking a look at the Senate subcommittee report AP references (page 8), since the thrust of the left’s outrage over Trump’s “Zero Tolerance” policy was originally poor migrant children being forced into cages… 

    First, we have the 90,000 under Obama figure – but there’s a footnote. Then the report notes that the majority of unaccompanied children over that two-year period were placed with a parent or a legal guardian. 

    Since the beginning of FY2014, HHS has placed almost 90,000 UACs [Unaccompanied Alien Child] with sponsors in the United States.(31) According to HHS, it places the majority of those UACs with the child’s parent or legal guardian.(32)

    Now let’s look at that footnote (31) attached to the 90,000 figure – which directs us to an Office of Refugee Resettlement publication entitled: Unaccompanied Children Released to Sponsors by State.

    Navigating over to that document on page 2, we find section “A” which outlines “Cases in which a determination of UAC (Unaccompanied Alien Child) status has already been made.”

    It’s got a footnote too… 

    Asylum Offices will see evidence of these prior UAC determinations in A-files or in systems on the form I-213, Record of Deportable Alien; the Form 93 (the CBP UAC screening form0; the Department of Health and Human Services (HHS) Office of Refugee Resettlement (ORR) Initial Placement Form1.

    And what do we find under the ORR footnote “1”?

    “After apprehending an individual and determining that he or she is a UAC, CBP or ICE transfers him or her to a facility run by the Office of Refugee Resettlement (ORR), which is part of the Department of Health and Human Services (HHS). 

    In other words – all of the unaccompanied minors detained under the Obama administration were locked up in the exact same facilities the Trump administration is using. 

    Stats on the minors:

    Digging some more, we find a February, 2016 report from the Government Accountability Office entitled :Unaccompanied Children – HHS Can Take Further Actions To Monitor Their Care.

    In fiscal year 2014, nearly 57,500 children traveling without their parents or guardians (referred to as unaccompanied children) were apprehended by federal immigration officers and transferred to the care of the Department of Health and Human Services’ Office of Refugee Resettlement (ORR). Most of these children were from Central America.

    So tens of thousands of unaccompanied minors were taken in by the Obama administration each year and placed in government facilities. 

    Average Stay

    In 2011, the average stay of an unaccompanied minor in an Obama-admin facility was 72 days, which dropped to 34 days in 2015. 

    How about today? In 2016, the average stay was 41 days, while the Department of Health and Human Services “Unaccompanied Alien Children Program” fact sheet from June 15 states: “Currently, the average length of stay for UAC in the program is approximately 57 days.” So in 2011, precious children remained in Obama’s “concentration camps” as the left now calls them an average of 15 days longer than today. 

    Where are most UACs released?

    In 2014, most unaccompanied minors were released in Los Angeles, Miami-Dade, and Palm Beach counties. Counties which took in fewer than 50 UACs are not noted on the map. 

    In fiscal year 2014, ORR released a total of 53,518 children to sponsors, and these children were released in every state except one.37 The largest number of children were placed in Texas, New York, California, Florida, and the Washington, D.C. area, respectively, with Harris County, TX receiving 4,028 children in fiscal year 2014, more children than any other single county (see fig. 5).38 Often children were placed in counties with large Latino populations.

    So to be clear – hundreds of thousands of migrant children whose parents sent them into the United States alone or with a human trafficker remained in Obama administration facilities for up to months at a time, before eventual release or repatriation. 

    In fact, if one adds up just the unaccompanied minors taken into custody between 2008 – 2016 (here and here), nearly 300,000 children were placed in federal housing under Obama. 

    And as Brad Parscale points out, no one cared.

    Finally, to clarify what ‘we, the people’ are supposed to believe:

  • How The Iran Sanctions Drama Intersects With OPEC-Plus

    Authored by Pepe Escobar via The Asia Times,

    Major states buying oil from Iran are unlikely to heed the US call to drop imports; key allies want a waiver to avoid sanctions; OPEC, meanwhile, will have trouble boosting output in the short-term; the puzzle is not solved, but there are dark clouds…

    History may have registered stranger geoeconomic bedfellows. But in the current OPEC-plus world, the rules of the game are now de facto controlled by OPEC powerhouse Saudi Arabia in concert with non-OPEC Russia.

    Russia may even join OPEC as an associate member. There’s a key clause in the bilateral Riyadh-Moscow agreement stipulating that joint interventions to raise or lower oil production now are the new norm.

    Some major OPEC members are not exactly pleased. At the recent meeting in Vienna, three member states – Iran, Iraq and Venezuela – tried, but did not manage to veto the drive for increased production. Venezuela’s production is actually declining. Iran, facing a tacit US declaration of economic war, is hard-pressed to increase production. And Iraq’s will need time to boost output.

    Goldman Sachs insists: “The oil market remains in deficit… requiring higher core OPEC and Russia production to avoid a stock-out by year-end.” Goldman Sachs expects production by OPEC and Russia to rise by 1.3 million barrels a day by the end of 2019. Persian Gulf traders have told Asia Times that’s unrealistic: “Goldman Sachs does not have the figures to assert the capability of Russia and Saudi Arabia to produce so much oil. At most, that would be a million barrels a day. And it is doubtful Russia will seek to damage Iran even if they had the capacity.”

    In theory, Russia and Iran, both under US sanctions, coordinate their energy policy. Both are interested in countering the US shale industry. Top energy analysts consider that only with oil at $100 a barrel will fracking become highly profitable. And oil and gas generated via fracked in the US is a short-term thing; it will largely be exhausted in 15 years. Moreover, the real story may be that shale oil is, in the end, nothing but a Ponzi scheme.

    Those were the days when the Obama administration ordered Riyadh to unleash a de facto oil-price war to hurt both Russia and Iran. Yet the game drastically changes when Venezuela loses a million barrels a day in production and Iran, under upcoming sanctions, may lose another million.

    As Asia Times has reported, OPEC (plus Russia) can at best increase their production by 1 million barrels a day. And that would take time because, as Persian Gulf traders said: “800,000 barrels a day of their cutback is due to depletion that cannot be restored.”

    Oil producers don’t want high prices

    Most oil-producing nations don’t want high oil prices. When that happens, demand goes down, and the dreaded competition – in the form of electric vehicles – gets a major boost.

    That explains in part why Riyadh prevailed in the price-capping war in Vienna. Saudi Arabia is the only producer with some spare capacity; the real numbers are a source of endless debate in energy circles. US-sanctioned Iran, for its part, is in acute need of extra energy income and had to be against it.

    The bottom line is that despite the agreement in Vienna, the price of oil, in the short-term, is bound to go up. Analyses by BNP Paribas, among others, are adamant that supply problems with Venezuela and Libya, plus the proverbial “uncertainty” about the sanctions on Iran, lead to “oil fundamentals still…favorable for oil prices to rise over the next six months despite the OPEC+ decision.”

    Iran’s Petroleum Minister Bijan Zanganeh has done his best to downplay how much oil will really be back on the market. In tandem with Persian Gulf traders, he certainly knows that can’t be more than 1 million barrels a day, and that such an output boost will take time.

    Considering that in realpolitik terms Riyadh simply is not allowed any “decision” in oil policy without clearing it first with the US, what remains to be seen is how Washington will react to the new, long-term Riyadh-Moscow entente cordiale. As far as oil geopolitics goes, this is in fact the major game-changer.

    Business as usual

    The Big Unknown is how the US economic war on Iran’s oil exports will play out.

    Iran’s Zanganeh has been quite realistic; he does not expect buyers to get any sanctions waivers from Washington. Total and Royal Dutch Shell have already stopped buying.

    Iran’s top oil customers are, in order: China, India, South Korea and Turkey.

    India will buy Iranian oil with rupees. China also will be totally impervious to the Trump administration’s command. Sinopec, for instance, badly needs Iranian oil for new refineries in assorted Chinese provinces, and won’t stop buying.

    Turkey’s Economy Minister Nihat Zeybekci has been blunt: “The decisions taken by the United States on this issue are not binding for us.” He added that: “We recognize no other [country’s] interests other than our own.” Iran is Turkey’s number-one oil supplier, accounting for almost 50% of total imports.

    And Iraq won’t abandon strategic energy cooperation with Iran. Supply chains rule; Baghdad sends oil from Kirkuk to a refinery in Kermanshah in Iran, and gets refined Iranian oil for southern Iraq.

    Russia won’t back down from its intention to invest $50 billion in Iran’s energy infrastructure.

    Japan and South Korea are lobbying heavily to get waivers. According to South Korea’s Energy Ministry: “We are in the same position as Japan. We are in talks with the United States and will keep negotiating to get an exemption”.

    In a less Hobbesian world, the EU-3 (France, UK and Germany), plus China and Russia – which all negotiated the Iran nuclear deal, known as the Joint Comprehensive Plan of Action or JCPOA, along with Japan and South Korea, would be telling the US the Trump administration’s unilateral economic war against Iran is, in fact, a violation of a UN-endorsed treaty, totally disregarding nations that have pledged to protect the JCPOA. In the real world though, that’s not going to happen.

    It’s all about energy

    Once again, the action to watch will be at the Shanghai Energy Stock Exchange. Petro-yuan contracts started trading in late March. By May, they were already covering 12% of the global market. The price of a barrel of oil, in yuan, has oscillated between Brent and West Texas Intermediate (WTI).

    China is going no holds barred, betting simultaneously on Saudi Arabia and Iran. China Investment Corp. may well buy 5% of Aramco, at roughly $100 billion. In parallel, China started paying for Iranian oil in yuan in 2012. If the Europeans buckle up, as top Iranian analysts expect, the volume of energy business with China may soon reach $40 billion a year.

    Iran is firmly linked to the petro-yuan. Iran now may rely on a fleet of supertankers, properly insured, to export its own oil. The Iranian calculation is that Washington’s economic war will spur higher oil prices. So, even if Iran’s exports are bound to suffer, energy income may not be affected.

    Shaded by all these dramatic eruptions, we find some startling data. Iran – and Russia – may sit on an astonishing $45 trillion worth in oil and gas reserves. US fracking is largely a myth. Saudi Arabia may have at best 20 years of oil supply left. It’s all about energy – all the time.

    The usual suspects will hardly sit back and relax while endlessly demonized Russia, just like Norway, builds a solid middle class through oil revenue and massive current account surpluses. Alarm bells are about to sound, to the tune of “Putin has taken over OPEC”. In fact, it was Putin who convinced Mohammad bin Salman (MBS) they should fight the US shale offensive together.

    The OPEC-plus-Iran puzzle is far from solved. Only one thing is certain; the future spells out brutal, covert resource wars.

  • Anti-establishment Leftist Lopez Obrador Wins Mexican Presidency In A Landslide

    As expected, Mexico has just elected its first leftist president in decades, with Andrés Manuel López Obrador (or AMLO) winning in a landslide and a near majority outright, or 49% of the vote early exit polls showed; right-left coalition leader Ricardo Anaya, in distant second place with 27% and the incumbent PRI party’s Jose Antonio Meade, with 18%.

    And, as Bloomberg headlines flash red, Obrador is now de facto president as his main rivals have conceded:

    • MEXICO’S LOPEZ OBRADOR SET TO WIN AS MAIN RIVALS CONCEDE

    And, adding to the concerns that AMLO may start rolling back energy privatization programs and issue more debt, is that his Morena party just won a majority in the Lower House:

    • MEXICO’S OBRADOR POISED TO GET MAJORITY IN LOWER HOUSE: POLL

    The victory of AMLO, who suffered defeats in the last two presidential votes, will hardly come as a surprise, as has led by double digit numbers throughout this campaign. His popularity stems from his antiestablishment platform (sound familiar?) which has been riding a public revolt against entrenched corruption, rampant violence and an economy that’s failed to deliver higher living standards for the common man and especially the poor, which comprise about half of Mexico’s 125 million population. He also campaigned with promises for economic reform that has been underlined by a desire to freeze prices of gasoline in Mexico for 3 years, as well as a reduction of external investment in the energy sector.

    AMLO has also promised to ramp up social programs and, like so many of his antiestablishment peers, has vowed to fund them without deficit-spending by eliminating graft, a claim which as Bloomberg laconically adds, “has been greeted skeptically by economists.” He’s also promised not to nationalize companies or quit Nafta. Investors are worried however that he may cancel oil contracts signed as part of outgoing President Enrique Pena Nieto’s energy reforms.

    * * *

    The victory of a leftist in Mexico is a stark reversal for the Latin American nation which unlike most of its peers has not had a socialist leader in decades.

    As Bloomberg notes, Lopez Obrador has promised to govern as a pragmatist. Still, his procession toward victory has alarmed many investors and business leaders, who worry that he’ll roll back privatization of the energy industry and push the country into debt by spending more on social programs.

    Those concerns will be amplified if Lopez Obrador’s Morena party wins majorities in both houses of Congress, which earlier surveys had suggested is likely.

    With the election outcome widely expected, there was little reaction in markets aside from the USDMXN which has enjoyed a relief rally, although as in the case of the Turkish Lira, many expect this will be short-lived as many anticipate Mexico’s problems are set to worsen under the new administration.

    What is more notable is that like so many other nations, Mexicans have also opted for change and turned their back on the establishment and the only two parties to have run the country in almost a century. There are plenty of reasons they might want to kick out the governing class.

    “We need a complete transformation in Mexico,” said Sergio Oceransky, 45, as he voted at a polling station in central Mexico City. “We’re experiencing a tremendous political crisis that’s no longer sustainable.”

    On the campaign trail, many voters say physical security was their top concern. A decade-long war on drug cartels has pushed the murder rate to record levels.

    His predecessor, Pena Nieto, also started off on the right foot, opening Mexico’s energy industry to private investors and winning a reputation as an economic reformer early on. However, a surge in violence, and a string of graft scandals that dragged in the president and his family, Pena Nieto is ending his six-year term with some the lowest approval ratings in the history of the presidency. He will remain in office until December when Mexico’s 5 month gap between elections and inauguration lapses.

    And since both Obrador and Trump won on an antiestablishment platform, we look forward to them getting along just great.

    * * *

    As discussed previously, here are the main campaign issues that dominated the presidential campaign (via Reuters):

     

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