The Post-American World; Crooke, Escobar, Blumenthal and Marandi lay it all out

Via The Saker

The Post-American World; Crooke, Escobar, Blumenthal and Marandi lay it all out

February 17, 2021

Thirty years ago, the United States dominated the world politically, economically, and scientifically. But today?

Watch this in-depth discussion with distinguished guests:
Alastair Crooke – Former British Diplomat, the Founder, and Director of the Conflicts Form
Pepe Escobar – Brazilian Political Analyst and Author
Max Blumenthal – American Journalist and Author from Grayzone
Chaired by Dr. Mohammad Marandi – Professor at University of Tehran

Russia holds the key to German sovereignty

Russia holds the key to German sovereignty

February 17, 2021

A more sovereign Germany closer to Russia and China may be the straw that breaks the US hegemon’s back

By Pepe Escobar with permission and first posted at Asia Times

Last week we traced the necessary historical and geopolitical steps to understand Why Russia is driving the West crazy.

And then, last Friday, right before the start of the Year of the Metal Ox, came the bombshell, delivered with customary aplomb by Russian Foreign Minister Sergey Lavrov.

In an interview with popular talk show host Vladimir Solovyov – with the full transcript published by the Russian Ministry of Foreign Affairs – Lavrov said Moscow “must be ready” for a possible “break with the European Union.”

The ominous break would be a direct result of new EU sanctions, particularly those “that create risks for our economy, including in the most sensitive areas.” And then, the Sun Tzu-style clincher: “If you want peace, prepare for war.”

Kremlin spokesperson Dmitri Peskov, afterwards, made sure to explain that Lavrov was taken out of context: the media, predictably, had seized on a “sensational” headline.

So Lavrov’s full, nuanced answer to a question about rocky EU-Russia relations must be carefully examined:

“We believe we would be ready for this. We are neighbors. Speaking collectively, they are our largest trade and investment partner. Many EU companies operate here; there are hundreds or even thousands of joint ventures. When a business benefits both sides, we will continue. I am sure that we have become fully self-sufficient in the defense sphere. We must also attain the same position in the economy to be able to act accordingly if we see again (we have seen this more than once) that sanctions are imposed in a sphere where they can create risks for our economy, including in the most sensitive areas such as the supply of component parts. We don’t want to be isolated from the world, but we must be prepared for this. If you want peace, prepare for war.”

It’s quite clear that Lavrov is not stating that Russia will unilaterally cut off relations with the EU. The ball is actually in the EU’s court: Moscow is stating that it will not exercise a first-strike option to break relations with the Brussels eurocracy. And that in itself would also be quite different from breaking relations with any of the 27 EU member-states.

The context Peskov referred to is also clear: EU envoy Josep Borrell, after his disastrous trip to Moscow, had raised the issue that Brussels was weighing the imposition of further sanctions. Lavrov’s response was clearly designed to drum some sense into the thick heads of the European Commission (EC), run by notoriously incompetent former German defense minister Ursula von der Leyen and her foreign policy “chief” Borrell.

Earlier this week, Peskov was forced to come back incisively to the volcanic saga: “Regrettably, Brussels keeps talking about sanctions, so does the United States with maniacal persistency. This is something we will never welcome. It is something that we do not like at all.”

Talk about diplomatic euphemism.

So the stage is set for a raucous – to say the least – meeting of EU foreign ministers next Monday, where they will discuss – what else? – possible new sanctions. Those most probably would include travel bans and asset freezes on selected Russians, including people very close to the Kremlin, blamed by the EU to be responsible for the jailing earlier this month of right-wing blogger and convicted fraudster (a scam against Yves Rocher) Alexei Navalny.

The overwhelming majority of Russians see Navalny – with a popularity rate of 2% at best – as a lowly, expendable NATO asset. The meeting next week will pave the way for the summit of member state leaders at the end of March, where the EU could – and that’s the operative word – formally approve new sanctions. That would require a unanimous decision by the EU’s 27 member states.

As it stands, apart from the stridently Russophobic usual suspects – Poland and the Baltics – it doesn’t appear Brussels is aiming to shoot itself in the back.

Remember Leibniz

EU observers obviously have not been observing how Moscow’s pragmatic view of Brussels has evolved in the past few years.

Russia-EU trade will continue, no matter what. The EU badly needs Russian energy; and Russia is willing to sell it, oil and gas, pipelines and all. That’s strictly business. If the EU doesn’t want it – for a basket of reasons – no problem: Russia is developing a steady stream of businesses, energy included, all across East Asia.

The always relevant Valdai Discussion Club, a Moscow-based think tank, for instance, is carefully tracking the trade aspect of the Russia-China strategic partnership:

“US policy will continue to seek a split between China and Russia. Europe remains an important partner for Moscow and Beijing. The situation in Central Asia is stable, but it requires the building up of Russian-Chinese cooperation.”

Putin, laterally, also weighed in on the EU-Russia saga, which is a subtext of that perennial battle between Russia and the West: “As soon as we began to stabilize, to get back to our feet – the policy of deterrence followed immediately… And as we grew stronger, this policy of deterrence was being conducted more and more intensely.”

I hinted last week at the intergalactic-distant possibility of a Berlin-Moscow-Beijing axis
Media and telecoms analyst Peter G. Spengler in a lengthy email to me elegantly qualified it as belonging to Robert Musil’s sense of possibility, as described in his masterpiece The Man Without Qualities.

Peter Spengler also called attention to Leibniz’s Novissima Sinica, and particularly to an essay by Manfred von Boetticher on Leibniz and Russia, represented by Tsar Peter the Great, in which the role of Russia as a bridge between Europe and China is emphasized.

Even though Leibniz, in the end, never met Peter the Great, we learn that “it was always Leibniz’s goal to get practical application for his theoretical findings. Throughout his life, he was looking for a ‘great potentate’ who was open to modern ideas and with whose help he could realize his ideas of a better world. In the age of absolutism, this seemed to be the most promising perspective for a scholar for whom the progress of science and technology as well as the improvement of education and economic conditions were urgent goals.”

“Tsar Peter, who was as powerful as he was open to all new plans and whose personality fascinated him anyway, must therefore have been an extraordinarily interesting contact for Leibniz. Since Western Europe had come into closer contact with China through the Jesuit mission and Leibniz had recognized the importance of the millennia-old Chinese culture, he also saw in Russia the natural link between the European and Chinese cultural spheres, the center of a future synthesis between the Orient and the Occident. With the emerging upheavals in the Russian Empire, his hopes seemed to be fulfilled: Full of expectation, he followed the changes in Russia, as they were emerging under Peter I.”

Yet to evoke Leibniz at this stage is to dream of heavenly spheres. The pedestrian geopolitical reality is that the EU is an Atlanticist institution – de facto subordinated to NATO. Lavrov might want to behave like a Daoist monk, or even pull a Leibniz, but it’s hard when you’re forced to deal with a bunch of dummies.

It’s all about sovereignty

Rabid Atlanticists argue that non-entity Navalny is directly related to Nord Stream 2. Nonsense: Navalny was built (italics mine) by the usual suspects as a battering ram to undermine Nord Stream 2.

The reason is that the pipeline will consolidate Berlin at the core of the EU’s energy policy. And that will be a major factor in the EU’s overall foreign policy – with Germany, at least in theory, exercising more autonomy in relation to the US.

So here’s the “dirty” secret: it’s all a matter of sovereignty. Every geopolitical and geoeconomic player knows who does not want a closer Germany-Russia entente.

Now imagine a hegemonic Germany in Europe forging closer trade and investment ties with not only Russia but also China (and that’s the other “secret” inbuilt in the EU-China trade-investment deal).

So whoever is lodged in the White House, there’s nothing else to expect from the US Deep State apart from the “maniacal” push towards perennial, accumulated sanctions.

The ball is actually in Berlin’s court, much more than in the court of eurocratic nightmare Brussels, where everyone’s future priority amounts to receiving their full, fat retirement pensions tax-free.

Berlin’s strategic priority is more exports – within the EU and most of all to Asia. German industrialists and the business classes know exactly what Nord Stream 2 represents: increasingly assertive German sovereignty guiding the heart of the EU, which translates as increased EU sovereignty.

An immensely significant sign has been recently delivered by Berlin with the approval granted for imports of the Sputnik vaccine.

Is Musil’s sense of possibility already in play? It’s too early to tell. The hegemon has unleashed a no-holds-barred hybrid war against Russia since 2014. This war may not be kinetic; roughly, it’s 70% financial and 30% infowar.

A more sovereign Germany closer to Russia and China may be the straw that breaks the hegemon’s back.

Once upon a time, in the Lunar New Year…

Once upon a time, in the Lunar New Year…

February 13, 2021

By Pepe Escobar posted with permission and first posted at Asia Times

Have an auspicious Year of the Ox, everybody. And to celebrate it in style, fleetingly alleviating our burden in these times of trouble, let’s plunge into a dream within a dream, going back to the future for a game-changing moment in Chinese history.

Chinese New Year’s Day, 1272. At the time, that fell on January 18. Kublai Khan, after issuing an imperial edict, establishes the official beginning of the Yuan dynasty in China.

That may have been a Chinese-style dynasty in all its accoutrements, set up according to millenary rituals and following a classic structure. But the people who were running the show were definitely the sons of the steppe: the Mongols.

Kublai Khan was on a roll. In 1256 he had started building a summer capital north of the Great Wall of China, Kaiping – renamed Shangtu in 1263. That was the Xanadu of Coleridge’s sublime poem – later decoded by the genius of Jorge Luis Borges, that Buddha in a gray suit, as containing an “unrevealed archetype”, an “eternal object” whose “first manifestation was the palace; the second, the poem.”

In 1258, after fighting, successfully, a court conspiracy, Kublai’s brother Mongke – then the Great Khan – gave him the strategic command of one of the four divisions of the Mongol army in a new offensive against the Song dynasty in China.

But then Mongke died – of fever – outside Chungking (today’s Chongqing), in 1259. The succession was epic. The Khan’s younger brother, Ariq – who had stayed in the Mongol capital Karakorum to protect the homeland – was about to go medieval to capture the throne.

Hulagu, also Kublai’s brother, and the conqueror (and destroyer) of Baghdad – actually the conqueror of nearly all of West Asia – stopped his military campaign in Syria and run back home to support Kublai.

Kublai finally got back to Kaiping. A khuriltai – the imposing, ceremonial Mongol council of tribal chieftains – was finally held. And Kublai was proclaimed Great Khan in June 1260.

The immediate result was civil war – until Ariq finally caved in.

Six years after becoming Great Khan, Kublai started the construction of a new winter capital, Ta-tu (“great capital”), northeast of the old city of Chungtu (that’s where modern Beijing is located).

In Turkic, the city was named Khanbalik (“royal capital”). That’s the Cambalac we find in Marco Polo’s travels.

Kublai’s war against the Song dynasty was an immensely protracted affair. His final victory only happened four years after he became Great Khan – when the Song empress dowager handed him over the imperial seal.

The Yuan dynasty was a de facto, historical game-changer – because deep down the Mongols, nomad sons of the steppe, never trusted the sedentary, refined, urbanized Chinese.

Kublai, though, was a master strategist. He kept a lot of very important Chinese advisers. But later on, his successors preferred to staff the administration with Mongols, assorted Muslims from Central Asia, and Tibetans.

The Great Khanate under Kublai included Mongolia and Tibet – which, of course, were not Chinese. Yet the most extraordinary point is that Yuan China was in fact integrated and/or absorbed into the Mongol empire. China became part of the Khanate.

Follow the script

The Yuan dynasty also sealed a defining moment in Mongol history. The Mongols were always open to the influence of every religion. But all in all, they remained fundamentally pagan. The ones who really commanded their attention – and devotion – were their shamans.

Still, some Mongols had converted to Nestorian Christianity. Kublai’s wife, Chabi, was a fervent Buddhist. But then Kublai’s generation, en masse, started to turn towards Mahayana Buddhism. Their tutors were not only Tibetans, but Uighurs as well.

And that leads us to a key juncture. Kublai decided he needed a unified Mongol script to congregate the Babel of languages spoken across the Khanate.

The man appointed to carry the formidable task was Phagspa – Kublai’s National Preceptor, the Viceroy of Tibet, and later imperial preceptor, that is, the supreme authority over all Buddhists in the whole Mongol empire.

Phagspa came up with a script, not surprisingly, based on the Tibetan alphabet. Yet that was written vertically – like Chinese script, and Uighur and Mongol script.

In 1269, three years before the official start of the Yuan dynasty, that became the official writing system. Why is that so important? Because it was the first multilingual transcription system in the world.

Then there’s the all-important matter of food.

Kublai was a gourmet. Cooks held a special, very prestigious role in the Mongol universe. They were close companions to the Khan, who trusted them to keep his food always poison-free. Cooks were also members of the keshig – the Khan’s praetorian guard. That means they were also accomplished warriors.

In Chinese imperial tradition, the Son of Heaven was supposed to follow a perfectly balanced diet; that’s how he secured stability for the world at large. Meals of the Chinese emperor – the living link between Heaven and Earth – marked the passage of time, and the alternation of yin and yang.

Kublai, as a keen student of Chinese tradition, must have been introduced by his court advisers to a famous passage from the Chinese classic The Master Zhuang. The appropriately named “Essentials for Nourishing Life” features a dialogue between the Duke Wenhui of Wei and his cook, Ding, who happens to be butchering… an ox.

The most extraordinary thing about this tale – which sort of prefigures the writing of Borges – is how Ding, the cook, describes his art to the master: how to dissect an ox by steering his blade through the open spaces between the joints.

It’s all a matter of concentrating on the Dao. That is, going with the flow – and respecting natural anatomy. That’s how you learn to navigate the complex carcass of life itself – facing no resistance, and without exhausting vital energy.

So there it is: a cook as a Daoist philosopher. Borges would have loved it.

The message: if we want to live a life on the edge of a knife that can’t be blunted, we should be working between the joints.

Sounds like a life lesson we all should heed for a properly Ox-picious year.

Why Russia is driving the West crazy

Why Russia is driving the West crazy

February 10, 2021

by Pepe Escobar with permission and first posted on Asia Times

Future historians may register it as the day when usually unflappable Russian Foreign Minister Sergey Lavrov decided he had had enough:

We are getting used to the fact that the European Union are trying to impose unilateral restrictions, illegitimate restrictions and we proceed from the assumption at this stage that the European Union is an unreliable partner.

Josep Borrell, the EU foreign policy chief, on an official visit to Moscow, had to take it on the chin.

Lavrov, always the perfect gentleman, added, “I hope that the strategic review that will take place soon will focus on the key interests of the European Union and that these talks will help to make our contacts more constructive.”

He was referring to the EU heads of state and government’s summit at the European Council next month, where they will discuss Russia. Lavrov harbors no illusions the “unreliable partners” will behave like adults.

Yet something immensely intriguing can be found in Lavrov’s opening remarks in his meeting with Borrell: “The main problem we all face is the lack of normalcy in relations between Russia and the European Union – the two largest players in the Eurasian space. It is an unhealthy situation, which does not benefit anyone.”

The two largest players in the Eurasian space (italics mine). Let that sink in. We’ll be back to it in a moment.

As it stands, the EU seems irretrievably addicted to worsening the “unhealthy situation”. European Commission head Ursula von der Leyen memorably botched the Brussels vaccine game. Essentially, she sent Borrell to Moscow to ask for licensing rights for European firms to produce the Sputnik V vaccine – which will soon be approved by the EU.

And yet Eurocrats prefer to dabble in hysteria, promoting the antics of NATO asset and convicted fraudster Navalny – the Russian Guaido.

Meanwhile, on the other side of the Atlantic, under the cover of “strategic deterrence”, the head of the US STRATCOM, Admiral Charles Richard, casually let it slip that “there is a real possibility that a regional crisis with Russia or China could escalate quickly to a conflict involving nuclear weapons, if they perceived a conventional loss would threaten the regime or state.”

So the blame for the next – and final – war is already apportioned to the “destabilizing” behavior of Russia and China. It’s assumed they will be “losing” – and then, in a fit of rage, will go nuclear. The Pentagon will be no more than a victim; after all, claims Mr. STRATCOM, we are not “stuck in the Cold War”.

STRATCOM planners could do worse than read crack military analyst Andrei Martyanov, who for years has been on the forefront detailing how the new hypersonic paradigm – and not nuclear weapons – has changed the nature of warfare.

After a detailed technical discussion, Martyanov shows how “the United States simply has no good options currently. None. The less bad option, however, is to talk to Russians and not in terms of geopolitical BS and wet dreams that the United States, somehow, can convince Russia “to abandon” China – US has nothing, zero, to offer Russia to do so. But at least Russians and Americans may finally settle peacefully this “hegemony” BS between themselves and then convince China to finally sit as a Big Three at the table and finally decide how to run the world. This is the only chance for the US to stay relevant in the new world.”

The Golden Horde imprint

As much as the chances are negligible of the EU getting a grip on the “unhealthy situation” with Russia, there’s no evidence what Martyanov outlined will be contemplated by the US Deep State.

The path ahead seems ineluctable: perpetual sanctions; perpetual NATO expansion alongside Russia’s borders; the build up of a ring of hostile states around Russia; perpetual US interference on Russian internal affairs – complete with an army of fifth columnists; perpetual, full spectrum information war.

Lavrov is increasingly making it crystal clear that Moscow expects nothing else. Facts on the ground, though, will keep accumulating.

Nordstream 2 will be finished – sanctions or no sanctions – and will supply much needed natural gas to Germany and the EU. Convicted fraudster Navalny – 1% of real “popularity” in Russia – will remain in jail. Citizens across the EU will get Sputnik V. The Russia-China strategic partnership will continue to solidify.

To understand how we have come to this unholy Russophobic mess, an essential road map is provided by Russian Conservatism , an exciting, new political philosophy study by Glenn Diesen, associate professor at University of Southeastern Norway, lecturer at Moscow’s Higher School of Economics, and one of my distinguished interlocutors in Moscow.

Diesen starts focusing on the essentials: geography, topography and history. Russia is a vast land power without enough access to the seas. Geography, he argues, conditions the foundations of “conservative policies defined by autocracy, an ambiguous and complex concept of nationalism, and the enduring role of the Orthodox Church” – something that implies resistance to “radical secularism”.

It’s always crucial to remember that Russia has no natural defensible borders; it has been invaded or occupied by Swedes, Poles, Lithuanians, the Mongol Golden Horde, Crimean Tatars and Napoleon. Not to mention the immensely bloody Nazi invasion.

What’s in a word? Everything: “security”, in Russian, is byezopasnost. That happens to be a negative, as byez means “without” and opasnost means “danger”.

Russia’s complex, unique historical make-up always presented serious problems. Yes, there was close affinity with the Byzantine empire. But if Russia “claimed transfer of imperial authority from Constantinople it would be forced to conquer it.” And to claim the successor, role and heritage of the Golden Horde would relegate Russia to the status of an Asiatic power only.

On the Russian path to modernization, the Mongol invasion provoked not only a geographical schism, but left its imprint on politics: “Autocracy became a necessity following the Mongol legacy and the establishment of Russia as an Eurasian empire with a vast and poorly connected geographical expanse”.

“A colossal East West”

Russia is all about East meets West. Diesen reminds us how Nikolai Berdyaev, one of the leading 20th century conservatives, already nailed it in 1947: “The inconsistency and complexity of the Russian soul may be due to the fact that in Russia two streams of world history – East and West – jostle and influence one another (…) Russia is a complete section of the world – a colossal East West.”

The Trans-Siberian railroad, built to solidify the internal cohesion of the Russian empire and to project power in Asia, was a major game-changer: “With Russian agricultural settlements expanding to the east, Russia was increasingly replacing the ancient roads who had previously controlled and connected Eurasia.”

It’s fascinating to watch how the development of Russian economics ended up on Mackinder’s Heartland theory – according to which control of the world required control of the Eurasian supercontinent. What terrified Mackinder is that Russian railways connecting Eurasia would undermine the whole power structure of Britain as a maritime empire.

Diesen also shows how Eurasianism – emerging in the 1920s among émigrés in response to 1917 – was in fact an evolution of Russian conservatism.

Eurasianism, for a number of reasons, never became a unified political movement. The core of Eurasianism is the notion that Russia was not a mere Eastern European state. After the 13th century Mongol invasion and the 16th century conquest of Tatar kingdoms, Russia’s history and geography could not be only European. The future would require a more balanced approach – and engagement with Asia.

Dostoyevsky had brilliantly framed it ahead of anyone, in 1881:

Russians are as much Asiatics as European. The mistake of our policy for the past two centuries has been to make the people of Europe believe that we are true Europeans. We have served Europe too well, we have taken too great a part in her domestic quarrels (…) We have bowed ourselves like slaves before the Europeans and have only gained their hatred and contempt. It is time to turn away from ungrateful Europe. Our future is in Asia.

Lev Gumilev was arguably the superstar among a new generation of Eurasianists. He argued that Russia had been founded on a natural coalition between Slavs, Mongols and Turks. The Ancient Rus and the Great Steppe, published in 1989, had an immense impact in Russia after the fall of the USSR – as I learned first hand from my Russian hosts when I arrived in Moscow via the Trans-Siberian in the winter of 1992.

As Diesen frames it, Gumilev was offering a sort of third way, beyond European nationalism and utopian internationalism. A Lev Gumilev University has been established in Kazakhstan. Putin has referred to Gumilev as “the great Eurasian of our time”.

Diesen reminds us that even George Kennan, in 1994, recognized the conservative struggle for “this tragically injured and spiritually diminished country”. Putin, in 2005, was way sharper. He stressed,

the collapse of the Soviet Union was the greatest geopolitical catastrophe of the century. And for the Russian people, it was a real drama (…) The old ideals were destroyed. Many institutions were disbanded or simply hastily reformed…With unrestricted control over information flows, groups of oligarchs served exclusively their own corporate interests. Mass poverty started to be accepted as the norm. All this evolved against a background of the most severe economic recession, unstable finances and paralysis in the social sphere.

Applying “sovereign democracy”

And so we reach the crucial European question.

In the 1990s, led by Atlanticists, Russian foreign policy was focused on Greater Europe, a concept based on Gorbachev’s Common European Home.

And yet post-Cold War Europe, in practice, ended up configured as the non-stop expansion of NATO and the birth – and expansion – of the EU. All sorts of liberal contortionisms were deployed to include all of Europe while excluding Russia.

Diesen has the merit of summarizing the whole process in a single sentence: “The new liberal Europe represented a British-American continuity in terms of the rule of maritime powers, and Mackinder’s objective to organize the German-Russian relationship in a zero-sum format to prevent the alignment of interests”.

No wonder Putin, subsequently, had to be erected as the Supreme Scarecrow, or “the new Hitler”. Putin rejected outright the role for Russia of mere apprentice to Western civilization – and its corollary, (neo) liberal hegemony.

Still, he remained quite accommodating. In 2005, Putin stressed, “above all else Russia was, is and will, of course, be a major European power”. What he wanted was to decouple liberalism from power politics – by rejecting the fundamentals of liberal hegemony.

Putin was saying there’s no single democratic model. That was eventually conceptualized as “sovereign democracy”. Democracy cannot exist without sovereignty; so that discards Western “supervision” to make it work.

Diesen sharply observes that if the USSR was a “radical, left-wing Eurasianism, some of its Eurasian characteristics could be transferred to conservative Eurasianism.” Diesen notes how Sergey Karaganov, sometimes referred to as the “Russian Kissinger”, has shown “that the Soviet Union was central to decolonization and it mid-wifed the rise of Asia by depriving the West of the ability to impose its will on the world through military force, which the West had done from the 16th century until the 1940s”.

This is largely acknowledged across vast stretches of the Global South – from Latin America and Africa to Southeast Asia.

Eurasia’s western peninsula

So after the end of the Cold War and the failure of Greater Europe, Moscow’s pivot to Asia to build Greater Eurasia could not but have an air of historical inevitability.

The logic is impeccable. The two geoeconomic hubs of Eurasia are Europe and East Asia. Moscow wants to connect them economically into a supercontinent: that’s where Greater Eurasia joins China’s Belt and Road Initiative (BRI). But then there’s the extra Russian dimension, as Diesen notes: the “transition away from the usual periphery of these centers of power and towards the center of a new regional construct”.

From a conservative perspective, emphasizes Diesen, “the political economy of Greater Eurasia enables Russia to overcome its historical obsession with the West and establish an organic Russian path to modernization”.

That implies the development of strategic industries; connectivity corridors; financial instruments; infrastructure projects to connect European Russia with Siberia and Pacific Russia. All that under a new concept: an industrialized, conservative political economy.

The Russia-China strategic partnership happens to be active in all these three geoeconomic sectors: strategic industries/techno platforms, connectivity corridors and financial instruments.

That propels the discussion, once again, to the supreme categorical imperative: the confrontation between the Heartland and a maritime power.

The three great Eurasian powers, historically, were the Scythians, the Huns and the Mongols. The key reason for their fragmentation and decadence is that they were not able to reach – and control – Eurasia’s maritime borders.

The fourth great Eurasian power was the Russian empire – and its successor, the USSR. A key reason the USSR collapsed is because, once gain, it was not able to reach – and control – Eurasia’s maritime borders.

The US prevented it by applying a composite of Mackinder, Mahan and Spykman. The US strategy even became known as the Spykman-Kennan containment mechanism – all these “forward deployments” in the maritime periphery of Eurasia, in Western Europe, East Asia and the Middle East.

We all know by now how the overall US offshore strategy – as well as the primary reason for the US to enter both WWI and WWII – was to prevent the emergence of a Eurasian hegemon by all means necessary.

As for the US as hegemon, that would be crudely conceptualized – with requisite imperial arrogance – by Dr. Zbig “Grand Chessboard” Brzezinski in 1997: “To prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and keep the barbarians from coming together”. Good old Divide and Rule, applied via “system-dominance”.

It’s this system that is now tumbling down – much to the despair of the usual suspects. Diesen notes how, “in the past, pushing Russia into Asia would relegate Russia to economic obscurity and eliminate its status as a European power.” But now, with the center of geoeconomic gravity shifting to China and East Asia, it’s a whole new ball game.

The 24/7 US demonization of Russia-China, coupled with the “unhealthy situation” mentality of the EU minions, only helps to drive Russia closer and closer to China exactly at the juncture where the West’s two centuries-only world dominance, as Andre Gunder Frank conclusively proved , is coming to an end.

Diesen, perhaps too diplomatically, expects that “relations between Russia and the West will also ultimately change with the rise of Eurasia. The West’s hostile strategy to Russia is conditioned on the idea that Russia has nowhere else to go, and must accept whatever the West offers in terms of “partnership”. The rise of the East fundamentally alters Moscow’s relationship with the West by enabling Russia to diversify its partnerships”.

We may be fast approaching the point where Great Eurasia’s Russia will present Germany with a take it or leave it offer. Either we build the Heartland together, or we will build it with China – and you will be just a historical bystander. Of course there’s always the inter-galaxy distant possibility of a Berlin-Moscow-Beijing axis. Stranger things have happened.

Meanwhile, Diesen is confident that “the Eurasian land powers will eventually incorporate Europe and other states on the inner periphery of Eurasia. Political loyalties will incrementally shift as economic interests turn to the East, and Europe is gradually becoming the western peninsula of Greater Eurasia”.

Talk about food for thought for the peninsular peddlers of the “unhealthy situation”.

Burmese Days, Revisited

Image result for Burmese Days, Revisited
Independent geopolitical analyst, writer and journalist

Pepe Escobar

February 5, 2021

It will be fascinating to watch how the (Dis)United States will deal with post-coup Myanmar as part of their 24/7 “containment of China” frenzy.

The (jade) elephant in the elaborate room housing the military coup in Myanmar had to be – what else – China. And the Tatmadaw – the Myanmar Armed Forces – knows it better than anyone.

There’s no smoking gun, of course, but it’s virtually impossible that Beijing had not been at least informed, or “consulted”, by the Tatmadaw on the new dispensation.

China, Myanmar’s top trade partner, is guided by three crucial strategic imperatives in the relationship with its southern neighbor: trade/connectivity via a Belt and Road Initiative (BRI) corridor; full access to energy and minerals; and the necessity of cultivating a key ally within the 10-member ASEAN.

The BRI corridor between Kunming, in China’s Yunnan province, via Mandalay, to the port of Kyaukphyu in the Gulf of Bengal is the jewel in the New Silk Road crown, because it combines China’s strategic access to the Indian Ocean, bypassing the Strait of Malacca, with secured energy flows via a combined oil and gas pipeline. This corridor clearly shows the centrality of Pipelineistan in the evolution of the New Silk Roads.

None of that will change, whoever runs the politico-economic show in Myanmar’s capital Naypyidaw. Chinese Foreign Minister Wang Yi and Aung San Suu Kyi, locally known as Amay Suu (“Mother Suu”) were discussing the China-Myanmar economic corridor only three weeks before the coup. Beijing and Naypyidaw have clinched no less than 33 economic deals only in 2020.

We just want “eternal peace”

Something quite extraordinary happened earlier this week in Bangkok. A cross-section of the vast Myanmar diaspora in Thailand – which had been ballooning since the 1990s – met in front of the UN’s Asia-Pacific office.

They were asking for the international reaction to the coup to ignore the inevitable, incoming U.S. sanctions. Their argument: sanctions paralyze the work of citizen entrepreneurs, while keeping in place a patronage system that favors the Tatmadaw and deepens the influence of Beijing at the highest levels.

Yet this is not all about China. The Tatmadaw coup is an eminently domestic affair – which involved resorting to the same old school, CIA-style method that installed them as a harsh military dictatorship way back in 1962.

Elections this past November reconfirmed Aung San Suu Kyi and her party, the NLD, in power by 83% of the votes. The pro-army party, the USDP, cried foul, blaming massive electoral fraud and insisting on a recount, which was refused by Parliament.

So the Tatmadaw invoked article 147 of the constitution, which authorizes a military takeover in case of a confirmed threat to sovereignty and national solidarity, or capable of “disintegrating the Union”.

The 2008 constitution was drawn by – who else – the Tatmadaw. They control the crucial Interior, Defense and Border ministries, as well as 25% of the seats in Parliament, which allows them veto power on any constitutional changes.

The military takeover involves the Executive, the Legislative and the Judiciary. A year long state of emergency is in effect. New elections will happen when order and “eternal peace” will be restored.

The man in charge is Army chief Min Aung Hlaing, quite flush after years overseeing juicy deals conducted by Myanmar Economic Holdings Ltd. (MEHL). He also oversaw the hardcore response to the 2007 Saffron revolution – which did express legitimate grievances but was also largely co-opted as a by-the-book U.S. color revolution.

More worryingly, Min Aung Hlaing also deployed wasteland tactics against the Karen and Rohingya ethnic groups. He notoriously described the Rohingya operation as “the unfinished work of the Bengali problem”. Muslims in Myanmar are routinely debased by members of the Bamar ethnic majority as “Bengali”.

No raised ASEAN eyebrows

Life for the overwhelming majority of the Myanmar diaspora in Thailand can be very harsh. Roughly half dwell in the construction business, the textile industry and tourism. The other half does not hold a valid work permit – and lives in perpetual fear.

To complicate matters, late last year the de facto military government in Thailand went on a culpability overdrive, blaming them for crossing borders without undertaking quarantine and thus causing a second wave of Covid-19.

Thai unions, correctly, pointed to the real culprits: smuggling networks protected by the Thai military, which bypass the extremely complicated process of legalizing migrant workers while shielding employers who infringe labor laws.

In parallel, part of the – legalized – Myanmar diaspora is being enticed to join the so-called MilkTeaAlliance – which congregates Thais, Taiwanese and Hong Kongers, and lately Laotians and Filipinos as well – against, who else, China, and to a lesser extent, the Thai military government.

ASEAN won’t raise eyebrows against the Tatmadaw. ASEAN’s official policy remains non-interference in the domestic affairs of its 10 members. Bangkok – where, incidentally, the military junta took power in 2014 – has shown Olympic detachment.

In 2021, Myanmar happens to be coordinating nothing less than the China-ASEAN dialogue mechanism, as well as presiding over the Lancang-Mekong Cooperation – which discusses all crucial Mekong matters.

The mighty river, from the Tibetan plateau to the South China Sea, could not be more geo-economically strategic. China is severely criticized for the building of dozens of dams, which reduce direct water flows and cause serious imbalances to regional economies.

Myanmar is also coordinating a supremely sensitive geopolitical issue: the interminable negotiations to establish the Code of Conduct in the South China Sea, which pit China against Vietnam, Malaysia, Philippines, Indonesia, Brunei and non-ASEAN Taiwan.

The Tatmadaw does not seem to be losing sleep over post-coup business problems. Erik Prince, former Blackwater honcho and now the head of Hong Kong-based Frontier Services Group (FSG) – financed, among others, by powerful Chinese conglomerate Citic – is about to hit Naypyidaw to “securitize” local companies.

A juicier dossier involves what’s going to happen with the drug trade: arguably Tatmadaw getting a bigger piece of the pie. Cartels in Kachin state, in the north, export opium to China’s Yunnan province to the east, and India to the west. Shan state cartels are even more sophisticated: they export via Yunnan to Laos and Vietnam to the east, and also to India to the northwest.

And then there’s a gray area where no one really knows what’s going on: the weapons highway between China and India that runs through Kachin state – where we also find Lisu and Lahu ethnic groups.

The dizzying ethnic tapestry

The Myanmar electoral commission is a very tricky business, to say the least. They are designated by the Executive, and had to face a lot of criticism – internal, not international – for their censorship of opposition parties in the November elections.

The end result privileged the NLD, whose support is negligible in all border regions. Myanmar’s majority ethnic group – and the NLD’s electoral base – is the Bamar, Buddhist and concentrated in the central part of the country.

The NLD frankly does not care about the 135 ethnic minorities – which represent at least one third of the general population. It’s been a long way down since Suu Kyi came to power, when the NLD actually enjoyed a lot of support. Suu Kyi’s international high profile is essentially due to the power of the Clinton machine.

If you talk to a Mon or a Karen, he or she will tell you they had to learn the hard way how much of an intolerant autocrat is the real Suu Kyi. She promised there would be peace in the border regions – eternally mired in a fight between the Tatmadaw and autonomous movements. She could not possibly deliver because she had no power whatsoever over the military.

Without any consultation, the electoral commission decided to cancel voting, totally or partially, in 56 cantons of Arakan state, Shan state, Karen state, Mon state and Kachin state, all of them ethnic minorities. Nearly 1.5 million people were deprived of voting.

There were no elections, for instance, in the majority of Arakan state; the electoral commission invoked “security reasons”. The reality is the Tatmadaw is in a bitter fight against the Arakan Army, which want self-determination.

Needless to add, the Rohingyas – which live in Arakan – were not allowed to vote. Nearly 600,000 of them still barely survive in camps and closed villages in Arakan.

In the 1990s, I visited Shan state, which borders China’s strategic Yunnan province to the east. Nothing much changed over two decades: the guerrilla has to fight the Tatmadaw because they clearly see how the army and their business cronies are obsessed to capture the region’s lavish natural resources.

I traveled extensively in Myanmar in the second part of the 1990s – before being blacklisted by the military junta, like virtually every journalist and analyst working in Southeast Asia. Ten years ago, photojournalist Jason Florio, with whom I’ve been everywhere from Afghanistan to Cambodia, managed to be sneaked into Karen rebel territory, where he shot some outstanding pictures.

In Kachin state, rival parties in the 2015 elections this time tried to pool their efforts. But in the end they were badly bruised: the electoral mechanism – one round only – favored the winning party, Suu Kyi’s NLD.

Beijing does not interfere in the dizzyingly complex Myanmar ethnic maze. But questions remain over the murky support for Chinese who live in Kachin state in northern Myanmar: it’s possible they may be used as leverage in negotiations with the Tatmadaw.

The basic fact is the guerrillas won’t go away. The top two are the Kachin Independence Army and the United Wa State Army (Shan). But then there’s the Arakan Liberation Army, the China National Army, the Karenni Army (Kayah), the Karen National Defense Organization and the Karen National Liberation, and the Mon National Liberation Army.

What this weaponized tapestry boils down to, in the long run, is a tremendously (Dis)United Myanmar, bolstering the Tatmadaw’s claim that no other mechanism is capable of guaranteeing unity. It doesn’t hurt that “unity” comes with the extra perks of controlling crucial sectors such as minerals, finance and telecom.

It will be fascinating to watch how the (Dis)United Imperial States will deal with post-coup Myanmar as part of their 24/7 “containment of China” frenzy. The Tatmadaw are not exactly trembling in their boots.

Xi and Putin make the case for win-win vs. zero-sum

Xi and Putin make the case for win-win vs. zero-sum

February 02, 2021

By Pepe Escobar, posted with permission and first posted at Asia Times

So the Davos Agenda has come and gone.

That was the virtual Great Reset preview, hosted by Kissinger acolyte cum World Economic Forum (WEF) oracle Herr Klaus Schwab.

Still, corporate/political so-called “leaders” will continue to wax lyrical about the Fourth Industrial Revolution – or its mild spin-offs such as Build Back Better, the favorite slogan of the new White House tenants.

The WEF co-sponsors – from the UN and the IMF to BlackRock, Blackstone and the Carlyle Group – will continue to expand their synchronicity with Lynn Forester de Rothschild and her corporate-heavy Council for Inclusive Capitalism with the Vatican – pop Pope Francis at the helm.

And yes, they accept Visa.

Predictably, the two really crucial events at Davos received minimal or non-existent coverage across the wobbly West: the speeches by President Xi and President Putin.

We have already highlighted Xi’s essentials. Aside from arguing a powerful case for multilateralism as the only possible road map to deal with global challenges, Xi stressed nothing substantial may be achieved if the inequality gap between North and South is not reduced.

The best in-depth analysis of Putin’s extraordinary speech , hands down, was provided by Rostislav Ishchenko, whom I had the pleasure to meet in Moscow in 2018.

Ishchenko stresses how, “in terms of scale and impact on historical processes, this is steeper than the Battles of Stalingrad and Kursk combined.” The speech, he adds, was totally unexpected, as much as Putin’s stunning intervention at the Munich Security Conference in 2007, “the crushing defeat” imposed on Georgia in 2008, and the return of Crimea in 2014.

Ishchenko also reveals something that will never be acknowledged in the West: “80 people from among the most influential on the planet did not laugh in Putin’s face, as it was in 2007 in Munich, and without noise immediately after his open speech signed up for a closed conference with him.”

Putin’s very important reference to the ominous 1930s – “the inability and unwillingness to find substantive solutions to problems like this in the 20th century led to World War 2 catastrophe” – was juxtaposed with a common sense warning: the necessity of preventing the takeover of global policy by Big Tech , which “are de facto competing with states”.

Xi and Putin’s speeches were de facto complementary – emphasizing sustainable, win-win economic development for all actors, especially across the Global South, coupled with the necessity of a new socio-political contract in international relations.

This drive should be based on two pillars: sovereignty – that is, the good old Westphalian model (and not Great Reset, hyper-concentrated, one world “governance”) and sustainable development propelled by techno-scientific progress (and not techno-feudalism).

So what Putin-Xi proposed, in fact, was a concerted effort to expand the basic foundations of the Russia-China strategic partnership to the whole Global South: the crucial choice ahead is between win-win and the Exceptionalist zero-sum game.

Regime-change that commie!

The Xi-Putin road map is already being examined in excruciating detail by Michael Hudson, for instance in this essay based on the first chapter of his upcoming book Cold War 2.0: The Geopolitical Economics of Finance Capitalism vs. Industrial Capitalism. Many of these themes have been elaborated in a recent conversation/interview between Michael and myself.

The whole Global South is figuring out how the contrast could not be starker between the American model – neoliberalism redux, in the form of turbo-financialization – and East Asia’s productive investment in industrial capitalism.

Alastair Crooke has outlined the dubious “appeal” of the American model, including “asset markets…severed from any connection to economic returns”; markets that “are not free, but Treasury managed”; and “enterprise capitalism…morphed into monopolistic oligarchism”.

The glaring counterpoint to Xi-Putin at Davos has been a so-called “strategy paper” released by NATO think tank The Atlantic Council, pompously titled The Longer Telegram, as if this was as relevant as George Kennan’s 1946 Long Telegram that designed the containment of the USSR.

Well, the least one can say to the anonymous “former senior government official with deep expertise” on China is, “Mr. Anonymous, You’re No George Kennan”. At best, we’re dealing with a sub-Mike Pompeo with a massive hangover.

Amidst a tsunami of platitudes, we learn that China is a “revisionist power” that “presents a serious problem for the whole of the democratic world”; and that the Chinese leadership better get its act together and operate “within the US-led liberal international order rather than building a rival order”.

The usual toxic mix of arrogance and condescension totally gives away the game, which boils down to “deterring and preventing China from crossing US red lines”, and applying good, old Kissingerian Divide and Rule between Russia and China.

Oh, and don’t forget regime change: if the “strategy” works, “Xi will in time be replaced by the more traditional form of Communist Party leadership.”

If this is what passes for intellectual firepower in Atlanticist circles, Beijing and Moscow don’t even need enemies.

The Asian center of gravity

Martin Jacques, now a visiting professor at Tsinghua University and a senior fellow at the China Institute of Fudan University, is one of the very few Westerners who actually has real “expertise” on China.

He’s now focusing on the main battlefield in the evolving US-China clash: Europe. Jacques notes that, “the trend toward a growing distance between Europe and the US will be slow, tortuous, conflict-riddled, and painful.” We are now “in new territory. American decline means that it has increasingly less to offer Europe.”

As an example, let’s jump cut to a distinct feature of the BRI/New Silk Roads and one of its key hubs, the China-Pakistan Economic Corridor (CPEC): the Digital Silk Road .

In partnership with Huawei, fiber optic cable is being laid out all across Pakistan – as I saw for myself when I traveled the Karakoram Highway, the northern part of CPEC. This fiber optic cable all the way from the Karakoram to Balochistan will link with the Pakistan-East Africa Connecting Europe (PEACE) submarine cable in the Arabian Sea.

The end result will be high-end connectivity between a host of BRI-participating nations and Europe – as the Mediterranean section is already being laid, running from Egypt to France. Before the end of 2021, the whole 15,000 km-long fiber optic cable will be online.

This shows that BRI is not as much about building roads, dams and high-speed rail networks but especially the Digital Silk Road, intimately connected with state of the art Chinese cyber-tech.

It’s no wonder Jacques fully understands how “the gravitational pull of China, and Asia more generally, is drawing Europe eastward. Nothing illustrates this phenomenon better than the China-proposed Belt and Road Initiative.”

In ReOrient: Global Economy in the Asian Age, an extraordinary book published way back in 1998, the late, great Andre Gunder Frank exhaustively smashed Eurocentrism, demonstrating how the rise of the West was a mere historical blip, and a consequence of the decline of the East around 1800.

Now, only two centuries later, the planet’s center of gravity is back in Asia, as it’s been for most of recorded history. The fate of those blind to the evidence and unable to adapt is to telegram themselves to utter irrelevance.

The triads, the Kuomintang and Hong Kong’s “democracy riots”

February 02, 2021

The triads, the Kuomintang and Hong Kong’s “democracy riots”

By Ji Pei for the Saker Blog

To put the World in order, we must first put the nation in order; to put the nation in order, we must first put the Family in order; to put the Family in order, we must first cultivate our personal lives by setting our hearts right. Confucius

The extent of the criminal and corrupt past of Hong Kong and Taiwan is little known in the West.

People know that Hong Kong has been a British colony and the center of the opium trade with China from the the nineteenth century on, but this often remains an abstract knowledge for most readers, who often ignore to which extent this “trade” was tied to blackmailing, corruption, money laundering, war, colonial exploitation and other criminal activities. Part of the huge growth of British banking and of the financial power of the City of London in the 19th century resulted notably from the profits from the opium sold in China. This trade grew from around 5000 crates of opium sold in 1820, to 96,000 crates sold in 1873. This took place against the fierce resistance of the Chinese imperial government, which for this reason had to suffer the three so called Opium Wars waged by Great Britain against China. Expressed in tons, the British opium exports reached very nearly ten thousand tons during the year 1873. An incredible quantity for a substance sold in grams!

Colonial exploitation and crime expanded to new heights after 1949 in Hong Kong and, for that matter, also in Taiwan. Why?

Western people interested by Chinese history usually know that the Kuomintang (KMT) came to power in China as a result of Chiang Kai-shek’s 1926 “Northern Expedition” against the northern warlords. With 6000 Whampoa cadets and 85,000 troops, Chiang took Wuhan in September, 1926, and Shanghai and Nanking in March 1927. Many also know, if only by having read the famous French Author André Malraux’s moving text on this event, that Chiang Kai-shek organized the liquidation of the communists in Shanghai in April, 1927, and that he used the help of the Shanghai criminal syndicates, the so called triads to this aim. What is much less known is the incredible high level of influence played by the triads and by crime in the history of the Kuomintang government of China until its defeat at the hands of Mao Tse-tung’s and Chu Teh’s communists in 1949. This ignorance is due to the fact that the USA, which supported the Kuomintang-based anti-communist government in China during the war with Japan and later in Taiwan after the liberation of China, did everything to let Chiang and the KMT appear clean and solid. They thus laid a coating of governmental respectability on everything that concerned Chiang Kai-shek and his KMT.

In the twenties of the twentieth century, Shanghai’s underworld was dominated by three triads: Pockmarked Huang’s (Huang Chih-jung’s) Red Gang, which would soon be the most militant anti-communist force in China after Big-eared Tu (Tu Yueh-sheng) took the gang’s operational direction, Tu’s own Green Gang, and the Blue Gang. These three triads associated under Big-eared Tu’s pressure to exercise a monopoly of opium handling in order to raise the price. Tu was soon pulling all strings in Shanghai, not only in the underworld, but also in the city’s administration (the gangsters could even read the mail and gather information on banking operations) and in the police. He also had the best connections to the Kung banking family and to the Soong finance dynasty, thus combining the resources of the Kung banking empire, the leverage of the Soong family and the mammoth clout of the green gang. With Chiang Kai-shek, Tu would soon add political power to this extraordinary pyramid of forceful means.

Chiang Kai-shek, the Kuomintang and the triads

And here comes violent-tempered Chiang Kai-shek, born around one year before Big-eared Tu left his mother’s womb in 1888. In 1906, young Chiang left for Japan to receive a military training. On arriving, he discovered that he did not own the official recommendation necessary for that. Soon, he came in contact with the Chinese expatriate community, many of which were followers of Sun Yat-sen’s republican movement. One of them, Ch’en Ch’i-mei, one of Sun’s most ardent recruiters and member of Pockmarked Huang’s Shanghai Red Gang, befriended him. Back in China where he attended the lessons of a military academy, Chiang finally obtained a permission to follow a three-year course at the famous Shimbu Gakko military academy. There in Japan, Ch’en put Chiang up for membership of Sun’s political movement and he was accepted. During one of his visits to China with Ch’en, Chiang Kai-shek was also enrolled into the Green Gang. Involving himself in the gang’s activities, he took part in extortion, armed robberies and a jail break. “His police record in the British-administered International Settlements grew over the years to include murder, extortion, numerous armed robberies, and assorted other crimes.” (Seagrave, page 156).

In 1911, now graduated from Shimbu Gakko, Chiang joined Ch’en for the revolution in October with a unit of Sun Yat-sen’s Republican army composed entirely of Green Gang personnel. After the success of the revolution, Ch’en was appointed military governor of Shanghai and Chiang was made commander of a regiment. He spent the years of WW I mostly in Shanghai (and in Japan when Yuan Shih-kai’s secret police was after him and after Ch’en), usually active in Green Gang extortions and also assisting Ch’en Ch’i-mei who was now chairman of the Kuomintantg’s Central Committee. After Ch’en’s murder by the secret police in May, 1916, Chiang found himself at the heart of a hefty realignment of power in the Kuomintang. He became senior political assistant to Sun Yat-sen and, in 1917, his military adviser in Guangzhou, at the same time always closely working with Big-eared Tu on insider dealings in Shanghai’s stock market. His Shanghai patrons (Tu, the Soongs and wealthy industrialists, bankers like Kungs and merchants) wanted him to ingratiate himself with Sun to increase their common influence upon the Kuomintang. He fulfilled the task with success and was himself made chairman of the Kuomintang’s military academy in Whampoa and chief of staff of the Kuomintang army. Following Sun Yat-sen’s death (1925), Sun’s favored successor, left of center politician Liao Chung-k’ai, was gunned by five Green Gang killers. The murder was attributed to right wing influence: this eliminated the conservative candidates to Sun’s seat, while other leftist candidates couldn’t secure enough support because the workers’ strikes called by the Communist Party scared too many. Thus in the end, it was the “middle of the road” candidate Chiang Kai-shek, Big-eared Tu’s secret candidate of choice, who was elected president of the Kuomintang, the ‘Nationalist Party’. Chiang organized immediately the election of Curio Chang (Chang Ching-chang, another Green Gang friend of Tu with wide connections) to the chairmanship of the KMT’s Central Committee. “With them in charge, the Kuomintang was finally thoroughly criminalized.” (Booth, page 143). Two years later, Chiang and the Green Gang would carry against the communists the heavy blow mentioned at the beginning of this article (the Shanghai 1927 communists’ massacre), thus opening the long civil war between KMT and CPC that would end 1949 with Chiang Kaishek’s defeat at the hands of Mao Tse-tung and Chou Teh and with the establishing of the People’s Republic of China. Chiang fled to Taiwan with his defeated army.

New Regime on Mainland China: the triads flee to Hong Kong and Taiwan

Whatever position one has on communism, one must admit that Mao’s new regime proscribed the triads with a vigor never seen before. The triads were considered a real threat: the Kuomintang had used them as they had used the Kuomintang, virtually running (and ruining) the country together. So the communists feared and abhorred triad criminality: triads had plundered China for decades and in their eyes, this had to stop. Within three years of the communists’ victory, opium got completely removed from Chinese society, the nation “clean” again after more than one century and the triads bereft of their most lucrative business. Addicts were treated sympathetically, farmers ordered to grow food crops instead of poppies. Opium-den owners were publicly humiliated and sent for political reeducation in labor camps. Dealers and traffickers were shot in public after brief trials. The triads got outlawed all over the country.

It is easy to imagine where the triad bosses and members that did not get caught by the communists would go: to Taiwan and to Hong Kong.

As a colony, Hong Kong had attracted Chinese triads almost from the beginning. The more affluent the colony became, the more worthwhile crime also grew. So by 1848, Hong Kong was already considered the nerve center for triad activity all over South China. Hundred years later, by 1949, it looked as if Hong Kong would become the biggest criminal city on earth: prostitution, protection, gambling rackets, narcotics trade, nothing was missing. It is in this situation that refugee members of the big Chinese triads (especially the Shanghainese ones) arrived to Hong Kong and Taiwan in great numbers. Big-eared Tu and his Green Gang chose Hong Kong, not Taiwan, as their mainstay. A new scourge came with them, Heroin: the first Hong Kong heroin laboratories were financed by Big-eared Tu and went into production in 1950. “With an orchestrated, vicious ruthlessness, they also started their own extortion rackets and staged armed robberies on Chinese jewelers’ and gold shops. Well organized and financed, they were soon challenging the local societies (…), coordinating vice with the efficiency of corporate managers. They opened dance halls full of ‘taxi dancers’ who, charging clients by the dance, in turn paid the Green Gang operators for the right to work in their establishments. They ran brothels and massage-parlors, and administered opium and gambling dens. Not content with this, they bribed immigration officials, then preyed upon wealthy criminal exiles, offering protection to avoid deportation or to avoid being sent back to China. Wealthy non-criminals were forced to invest in Green Gang-controlled legitimate business.” (Booth, page 264). However, not everything developed smoothly in Hong Kong for the Green Gang. They had to ward off the competition of the local triads, and the arrest of a high member of the gang, Li Choi-fat in 1952, was a serious setback.

For Chiang Kai-shek in Taiwan, on the contrary, the refugee triads from the mainland were welcome. Here again one may say: ‘With them in charge, the island’s new government was now fully criminalized’. Chiang’s government itself consisted almost exclusively of triads, which could so continue their life of crime. They associated themselves into a new government sponsored society, the United Bamboo Society, which helped other triads to gain foothold in Hong Kong. They also formed an effective branch of Chiang Kai-shek’s secret service. Chiang had originally even hoped to be able to establish some political power in Hong Kong to run the colony as another KMT center of power against communist China.

After riots in Hong Kong’s refugee settlements in 1956, during which triads had supported the rioters, the British colonial government increased its fight against the secret societies. The triads had to adopt a low profile and to reconsolidate their position. At the same time, they re-oriented their criminal business to take advantage of the worldwide growing level of wellbeing. “Within four years of the riots, they were in a position to internationalize the narcotics trade. A new triad era was dawning.” (Booth, page 275).

The worldwide narcotic trade

Soon, the triads developed their infrastructure, increased their grip on Hong Kong, and organized during the Vietnam War an essentially Asian-wide, and later a worldwide Heroin trafficking. To gather the huge quantities of morphine base they needed, they set up a purchase agreement with Kuomintang general Li Wen-huan who lived in the Thai jungles in the so called ‘Golden Triangle’ ready to strike at communist China, and who paid his troops by selling Heroin. They also had agreements with Burmese insurgents, with General Rattikone, head of the Laotian army, with the Vietnamese heroin ring of air Vice-marshal Ky etc., thus controlling unlimited sources of morphine base. The CIA, Air America, Continental Air Service and Laos Development Air Service flew the narcotics for them to Thailand and to Hong Kong. In this way, the Hong Kong triads could soon control the entire heroin smuggling, processing and trade from the source to distribution. Hong Kong was the place which accommodated the Heroin labs, where the worldwide income was gathered, laundered and invested in casinos, in general and in commodity trading companies, in commercial property, cinemas, restaurants and bars. Triad bosses like the Ma brothers founded the Oriental Press Group, the main publication of which was the Oriental Daily News, one of Hong Kong’s most popular daily papers. They took part in high profile philanthropic activities, were accepted on the select Hong Kong racecourse and even in the exclusive Royal Jockey Club and lived in luxurious mansions.

After the end of the Vietnam war in 1973, the Hong Kong triads organized connections to the American Mafia (some say they even met Mafia boss Meyer Lansky), to the French Corsican crime syndicates, the French Marseilles gangsters and others. Soon, heroin addiction rose sharply in most Western countries and the triads’ income rose correspondingly. Meanwhile, the fight of the British authorities against the Hong Kong triads was most of the time rather a joke. Even the Ma brothers, if arrested, were released on appeal, or went to Taiwan if necessary. Many high level traffickers were acquitted. Why would police officers or judges risk their lives, seeing the attitude of their bosses: according to a Sunday Times report, the triad’s Oriental Press Group had donated considerable sums to the Conservative Party funds. Even Christopher Patten, sung of as the so incredibly democratic minded last governor of Hong Kong, “attended functions at the Oriental Press Group headquarters and gave his blessing to the founding of a new English-language daily newspaper, the Eastern Express. John Major, as party leader as well as prime minister, entertained [triad boss] Ma to tea at Downing Street.” (Booth, page 295). No change from the 19th century: Great Britain’s elites (if not the poor British youth addicted to Heroin!), Hong Kong’s elites ‒ and their banks! ‒ have always thrived on opium. And the USA always followed the example.

Chinese corruption and Chinese Fight against corruption

Everybody knows that in the early eighties, Deng Xiaoping told the Chinese to “Get rich” in order to launch the process of building up efficiently a market economy to strive out of underdevelopment. The Chinese people obeyed and the economy started to thrive and to boast incredible GDP growth rates never seen before. Obviously, in this process, quite a few Chinese would transgress the laws of morals, and corruption grew again in China at a rate never seen since 1949. Hong Kong triads reestablished business with the new Chinese criminal scene. Even the People’s Liberation Army, the communist party and the administration were caught in this corrupting frenzy. But because the Chinese communist party is – with more than eighty million members – the biggest people’s party worldwide, the law abiding majority of this party let their party leaders understand that they had to do something against corruption, or else… Since China had and has energetic leaders like Jiang Zemin, Zhu Rongji or now Xi Jinping, who organized a war against corruption never seen of in our parts of the world, things started to change: in the meantime, even high level officials or ministers found guilty of corruption have been condemned to heavy sentences (even death penalty) in China, whereas similar persons in the West get a few months on probation for the same level of corruption, if at all.

However, the corruption fighting leaders of the Communist Party had a problem: if criminal or corrupt members of the Chinese society and of the party could flee to Hong Kong before being arrested, they couldn’t be brought to trial in their homeland because the ex-colony had no extradition law. That was a real problem for China’s politics and for China’s justice.

In the final months of British rule under Governor Patten, Hong Kong had passed laws barring the extradition to mainland China due to claimed concerns about the quality and objectivity of the mainland’s justice. This in spite of the huge progress made in China in the field of justice, especially since the law of 2004 strongly reinforcing the position of the defending counsels in court, and in spite of the fact that colonial justice itself had always been a caricature of justice, since in Hong Kong Chinese people could never be tried by Chinese judges, but only by British ones.

Beijing formulated very early its wish to see this Patten “non-extradition” bill changed for a law allowing extradition, but displayed much patience in order to avoid doing violence to the autonomy and anti-communist feelings of part of the Hong Kong population. But the constant misuse of Hong Kong’s protection by persons menaced by the Xi Jinping government’s legal, useful and successful fight against corruption and graft led to an increase of Beijing’s pressure for a change in this field. Beijing let it know that more than 300 wanted fugitives were hiding in Hong Kong. Finally, the Hong Kong government decided in February, 2019 to amend the law and to allow for extradition on a case-by-case basis with countries not already covered by mutual agreements—and this would include mainland China and Macao, doing away with the geographical restrictions on the PRC in the existing rules.

Street war against extradition law

Opposition to this change manifested itself very soon. Aside of the old anti-communist prejudice of a part of Hong Kong’s population, this change obviously affected huge interests: the financial interests of the Hong Kong triads which earned millions with the corrupt part of mainland China’s industry, banking and import-export business, the financial interests of the Taiwan triads doing similar businesses, the financial interests of the money laundering and money manipulating British and overseas Chinese banks, the financial interests of Hong Kong’s big import-export houses, the financial and political interests of Taiwan’s Kuomintang party, the huge political and geopolitical interests of the imperialist NATO countries, especially Great Britain and the USA and their secret services and NGOs, which have been practicing the containment of China since 1949 and which dream of a weak China which could be recolonized, and finally the financial and political interests of the infamous One Percent billionaires dreaming of globalization and world power and who saw there an opportunity to sabotage China’s Belt and Road Initiative. With such interests ready to finance and support opposition against the new extradition bill, and within the framework of the anti-China business war waged by the Trump government against the Chinese government, it is clear that huge rioting activities and widespread protests were soon mobilized on a very large scale against China in the streets of Hong Kong and Kowloon during the whole of 2019 and part of 2020.

The incredibly brutal and nasty protests against the extradition law in Hong Kong thus lasted more than one year. The West has probably never before invested so much money and political influencing in a single China containment political struggle, fortunately to no avail: bar associations, chambers of commerce, law societies, so called human rights groups, journalist’s associations, dozens of colonial era officials including of course Chris Patten himself, the whole of the Western mainstream media and dozens of government representatives in the line of Great Britain, the EU, the USA, Canada, etc. have criticized the People’s Republic’s policy. A nastier intervention into the internal affairs of a country is difficult to find. The world can rest thankful to the Peoples Republic of China for having shown much patience: the units of the People’s Liberation Army established in Hong Kong never intervened except to clean up the debris of destroyed shop fronts. Having brought seven hundred million citizens out of poverty within twenty-five years, China is now a strong, proud dragon that obviously no longer needs to brawl with misled students and louts. One only feels sorry for the tens of thousands of these naïve students and other young people who believed the lies of their agitators and thought to fight for liberty and democracy, whereas they were fighting for the financial and political interests of criminals, of money launders, globalists and of corrupt politicians.

In the end, an extradition law had to be. And it is now effective in Hong Kong.


Literature:

One could fill many pages with titles of books on the Chinese triads, on the history of Kuomintang China, on the history of Hong Kong, etc. The two books mentioned in this article bring the most important facts together in attractive, easy readable texts:

SEAGRAVE, Sterling, 1985: The Soong dynasty, Corgi Books, London

BOOTH, Martin,, 1999: The dragon syndicates. Bantam Books, London

See also: https://en.wikipedia.org/wiki/2019_hong_kong_extradition_bill

Dr. Ji Pei was lecturer for Chinese history at a European University.

Xi reads the Multilateral Riot Act at Davos

Xi reads the Multilateral Riot Act at Davos

January 26, 2021

by Pepe Escobar, posted with permission and first posted at Asia Times

The virtual Davos Agenda is finally on, from Monday to Friday this week, promoted by the World Economic Forum (WEF).

No, this is not The Great Reset. At least not yet. The Agenda is the aperitivo towards the Great Reset apotheosis at the WEF’s Special Annual Meeting, which will take place this coming spring in Singapore.

The Agenda’s theme for 2021 is “A Crucial Year to Rebuild Trust.”

Oops. Davos, we got a problem: trust is always earned, never built.

Trust, anyway, in Davos speak, must always lead towards – what else – the Great Reset, introduced here in a Tik Tok-ready clip crammed with catchy slogans such as “a new dashboard for the new economy” or “right people, right place, right time”.

The message clincher is “tune in, turn on, get involved”, borrowing shamelessly from 1960s Timothy Leary (but ditching “drop out”).

It obviously escaped the clip’s producers that their P.R. opus indirectly admits to rigged elections and blanket censorship on social media.

The Agenda’s P.R. blitz must have a hard time dismissing the predominant perception this is all about Davos Man – and Woman – losing their sleep over global wealth inequality while enthusiastically applauded by a bunch of glitterati sociopaths.

Onwards with the sessions.

Here’s your new social contract

On day one, a “Leadership Panel” examined

How to restore growth, advising the public and private sectors on how to build a “new economic agenda”. Sleep-inducing platitudes were the norm.

WEF’s Agenda sessions cannot possibly address the iron imperative: the implosion of the old economic order under a Green camouflage, conducted by self-appointed, sub-Platonic sages which belong to the world’s wealthiest, will only benefit this 0.0001%.

The Great Reset is not an organic grassroots movement coordinated and benefitting the over 99%. It will lead, inevitably, to techno-feudalism, as I previously argued. Herr Schwab, the Oracle of Ravensburg and Davos supremo, insists in his writings “you will own nothing”.

A WEF graph – Top Ten Most Likely Fall Out for the World – should in fact be interpreted as The Great Reset’s ultimate targets. This is not a warning: it’s the road map ahead.

A session on advancing the new social contract neatly merged with a discussion about “stakeholder capitalism”. That’s a clever P.R. advertisement – what else – for Herr Schwab’s new book: Stakeholder Capitalism, which advances a “more sustainable, resilient and inclusive” global economy and argues for – what else – a “clearly defined social contract” which will allow “governments, business and individuals to produce the most optimal outcomes.”

So here’s how it works. You don’t earn trust: you rebuild it (italics mine). This trust metastasizes into the social contract – which is absolutely necessary for The Great Reset. Selling this new social contract is a matter of rebranding turbo-capitalism globally as “stakeholder capitalism”, or capitalism with a human face.

Not a peep about the Great Reset as a mechanism of unbridled expansion of mega-corporate power, hermetically securing/serving the 0.0001%, which are not, and will never be, suffering The Great Depression.

Stripped to the bone, that’s also one of the key themes of the Fourth Industrial Revolution: consolidating, crushing and shepherding the working class masses into the unstable gig economy, commanded by “emotionally intelligent” leaders.

The Who nailed it half a century ago: meet the new boss, same as the old boss.

A realpolitik stunner

It’s still unclear what China, Russia and Iran – the real Three Sovereigns in this Brave New World, and the key nodes of progressive Eurasia integration – will counter-propose when faced with the Great Reset.

Into this toxic mix steps in none other than President Xi Jinping, the leader of the global superpower in the making. Instead of Reset platitudes, his Davos Agenda address was quite a realpolitik stunner.

Xi stressed, “to build small circles or start a new Cold War, to reject, threaten or intimidate others, to willfully impose decoupling, supply disruptions or sanctions, and to create isolation or estrangement will only push the world into division and even confrontation (…) We cannot tackle common challenges in a divided world, and confrontation will lead us to a dead end.”

Xi might be interpreted as aligning with Herr Schwab. Not really. Xi stressed solutions to our current plight must be multilateral; but the key is how to implement them geopolitically.

It’s unclear how the new dispensation in the US – humanitarian imperialists, Dem oligarchs, Big Tech, Big Pharma, Big Media – will react to Xi’s call: “The misguided approach of antagonism and confrontation, be it in the form of a Cold War, hot war, trade war or tech war, would eventually hurt all countries’ interests (…) “Difference in itself is no cause for alarm. What is alarming are arrogance, prejudice and hatred.”

Xi emphasized a straight to the point definition of multilateralism as

“having international affairs addressed through consultation and the future of the world decided by everyone working together (…) To beggar thy neighbor, to go it alone, and to slip into arrogant isolation will always fail.”

What Xi has made it crystal clear, once again, is the acute contrast between relative Asian serenity and stability and the volcanic chaos engulfing the West’s top power centers. How this intertwines – in realpolitik terms – with Her Schwab’s Brave New World will be a work in progress. For the moment, Xi has just read the Multilateral Riot Act at Davos. The whole Global South is paying attention.

The Making of US Empire at the dawning of its end

The Making of US Empire at the dawning of its end

January 21, 2021

by Pepe Escobar posted with permission and first posted at Asia Times

As the Exceptional Empire gets ready to brave a destructive – and self-destructive – new cycle, with dire, unforeseen consequences bound to reverberate across the world, now more than ever it is absolutely essential to go back to the imperial roots.

The task is fully accomplished by

Tomorrow, the World: The Birth of U.S. Global Supremacy , by Stephen Wertheim, Deputy Director of Research and Policy at the Quincy Institute for Responsible Statecraft and a research scholar at the Saltzman Institute of War and Peace Studies at Columbia University.

Here, in painstaking detail, we can find when, why and especially who shaped the contours of US “internationalism” in a roomful of mirrors always disguising the real, ultimate aim: Empire.

Wertheim’s book was superbly reviewed by Prof. Paul Kennedy. Here we will concentrate on the crucial plot twists taking place throughout 1940. Wertheim’s main thesis is that the fall of France in 1940 – and not Pearl Harbor – was the catalyzing event that led to the full Imperial Hegemony design.

This is not a book about the U.S. industrial-military complex or the inner workings of American capitalism and finance capitalism. It is extremely helpful as it sets up the preamble to the Cold War era. But most of all, it is gripping intellectual history, revealing how American foreign policy was manufactured by the real flesh and blood actors that count: the economic and political planners congregated by the arch-influential Council on Foreign Relations (CFR), the conceptual core of the imperial matrix.

Behold Exceptionalist nationalism

If just one phrase should capture the American missionary drive, this is it: “The United States was born of exceptionalist nationalism, imagining itself providentially chosen to occupy the vanguard of world history”. Wertheim nailed it by drawing from a wealth of sources on exceptionalism, especially Anders Stephanson’s Manifest Destiny: American Expansion and the Empire of the Right.

The action starts in early 1940, when the State Dept. formed a small advisory committee in collaboration with the CFR, constituted as a de facto proto-national security state.

The CFR’s postwar planning project was known as the War and Peace Studies, financed by the Rockefeller Foundation and boasting a sterling cross-section of the American elite, divided into four groups.

The most important were the Economic and Financial Group, headed by the “American Keynes”, Harvard economist Alvin Hansen, and the Political Group, headed by businessman Whitney Shepardson. CFR planners were inevitably transposed to the core of the official postwar planning committee set up after Pearl Harbor.

A crucial point: the Armaments Group was headed by none other than Allen Dulles, then just a corporate lawyer, years before he became the nefarious, omniscient CIA mastermind fully deconstructed by David Talbot’s The Devil’s Chessboard.

Wertheim details the fascinating, evolving intellectual skirmishes along the first eight months of WWII, when the prevailing consensus among the planners was to concentrate on the Western Hemisphere only, and not indulge in “balance of power” overseas adventures. As in let the Europeans fight it out; meanwhile, we profit.

The fall of France in May-June 1940 – the world’s top army melting down in five weeks – was the game-changer, much more than Pearl Harbor 18 months later. This is how the planners interpreted it: if Britain were the next domino to fall, totalitarianism would control Eurasia.

Wertheim zeroes in on the defining “threat” for the planners: Axis dominance would prevent the United States “from driving world history. Such a threat proved unacceptable to U.S. elites”. That’s what led to an expanded definition of national security: the U.S. could not afford to be simply “isolated” within the Western Hemisphere. The path ahead was inevitable: to shape world order as the supreme military power.

So it was the prospect of a Nazi-shaped world order – and not U.S. security – that shook foreign policy elites in the summer of 1940 to build the intellectual foundations of global U.S. hegemony.

Of course there was a “lofty ideal” component: the U.S. would not be able to fulfill its God-given mission to lead the world towards a better future. But there was also a much more pressing practical matter: this world order might be closed to liberal U.S. trade.

Even as the tides of war changed afterwards, the interventionist argument ultimately prevailed: after all, the whole of Eurasia could (italics in the book) eventually, fall under totalitarianism.

It’s always about “world order”

Initially, the fall of France forced Roosevelt’s planners to concentrate on a minimum hegemonic area. So by midsummer 1940, the CFR groups, plus the military, came up with the so-called “quarter sphere”: Canada down to northern South America.

They were still assuming that the Axis would dominate Europe and parts of the Middle East and North Africa. As Wertheim notes, “American interventionists often portrayed Germany’s dictator as a master of statecraft, prescient, clever and bold.”

Then, at the request of the State Dept., the crucial CFR’s Economic and Financial Group worked feverishly from August to October to design the next step: integrating the Western Hemisphere with the Pacific Basin.

That was a totally myopic Eurocentric focus (by the way, Asia barely registers on Wertheim’s narrative). The planners assumed that Japan – even rivaling the US, and three years into the invasion of mainland China – could somehow be incorporated, or bribed into a non-Nazi area.

Then they finally hit the jackpot: join the Western Hemisphere, the British empire and the Pacific basin into a so-called “great residual area”: that is, the entire non-Nazi dominated world except the USSR.

They found out that if Nazi Germany would dominate Europe, the U.S. would have to dominate everywhere else (italics mine). That was the logical conclusion based on the planners’ initial assumptions.

That’s when U.S. foreign policy for the next 80 years was born: the U.S. had to wield “unquestionable power”, as stated in the CFR planners “recommendation” to the State Dept., delivered on October 19 in a memorandum titled “Needs of Future United States Foreign Policy”.

This “Grand Area” was the brainchild of the CFR’s Economic and Financial Group. The Political Group was not impressed. The Grand Area implied a post-war peace arrangement that was in fact a Cold War between Germany and Anglo-America. Not good enough.

But how to sell total domination to American public opinion without that sounding “imperialistic”, similar to what the Axis was doing in Europe and Asia? Talk about a huge P.R. problem.

In the end, U.S. elites always came back to the same foundation stone of American exceptionalism: should there be any Axis supremacy in Europe and Asia, the U.S. manifest destiny of defining the path ahead for world history would be denied.

As Walter Lippmann succinctly – and memorably – put it: “Ours is the new order. It was to found this order and to develop it that our forefathers came here. In this order we exist. Only in this order can we live”.

That would set up the pattern for the subsequent 80 years. Roosevelt, only a few days after he was elected for a third term, stated it was the United States that “truly and fundamentally…was a new order”.

It’s chilling to be reminded that 30 years ago, even before unleashing the first Shock and Awe over Iraq, Papa Bush defined it as the crucible of a “new world order” (incidentally, the speech was delivered exactly 11 years before 9/11).

Henry Kissinger has been marketing “world order” for six decades. The number one U.S foreign policy mantra is “rules-based international order”: rules, of course, set unilaterally by the Hegemon at the end of WWII.

American Century redux

What came out of the 1940 policy planning orgy was encapsulated by a succinct mantra featured in the legendary February 17, 1941 essay in Life magazine by publishing mogul Henry Luce: “American Century”.

Only six months earlier planners were at best satisfied with a hemispheric role in an Axis-led world future. Now they went winner takes all: “complete opportunity of leadership”, in Luce’s words. In early 1941, months before Pearl Harbor, the American Century went mainstream – and never left.

That sealed the primacy of Power Politics. If American interests were global, so should be American political and military power.

Luce even used Third Reich terminology: “Tyrannies may require a large amount of living space. But Freedom requires and will require far greater living space than Tyranny.” Unlike Hitler’s, the unbounded ambition of American elites prevailed.

Until now. It looks and feels like the empire is entering a James Cagney Made it, Ma. Top of the World! moment – rotting from within, 9/11 merging into 1/6 in a war against “domestic terrorism” – while still nurturing toxic dreams of imposing uncontested global “leadership”.

Trump’s not-so-secret art of containing China

Trump’s not-so-secret art of containing China

January 16, 2021

by Pepe Escobar with permission and first posted at Asia Times.

It was hardly a secret throughout the Trump administration. Now, dying embers within sight, and with minimum fanfare, comes the declassification – virtually the whole document, minus a few redactions – of the US Strategic Framework for the Indo-Pacific.

Why now, no less than 30 years before the usual, standard US declassification/public record protocols apply? Don’t expect an answer from Trump or from his National Security Adviser Robert O’Brien.

O’Brien’s premise, presenting the declassification, is that, “Beijing is increasingly pressuring Indo-Pacific nations to subordinate their freedom and sovereignty to a ‘common destiny’ envisioned by the Chinese Communist Party.”

This is nonsense in multiple levels. The best Mandarin-English translation for China’s overarching strategy is “community with a shared future for humanity” – a Confucius/Marx crossover based on trade/connectivity and sustainable development.

No nation is pressured to surrender their “freedom and sovereignty” to join the Belt and Road Initiative (BRI). It’s a voluntary decision – otherwise over 130 nations would not go for it, including many in Europe. The strategy is not ideological; it’s based on trade. Moreover, China is already the top trade partner for the overwhelming majority of these nations.

Is Beijing trembling?

Since 2018 we were all familiar with the basic contours of the Trump administration’s “overarching strategic guidance” for the Indo-Pacific.

These are the Top 5 items – with no euphemistic softening:

– to maintain that sacrosanct US “primacy”, code for uncontested military power;

– promote the Quad (US, Japan, India, Australia);

– fully support the (failed) Hong Kong color revolution;

– demonize everything connected to BRI;

– and invest in “the rise of India”.

On the military front, things get way trickier: the imperative is to prevent Beijing, by all means necessary, from “dominating the first island chain” – that is, the island ring from the Japanese archipelago to Taiwan all the way to the northern Philippines and Borneo. Moreover, “primacy” should also be maintained in the “area beyond”.

So once again this is all about naval containment.

Chinese strategists obviously studied their Mahan and Spykman thoroughly – and understood that the US Navy would ultimately play their trump card as a naval embargo.

Thus the Chinese Heartland strategy to contain the US’s Rimland strategy: pipelines from Russia and Central Asia (energy supply chain) and BRI (trade). A neat combination of “escape from Malacca” (in terms of oil and gas supplies) and overland connectivity.

A graphic example is the importance of the southern sector of the China-Pakistan Economic Corridor (CPEC). In the long run, that offers Beijing, via Gwadar port, prime access to the Indian Ocean, bypassing Malacca. That can even be enhanced by upcoming Chinese investment in neighboring Chabahar port in Iran, in the Gulf Of Oman.

In contrast, US strategists advising the Trump administration, apart from not improving on Mahan and Spykman, completely ignored China’s economic pull all across Eurasia. They ignored the fact that scores of nations from Central to South and Southeast Asia (the ASEAN 10) would not sacrifice their trade/investment relations to the benefit of a Made in the Beltway “vision”.

The recent signing of the Regional Comprehensive Economic Partnership (RCEP) deal all but buried the Indo-Pacific strategy.

As much as they are not reality-based, the core lineaments of the Indo-Pacific strategy are not bound to change much under Biden-Harris. They will be tweaked – in a “back to the future” manner. The Biden-Harris point man for China is bound to be none other than Kurt Campbell, the man who invented the “pivot to Asia” concept that was then embraced by Hilary Clinton as Secretary of State and Obama as President. Campbell now argues that emphasis on the sacrosanct “primacy” may be somewhat alleviated.

Is Beijing trembling? Hardly.

The 100th anniversary of the Chinese Communist Party falls next July 23. Exactly one day before the declassification of Indo-Pacific, President Xi Jinping outlined his – and the CCP’s – vision for no less than the next three decades, culminating in the 100th anniversary of the People’s Republic of China in 2049.

So here’s Xi Top Three – in a nutshell.

– Keep calm and carry on, despite the ravaging effects of Covid-19, unrelenting Western – especially American – hostility, and the trials and tribulations of the crumbling US Empire.

– Focus on domestic development, in all areas.

– Focus on China’s priorities; then whatever happens the world outside will not be able to interfere. China’s priorities include solidifying its own “primacy” in the South China Sea while diversifying trade/development strategic options all along BRI.

It will certainly help that China’s GDP is bound to grow by almost 8% in 2021 – as estimated by IMF/World Bank. Astonishingly, if that’s the case GDP by the end of this year will reach the same level that pre-Covid Western forecasters were predicting by the end of 2019: 5% growth each year for the next two years. China may have grown roughly 2% in 2020, booming foreign trade included.

Goldman Sachs is branding the current economic environment “the Chinese phenomenon”. China remains the high-speed rail locomotive of global capitalism. It’s easy to notice which way scores of nations see the wind blowing when they compare it with what’s just been declassified.

9/11 Was the Prelude. 1/6 Is the Holy Grail

9/11 Was the Prelude. 1/6 Is the Holy Grail - TheAltWorld
9/11 Was the Prelude. 1/6 Is the Holy Grail

January 13, 2021

By Pepe Escobar with permission and cross-posted with Strategic Culture Foundation. 

Whether civil war is coming will depend on the degree of stoicism prevalent among the Deplorable multitudes.

I hear the sons of the city and dispossessed
Get down, get undressed
Get pretty but you and me
We got the kingdom, we got the key
We got the empire, now as then
We don’t doubt, we don’t take direction
Lucretia, my reflection, dance the ghost with me

Sisters of Mercy, Lucretia my Reflection

9/11 was the prelude. 1/6 is the Holy Grail.

9/11 opened the gates to the Global War on Terror (GWOT), later softened by Team Obama to the status of Overseas Contingency Operations (OCO) even as it was suavely expanded to the bombing, overt or covert, of seven nations.

9/11 opened the gates to the Patriot Act, whose core had already been written way back in 1994 by one Joe Biden.

1/6 opens the gate to the War on Domestic Terror and the Patriot Act from Hell, 2.0, on steroids (here is the 2019 draft ), the full 20,000 pages casually springing up from the sea like Venus, the day after, immediately ready to roll.

And as the inevitable companion to Patriot Act 2.0, there will be war overseas, with the return in full force, unencumbered, of what former CIA analyst Ray McGovern memorably christened the MICIMATT (Military-Industrial-Congressional-Intelligence-Media-Academia-Think Tank) complex.

And when MICIMATT starts the next war, every single protest will be branded as domestic terrorism.© [Shannon Stapleton/Reuters]

The faux coup

Whatever really happened on 1/6 in the militarized Valhalla of a superpower that spent untold trillions of dollars on security since the start of the millennium, the elaborate psy op/photo-op circus – complete with a strategically photogenic MAGA Viking actor – could never had happened if it was not allowed to happen. Debate will rage till Kingdom Come on whether the break in was organic – an initiative by a few hundred among at least 10,000 peaceful protestors surrounding the Capitol – or rather a playbook color revolution false flag instigated by an infiltrated, professional Fifth Column of agent provocateurs.What matters is the end result: the manufactured product – “Trump insurrection” – for all practical purposes buried the presentation, already in progress, of evidence of electoral fraud to the Capitol, and reduced the massive preceding rally of half a million people to “domestic terrorism”. That was certainly not a “coup”. Top military strategist Edward Luttwak, now advising the Pentagon on cyber-war, tweeted, “nobody pulls a coup during the day”. That was just “a show, people expressing emotions”, an actually faux coup that did not involve arson or widespread looting, and relatively little violence (compare it to Maidan 2014): talk about “insurrectionists” walking inside the Capitol respecting the velvet ropes.

A week before 1/6, a dissident but still very connected Deep State intel op offered this cold, dispassionate view of the Big Picture:

“Tel Aviv betrayed Trump with a new deal with Biden and so they threw him to the dogs. Sheldon Adelson and the Mafia have no trouble switching sides for the winner by hook or crook. Pence and McConnell also betrayed Trump. It was as though Trump walked as Julius Caesar into the Roman Senate to be stabbed to death. Any deal Trump makes with the system or Deep State will not be kept and they are secretly talking about ending him forever. Trump has the trump card. Martial law. Military tribunals. The Insurrection Act. The question is whether he will play it. Civil war is coming irrespective of what happens to him, sooner or later.”

Whether civil war is coming will depend on the degree of stoicism prevalent among the Deplorable multitudes.

Alastair Crooke has brilliantly outlined the Top Three main issues that shape Red America’s “Epiphany”: stolen elections; lockdown as a premeditated strategy for the destruction of small and mid-size businesses; and the dire prospect of ‘cancellation’ by an incoming woke ‘soft totalitarianism’ orchestrated by Big Tech.

Cue to a Corpse Reading a Teleprompter, also known as The President-Elect, and his own ominous words after 1/6: “Don’t dare call them protesters. They were a riotous mob. Insurrectionists. Domestic terrorists.” Some things never change. George W. Bush, immediately after 9/11: “Either you’re with us, or with the terrorists”.

That’s the hegemonic, set in stone, narrative now being implemented with an iron fist by Big Tech. First they come for POTUS. Then they come for you. Anyone, anywhere, not following Big Tech’s Techno-Feudalist diktat WILL be cancelled.

Bye bye Miss American Pie

And that’s why the drama is way, way, bigger than a mere discombobulated POTUS.

Every single institution controlled by the ruling class – from schools to mass media to the way workplaces are regulated – will go after the Deplorables with no mercy.

Professional CIA killer and liar John Breenan, key conceptualizer of totally debunked Russiagate, tweeted about the necessity of, in practice, setting up re-education camps. Media honchos called for “cleansing the movement”.

Politically, the Deplorables only have Trumpism. And that’s why Trumpism, with a possible avenue to become an established third party, must be smashed. As much as the 0.0001% is more terrified by the possibility of secession or armed revolt, they need urgent pre-emptive action against what is, for now, a nationalist mass movement, however inchoate its political proposals.

The “unknown unknown”, to evoke notorious neo-con Donald Rumsfeld, is whether the exasperated plebs will eventually reach for the pitchforks – and make the 0.0001% feudal hacienda ungovernable. And then there’s a literally smokin’ element – those half a billion guns out there.

The 0.0001% knows for sure that Trump, after all, was never a radical revolutionary change agent. Inchoately, he channeled Red America’s hopes and fears. But instead of the promised glitzy palace adorned with gold, what he delivered was a shack in the desert.

Meanwhile, Red America, intuitively, understood that Trump at least was a useful conduit. He lay bare how the corrupt swamp actually moves. How these “institutions” are mere corporate puppets – and completely ignore the common man. How the Judiciary is utterly corrupt – when even POTUS cannot get a hearing. How Pharma and Tech actually expanded the MICIMATT (MICIMAPTT?) And most of all, how the two party paradigm is a monstrous lie.

So where will 75 million disenfranchised voters – or 88 million Twitter followers – go?

As it stands, we’re deep into Hardcore Class War. The Top of the Scam Gang are in full control. The remains of “Democracy” have gelled into Mediacracy. Ahead, there’s nothing but ruthless purge, protracted crackdown, censorship, blanket surveillance, smashing of civil liberties, a single narrative, overarching cancel (in)culture. It gets worse: next week, this paranoid apparatus merges with the awesome machinery of the United States Government (USG).

So welcome to Full Spectrum Domestic Dominance. Germany 1933 on steroids. 1984 redux: no wonder the hashtag #1984 was banned by Twitter.

Cui bono? Techno-Feudalism, of course – and the interlocking tentacles of the trans-humanist Great Reset. Defy it, and you will be cancelled.

Bye bye Miss American Pie. That’s the legacy of 1/6.

The Assange saga: Practicing real journalism is criminally insane

The Assange saga: Practicing real journalism is criminally insane

January 07, 2021

By Pepe Escobar with permission and first posted at Asia Times

Synchronicity is definitely fond of mirror wonderwalls. The Julian Assange saga seemed to have entered a new chapter as he was, in thesis, on his way to – conditional – freedom this past Monday, only one day after the first anniversary of the start of the Raging Twenties: the assassination of Maj Gen Qassem Soleimani.

The fate of the journalist the Empire seeks to terminate was just juxtaposed to the fate of the warrior/diplomat the empire already terminated.

Two days later, Julian Assange was de facto re-incarcerated exactly as the Empire was hit by an “insurrection” which, whenever instigated in that distant “Third World”, is celebrated in Exceptionalistan as “people power”.

The invaluable Craig Murray, from inside Westminster Magistrates Court No. 1 in London, meticulously presented the full contours  of the insanity this Wednesday.

Read it in conjunction with the positively terrifying judgment delivered on Monday in the United States government case against Julian Assange.

The defining issue, for all those who practice real journalism all across the world, is that the judgment affirms, conclusively, that any journalist can be prosecuted under the US Espionage Act. Since a 1961 amendment, the Espionage Act carries universal jurisdiction.

The great John Pilger memorably describes “judge” Vanessa Baraitser as “that Gothic woman”. She is in fact an obscure public servant, not a jurist. Her judgment walks and talks like it was written by a mediocre rookie hack. Or, better yet, entirely lifted from the US Department of Justice indictment.

Julian Assange was – at the last minute – discharged on theoretically humanitarian grounds. So the case had, in effect, ended. Not really. Two days later, he was sent back to Belmarsh, a squalid maximum security prison rife with Covid-19. So the case is ongoing.

WikiLeaks editor Kristinn Hrafnnson correctly noted, “It is unjust and unfair and illogical when you consider her ruling of two days ago about Julian’s health in large part because he is in Belmarsh prison (…) To send him back there doesn’t make any sense.”

It does when one considers the real role of Baraitser – at a loss to juggle between the imperatives of the imperial agenda and the necessity of saving the face of British justice.

Baraitser is a mere, lowly foot soldier punching way above her weight. The real power in the Assange case is Lady Emma Arbuthnot, forced out of a visible role because of very compromising, direct ties she and her husband Lord Arbuthnot maintain with British intelligence and military, first revealed by – who else – WikiLeaks.

It was Arbuthnot who picked up obscure Baraitser – who dutifully follows her road map. In court, as Murray has detailed in a series of searing reports, Baraitser essentially covers her incompetence with glaring vindictiveness.

Baraitser discharged Julian Assange, according to her own reasoning, because she was not convinced the appalling American gulag would prevent him from committing suicide.

But the key issue is that before reaching this conclusion, she agreed and reinforced virtually every point of the US indictment.

So at this point, on Monday, the “Gothic woman” was performing a contortion to save the US from the profound global embarrassment of prosecuting a de facto journalist and publisher for revealing imperial war crimes, not United States government secrets.

Two days later, the full picture became crystal clear. There was nothing “humanitarian” about that judgment. Political dissent was equaled with mental illness. Julian Assange was branded as criminally insane. Once again, practicing journalism was criminalized.

There are reasons to believe though, that a United States government appeal may fail. A British High Court would be reluctant to overturn a judgment where Baraitser actually established findings of fact: a direct correlation between the state of the American gulag, and the extreme danger to Assange’s health if he’s thrown inside this system.

As it stands, it didn’t even matter that Assange’s defense offered a full package to obtain bail, from home arrest to the use of an ankle bracelet. Baraitser’s notion that the British security state would not be able to prevent his “escape” wearing an ankle bracelet in the middle of a total, police state-style lockdown does not even qualify as a joke.

So Julian Assange is back to suffering a perverse, interminable rewrite of Poe’s The Pit and the Pendulum.

The US government’s legal strategy before the High Court convenes in April is basically to try to prove its American gulag is competent enough to prevent a suicide – even though the ultimate aim of this post-truth Inquisition seems to be the termination of Julian Assange inside the penal system. That goal doesn’t even require a supermax prison in Colorado. Belmarsh will do.

Soleimani geopolitics, one year on

Soleimani geopolitics, one year on

by Pepe Escobar, posted with permission and first posted at Asia Times

One year ago, the Raging Twenties started with a murder.

The assassination of Maj Gen Qassem Soleimani, commander of the Quds Force of the Islamic Revolutionary Guards Corps (IRGC), alongside Abu Mahdi al-Muhandis, the deputy commander of Iraq’s Hashd al-Sha’abi militia, by laser-guided Hellfire missiles launched from two MQ-9 Reaper drones, was an act of war.

Not only the drone strike at Baghdad airport, directly ordered by President Trump, was unilateral, unprovoked and illegal: it was engineered as a stark provocation, to detonate an Iranian reaction that would then be countered by American “self-defense”, packaged as “deterrence”. Call it a perverse form of double down, reversed false flag.

The imperial Mighty Wurlitzer spun it as a “targeted killing”, a pre-emptive op squashing Soleimani’s alleged planning of “imminent attacks” against US diplomats and troops.

False. No evidence whatsoever. And then, Iraqi Prime Minister Adil Abdul-Mahdi, in front of his Parliament, offered the ultimate context: Soleimani was on a diplomatic mission, on a regular flight between Damascus and Baghdad, involved in complex negotiations between Tehran and Riyadh, with the Iraqi Prime Minister as mediator, at the request of President Trump.

So the imperial machine – in complete mockery of international law – assassinated a de facto diplomatic envoy.

The three top factions who pushed for Soleimani’s assassination were US neo-cons – supremely ignorant of Southwest Asia’s history, culture and politics – and the Israeli and Saudi lobbies, who ardently believe their interests are advanced every time Iran is attacked. Trump could not possibly see The Big Picture and its dire ramifications: only what his major Israeli-firster donor Sheldon Adelson dictates, and what Jared of Arabia Kushner whispered in his ear, remote-controlled by his close pal Muhammad bin Salman (MbS).

The armor of American “prestige”

The measured Iranian response to Soleimani’s assassination was carefully calibrated to not detonate vengeful imperial “deterrence”:

precision missile strikes on the American-controlled Ain al-Assad air base in Iraq. The Pentagon received advance warning.

Predictably, the run-up towards the first anniversary of Soleimani’s assassination had to degenerate into intimations of US-Iran once again on the brink of war.

So it’s enlightening to examine what the Commander of the IRGC Aerospace Division, Brigadier General Amir-Ali Hajizadeh, https://www.tasnimnews.com/fa/news/1399/10/13/2423366/ told Lebanon’s Al Manar network: “The US and the Zionist regime [Israel] have not brought security to any place and if something happens here (in the region) and a war breaks out, we will make no distinction between the US bases and the countries hosting them.”

Hajizadeh, expanding on the precision missile strikes a year ago, added, “We were prepared for the Americans’ response and all our missile power was fully on alert. If they had given a response, we would have hit all of their bases from Jordan to Iraq and the Persian Gulf and even their warships in the Indian Ocean.”

The precision missile strikes on Ain al-Assad, a year ago, represented a middle-rank power, enfeebled by sanctions, and facing a huge economic/financial crisis, responding to an attack by targeting imperial assets that are part of the Empire of Bases. That was a global first – unheard of since the end of WWII. It was clearly interpreted across vast swathes of the Global South as fatally piercing the decades-old hegemonic armor of American” prestige”.

So Tehran was not exactly impressed by two nuclear-capable B-52s recently flying over the Persian Gulf; or the US Navy announcing the arrival of the nuclear-powered, missile loaded USS Georgia in the Persian Gulf last week.

These deployments were spun as a response to an evidence-free claim that Tehran was behind a 21-rocket attack against the sprawling American embassy in Baghdad’s Green Zone.

The (unexploded) 107mm caliber rockets – by the way marked in English, not Farsi – can be easily bought in some underground Baghdad souk by virtually anybody, as I have seen for myself in Iraq since the mid-2000s.

That certainly does not qualify as a casus belli – or “self-defense” merging with “deterrence”. The Centcom justification actually sounds like a Monty Python sketch: an attack “…almost certainly conducted by an Iranian-backed rogue militia group.” Note that “almost certainly” is code for “we have no idea who did it”.

How to fight the – real – war on terror

Iranian Foreign Minister Javad Zarif did take the trouble (see attached tweet) to warn Trump he was being set up for a fake casus belli – and blowback would be inevitable. That’s a case of Iranian diplomacy being perfectly aligned with the IRGC: after all, the whole post-Soleimani strategy comes straight from Ayatollah Khamenei.

And that leads to the IRGC’s Hajizadeh once again establishing the Iranian red line in terms of the Islamic Republic’s defense: “We will not negotiate about the missile power with anyone” – pre-empting any move to incorporate missile reduction into a possible Washington return to the JCPOA. Hajizadeh has also emphasized that Tehran has restricted the range of its missiles to 2,000 km.

My friend Elijah Magnier, arguably the top war correspondent across Southwest Asia in the past four decades, has neatly detailed the importance of Soleimani.

Everyone not only along the Axis of Resistance – Tehran, Baghdad, Damascus, Hezbollah – but across vast swathes of the Global South is firmly aware of how Soleimani led the fight against ISIS/Daesh in Iraq from 2014 to 2015, and how he was instrumental in retaking Tikrit in 2015.

Zeinab Soleimani, the impressive General’s daughter, has profiled the man, and the sentiments he inspired. And Hezbollah’s secretary-general Sayed Nasrallah, in an extraordinary interview, stressed Soleimani’s “great humility”, even “with the common people, the simple people.”

Nasrallah tells a story that is essential to place Soleimani’s modus operandi in the real – not fictional – war on terror, and deserves to be quoted in full:

“At that time, Hajj Qassem traveled from Baghdad airport to Damascus airport, from where he came (directly) to Beirut, in the southern suburbs. He arrived to me at midnight. I remember very well what he said to me: “At dawn you must have provided me with 120 (Hezbollah) operation commanders.” I replied “But Hajj, it’s midnight, how can I provide you with 120 commanders?” He told me that there was no other solution if we wanted to fight (effectively) against ISIS, to defend the Iraqi people, our holy places [5 of the 12 Imams of Twelver Shi’ism have their mausoleums in Iraq], our Hawzas [Islamic seminars], and everything that existed in Iraq. There was no choice. “I don’t need fighters. I need operational commanders [to supervise the Iraqi Popular Mobilization Units, PMU].” This is why in my speech [about Soleimani’s assassination], I said that during the 22 years or so of our relationship with Hajj Qassem Soleimani, he never asked us for anything. He never asked us for anything, not even for Iran. Yes, he only asked us once, and that was for Iraq, when he asked us for these (120) operations commanders. So he stayed with me, and we started contacting our (Hezbollah) brothers one by one. We were able to bring in nearly 60 operational commanders, including some brothers who were on the front lines in Syria, and whom we sent to Damascus airport [to wait for Soleimani], and others who were in Lebanon, and that we woke up from their sleep and brought in [immediately] from their house as the Hajj said he wanted to take them with him on the plane that would bring him back to Damascus after the dawn prayer. And indeed, after praying the dawn prayer together, they flew to Damascus with him, and Hajj Qassem traveled from Damascus to Baghdad with 50 to 60 Lebanese Hezbollah commanders, with whom he went to the front lines in Iraq. He said he didn’t need fighters, because thank God there were plenty of volunteers in Iraq. But he needed [battle-hardened] commanders to lead these fighters, train them, pass on experience and expertise to them, etc. And he didn’t leave until he took my pledge that within two or three days I would have sent him the remaining 60 commanders.”

Orientalism, all over again

A former commander under Soleimani that I met in Iran in 2018 had promised me and my colleague Sebastiano Caputo that he would try to arrange an interview with the Maj Gen – who never spoke to foreign media. We had no reason to doubt our interlocutor – so until the last Baghdad minute we were in this selective waiting list.

As for Abu Mahdi al-Muhandis, killed side by side with Soleimani in the Baghdad drone strike, I was part of a small group who spent an afternoon with him in a safe house inside – not outside – Baghdad’s Green Zone in November 2017. My full report is here.

Prof. Mohammad Marandi of the University of Tehran, reflecting on the assassination, told me, “the most important thing is that the Western view on the situation is very Orientalist. They assume that Iran has no real structures and that everything is dependent on individuals. In the West an assassination doesn’t destroy an administration, company, or organization. Ayatollah Khomeini passed away and they said the revolution was finished. But the constitutional process produced a new leader within hours. The rest is history.”

This may go a long way to explain Soleimani geopolitics. He may have been a revolutionary superstar – many across the Global South see him as the Che Guevara of Southwest Asia – but he was most of all a quite articulated cog of a very articulated machine.

The adjunct President of the Iranian Parliament, Hossein Amirabdollahian, told Iranian network Shabake Khabar that Soleimani, two years before the assassination, had already envisaged an inevitable “normalization” between Israel and Persian Gulf monarchies.

At the same time he was also very much aware of the Arab League 2002 position – shared, among others, by Iraq, Syria and Lebanon: a “normalization” cannot even begin to be discussed without an independent – and viable – Palestinian state under 1967 borders with East Jerusalem as capital.

Now everyone knows this dream is dead, if not completely buried. What remains is the usual, dreary slog: the American assassination of Soleimani, the Israeli assassination of top Iranian scientist Mohsen Fakhrizadeh, the relentless, relatively low-intensity Israeli warfare against Iran fully supported by the Beltway, Washington’s illegal occupation of parts of northeast Syria to grab some oil, the perpetual drive for regime change in Damascus, the non-stop demonization of Hezbollah.

Beyond the Hellfire

Tehran has made it very clear that a return to at least a measure of mutual respect between US-Iran involves Washington rejoining the JCPOA with no preconditions, and the end of illegal, unilateral Trump administration sanctions. These parameters are non-negotiable.

Nasrallah, for his part, in a speech in Beirut on Sunday, stressed,

“one of the main outcomes of the assassination of General Soleimani and al-Muhandis is the calls made for the expulsion of US forces from the region. Such calls had not been made prior to the assassination. The martyrdom of the resistance leaders set US troops on the track of leaving Iraq.”

This may be wishful thinking, because the military-industrial-security complex will never willingly abandon a key hub of the Empire of Bases.

More important is the fact that the post-Soleimani environment transcends Soleimani.

The Axis of Resistance – Tehran-Baghdad-Damascus-Hezbollah – instead of collapsing, will keep getting reinforced.

Internally, and still under “maximum pressure” sanctions, Iran and Russia will be cooperating to produce Covid-19 vaccines, and the Pasteur Institute of Iran will co-produce a vaccine with a Cuban company.

Iran is increasingly solidified as the key node of the New Silk Roads in Southwest Asia: the Iran-China strategic partnership is constantly revitalized by FMs Zarif and Wang Yi, and that includes Beijing turbo-charging its geoeconomic investment in South Pars – the largest gas field on the planet.

Iran, Russia and China will be involved in the reconstruction of Syria – which will also include, eventually, a New Silk Road branch: the Iran-Iraq-Syria-Eastern Mediterranean railway.

All that is an interlinked, ongoing process no Hellfires are able to burn.

How West, Central and South Asia are interconnecting

How West, Central and South Asia are interconnecting

January 02, 2021

By Pepe Escobar with permission and first posted on Asia Times

It’s one of those quintessential journeys that make people dream: Istanbul-Tehran-Islamabad by train. Let’s call it ITI.

Soon, in early 2021, ITI will become a reality. But, initially, just as a freight train. The deal was recently sealed at the 10th meeting of the transport and communication ministers of ECO (Economic Cooperation Organization) in Istanbul.

ITI’s official name is actually the ECO Container Train. Trial runs started in 2019. The 6,500 km overland journey should now take 11 days – compared to the roughly 45 days across sealanes for trade between Western Europe and Pakistan.

ECO is a very interesting – and strategic – organization, virtually unknown outside of Asia, uniting Turkey, Iran, Pakistan, the five Central Asian “stans”, Azerbaijan and Afghanistan.

Some of these players are also members of the Shanghai Cooperation Organization (SCO); some are part of the Eurasia Economic Union (EAEU); and almost all of them are partners to the Belt and Road Initiative (BRI).

They have come up with a ECO Vision 2025 that emphasizes connectivity as a springboard to “social and economic development”, privileging trade, transportation, energy and tourism. ECO seeks to de facto integrate West, Central and South Asia plus the Caucasus. For all practical purposes, ECO straddles most of the New Silk Roads developing across a large part of Eurasia.

That pesky Sultan, again

The ITI/ECO Container Train will be yet another layer of connectivity running in parallel to the Baku-Tbilisi-Kars (BTK) railway, centered on the Caucasus, and as we have seen in a previous Turkey/New Great Game column, a key plank of Ankara’s trade strategy.

Soon, ITI/ECO will also link with the European rail networks via that 76-km long engineering marvel – the undersea Marmaray railway tunnel in Istanbul. Of course opportunities abound for branching out to parts of the Middle East. By the end of the decade, ITI/ECO may well go high-speed rail – think Chinese investment.

The fascinating counterpoint to the Marmaray undersea tunnel is the Trans-Caspian: the actual connection between the BTK in the Caucasus and Central Asia.

As you can see here , the strategically designed layout of the ports allows instant roll on-roll off from the cargo trains to huge freight ferries.

Iran, for instance, is building a roll on-roll off shipping port in Bandar-e Anzalī on the Caspian Sea – which will be used to export merchandise but also oil and gas transiting via Russia or Kazakhstan, both Caspian nations, and thus bypassing any further blockade imposed by the US.

The interlink of ITI/ECO with BTK will solidify yet another important East-West trade corridor. Apart from the northern corridors linking with the Trans-Siberian, every East-West trade corridor across Eurasia goes through Turkey. That gives President Erdogan a wealth of options – as Beijing knows too well. The Xian-Istanbul corridor is as important as the Xian-Kazakhstan-Russia corridor.

Our previous Turkey/New Great Game column provoked serious debate in Istanbul. Political analyst Ceyda Karan remarked Erdogan “has only one card: Turkish geopolitics. He doesn’t care how many soldiers will die in Libya or Syria. He doesn’t care about the Turkish people”.

Esteemed Professor Korkut Boratav, now a nonagenarian eminence in macroeconomics, wondered how I could “ascribe those important roles to our chief”, referencing Erdogan.

Well, it’s all about playing geoeconomics. Erdogan certainly has leveraged his Rolodex across Eurasia, in terms of foreign policy, going no holds barred in the manipulation of all sorts of proxy gangs practicing all manner of extremisms. But ultimately what The Sultan really needs is trade and foreign investment in his battered economy.

So trade connectivity is essential. But the problem always remains his own strategy. Supporting, feeding and weaponizing an army of ISIS/Daesh, Jabhat al-Nusra, and Uighur/Caucasian jihadi proxies is not exactly a sound business strategy.

Erdogan seems to be everywhere – Libya, Azerbaijan, the Turkish-northwest Syrian border. Strategists in Beijing, Moscow, Tehran and Islamabad of course are asking questions: what for, exactly?

There’s no realistic geoeconomic scenario for him to bypass Russia. He may use Azerbaijan as a sort of de luxe messenger between Turkey and Israel – and perhaps, subsequently, profit from Israel’s courtship of Persian Gulf monarchies. After all, as far as allies in the Arab world are concerned, the only player he can really count on is Qatar. Follow the money: Doha by itself won’t finance an economic boom in Turkey.

Let a million trade corridors bloom

Silly rumors about the demise of the China-Pakistan Economic Corridor (CPEC) are greatly exaggerated – considering they are a sub-section of American propaganda. CPEC is a complex, very long-term project whose implementation, according to the Chinese timetable, has not even started.

What Islamabad must be aware of is how much sexier, in comparison, is Tehran, when seen with Beijing’s eyes. Pakistan counts mostly on Imran Khan’s efforts. Iran has a wealth of oil, gas, gold and an array of crucial minerals. As India famously shot itself in the back – once again – by de facto abdicating from investing in Chabahar port in Iran, China stepped in. The $400 billion China-Iran deal is way more comprehensive than CPEC, at roughly $64 billion.

Back on the road, the good news is Iran-Pakistan seem to be focused on increasing connectivity. It boggles the mind that until recently there was only one crossing along their 900 km border. Finally they decided to open two more border gateways.

This is hugely important, because the first gateway is in ultra-sensitive Sistan-Balochistan province – constantly susceptible to Salafi-jihadi infiltrators – and only 70 km away from strategic Gwadar port.

As far as tourism goes – what the Chinese describe as “people to people exchange” – that’s an extra dimension, because Pakistanis can now easily cross the border, reach Chabahar, and then go by train to Iran’s holy sites Najaf and Karbala.

Finally, there’s the all-important Russian factor – which always commands Erdogan’s undivided attention.

Arguably Moscow’s top strategic priority is to decouple the EU from any US/NATO-imposed Dr. Strangelove impulses. So a EU trade alliance with Beijing – now in progress, via their investment treaty – cannot but be a win-win, as it spells out closer European integration with the Eurasian century, driven by China but with Russia, crucially, positioned as the premier security provider.

And as President Putin once again made it clear in his year end’s vows, BRI and the EAEU are increasingly merging.

Quite a few readers have noted that Russia has now achieved the tripartite capacity that Kissinger once declared essential for US strategic leadership: mastery of weapons exports; control of energy flows; and agriculture exports. Not to mention diplomatic finesse – widely respected all across Eurasia and the Global South.

Meanwhile, Eurasia goes with the flow: let a million trade corridors – Trans-Siberian, BTK, ITI/ECO – bloom.

Political Jesus

PEPE ESCOBAR • DECEMBER 23, 2020

Hieronymus Bosch, The Adoration of the Magi: detail featuring the splendid African Balthasar and, partially naked, at the entrance of the hut, the Anti-Christ.

Let’s hit the road in the search for the real Jesus.

Galilee, Year 27: baptized by an itinerant preacher, John the Baptist. That’s when the story really begins. We know virtually nothing of his life till then.

Galilee is ruled by shabby client kings of the Roman empire – first Herod, then his son Herod Antipas. Jesus only enters imperial jurisdiction later, when he moves to Judaea, a Roman province since Year 6.

Galilee is all about agricultural and fishing land, surrounded by way more sophisticated Greeks and Phoenicians. Jesus grows up in a context of simple peasant life; increasing taxes; population explosion; and then non-stop fragmentation of peasant land, causing the proverbial pressures on traditional family life.

Social oppression inevitably had to engender resistance – in the form of budding peasant unrest. Talk about quite fertile ground for the proliferation of charismatic spiritual leaders.

Yet who was Jesus The Man, really? A Jewish holy man? A prophet? A magician? A miracle man? A peasant leader? A revolutionary? Prefiguring Walt Withman, he did “contain multitudes”. He was indeed all things to all men.

What we seem to know for sure is that he had charisma in spades – and exuded natural authority.

The Synoptic Gospels point to problems with Mom and his brothers. Yet he never abandoned his followers – those twelve specials, all from very humble backgrounds, except Matthew (a tax collector).

He lived on the (dusty) road – full time, and that was not exactly comfortable. He was at ease with everyone – prostitutes included.

As a preacher, he was a master of P.R. He talked in parables – easily grasped by small agricultural communities. That’s where he felt really at home.

So Jesus was a rural, not urban, phenomenon. He specially appealed to those who were ill – mentally and physically. He built up a solid reputation as a healer: all those miracle cures – especially exorcisms. And the whole lot interpreted as a sign of holiness.

Jesus was a Palestinian Jew. His followers were overwhelmingly Jews – those peasants destabilized by heavy taxation of their lands and ingloriously clashing with the corruption of Herod’s political machine.

Jesus focused on the imminence of God’s kingdom. But what did he really mean? The Gospels don’t make it easier. Much of his preaching is inclusive. Yet sometimes he would refer to a “Last Judgment” in which the wicked will be punished and the good will be rewarded.

Essentially, he was a millenarian prophet. But as much as he was striving for moral renewal, he was delivering a social message – where the “kingdom” to come represented the Triumph of the Outcast. What that really mean, in practice, was possibly a renewal of family and village community life.

Whatever he was really up to, the Powers That Be feared Jesus. After all he was way too popular. And even if he did not advise armed resistance, Power could not but be very worried by a charismatic leader with miraculous attributes dazzling the crowds.

Jesus may have sensed he was a target. And that’s what may have provoked the move to Judaea – possibly in Year 30. And then to Jerusalem.

Jerusalem may have been the Holy Grail. The apex of his mission – as he finally sensed he was ready to confront the powers behind the Temple.

He made a Jerusalem entrance that was nothing short of epic, riding a donkey – as if fulfilling a prophecy (Zechariah) that “a king” would enter Jerusalem on a donkey. In Matthew, the crowds actually call him “Son of David”.

Jerusalem was buzzing with people getting together for Passover. And last but not least, Roman governor Pontius Pilate and his troops were also in town, freshly arrived from Caesarea – the Roman HQ in the province – and obsessed with maintaining order.

Enter Caiaphas, the high priest: a canny, vastly experienced political operator, who managed for years to get the support of the Jews while placating his Roman overlords.

Now imagine the scene – worthy of a Scorsese epic: an outsider, itinerant preacher from Galilee, arriving in the mean streets with his posse, all speaking in weird accents, with the crowds shouting he may be the Messiah.

And then, the ultimate set piece: he enters the Temple, by himself, and overthrows the tables of the moneylenders. What did he really want?

That’s Political Jesus 1 and 2.

1. To graphically stress the end of the old order – Temple included – and the coming of the “new kingdom”.

2. To express – politically – the growing popular revolt against the ruling elite.

And by a simple twist of fate, that’s when he sealed his destiny.

Blowback was instantaneous. The Jewish priests had to be placated. They feared Roman retaliation. And then Caiaphas saw his opening, telling them – according to the Gospel by John – “it is better for one man to die for the people”.

And that’s how Jesus the Outsider was used as only a pawn in their game to maintain order in Jerusalem.

He was now free to enter History as a larger than life Martyr, Savior, and Myth.

Turkey pivots to the center of The New Great Game

Turkey pivots to the center of The New Great Game

December 28, 2020

by Pepe Escobar with permission and first posted at Asia Times

When it comes to sowing – and profiting – from division, Erdogan’s Turkey is quite the superstar.

Under the delightfully named Countering America’s Adversaries Through Sanctions Act (CAATSA), the Trump administration duly slapped sanctions on Ankara for daring to buy Russian S-400 surface-to-air missile defence systems. The sanctions focused on Turkey’s defence procurement agency, the SSB.

Turkish Foreign Minister Mevlut Cavusoglu’s response was swift: Ankara won’t back down – and it is in fact mulling how to respond.

The European poodles inevitably had to provide the follow-up. So after the proverbial, interminable debate in Brussels, they settled for “limited” sanctions – adding a further list for a summit in March 2021. Yet these sanctions actually focus on as-yet unidentified individuals involved in offshore drilling in Cyprus and Greece. They have nothing to do with S-400s.

What the EU has come up with is in fact a very ambitious, global human-rights sanctions regime modeled after the US’s Magnitsky Act. That implies travel bans and asset freezes of people unilaterally considered responsible for genocide, torture, extrajudicial killings and crimes against humanity.

Turkey, in this case, is just a guinea pig. The EU always hesitates mightily when it comes to sanctioning a NATO member. What the Eurocrats in Brussels really want is an extra, powerful tool to harass mostly China and Russia.

Our jihadis, sorry, “moderate rebels”

What’s fascinating is that Ankara under Erdogan always seems to be exhibiting a sort of “devil may care” attitude.

Take the seemingly insoluble situation in the Idlib cauldron in northwest Syria. Jabhat al-Nusra – a.k.a. al-Qaeda in Syria – honchos are now involved in “secret” negotiations with Turkish-backed armed gangs, such as Ahrar al-Sharqiya, right in front of Turkish officials. The objective: to boost the number of jihadis concentrated in certain key areas. The bottom line: a large number of these will come from Jabhat al-Nusra.

So Ankara for all practical purposes remains fully behind hardcore jihadis in northwest Syria – disguised under the “innocent” brand Hayat Tahrir al-Sham. Ankara has absolutely no interest in letting these people disappear. Moscow, of course, is fully aware of these shenanigans, but wily Kremlin and Defence Ministry strategists prefer to let it roll for the time being, assuming the Astana process shared by Russia, Iran and Turkey can be somewhat fruitful.

Erdogan, at the same time, masterfully plays the impression that he’s totally involved in pivoting towards Moscow. He’s effusive that “his Russian colleague Vladimir Putin” supports the idea – initially tabled by Azerbaijan – of a regional security platform uniting Russia, Turkey, Iran, Azerbaijan, Georgia and Armenia. Erdogan even said that if Yerevan is part of this mechanism, “a new page may be opened” in so far intractable Turkey-Armenia relations.

It will help, of course, that even under Putin pre-eminence, Erdogan will have a very important seat at the table of this putative security organization.

The Big Picture is even more fascinating – because it lays out various aspects of Putin’s Eurasia balancing strategy, which involves as main players Russia, China, Iran, Turkey and Pakistan.

On the eve of the first anniversary of the assassination of Gen Soleimani, Tehran is far from cowed and “isolated”. For all practical purposes, it is slowly but surely forcing the US out of Iraq. Iran’s diplomatic and military links to Iraq, Syria and Lebanon remain solid.

And with less US troops in Afghanistan, the fact is Iran for the first time since the “axis of evil” era will be less surrounded by the Pentagon. Both Russia and China – the key nodes of Eurasia integration – fully approve it.

Of course the Iranian rial has collapsed against the US dollar, and oil income has fallen from over $100 billion a year to something like $7 billion. But non-oil exports are going well over $30 billion a year.

All is about to change for the better. Iran is building an ultra-strategic pipeline from the eastern part of the Persian Gulf to the port of Jask in the Gulf of Oman – bypassing the Strait of Hormuz, and ready to export up to 1 million barrels of oil a day. China will be the top customer.

President Rouhani said the pipeline will be ready by the summer of 2021, adding that Iran plans to be selling over 2.3 million barrels of oil a day next year – with or without US sanctions alleviated by Biden-Harris.

Watch the Golden Ring

Iran is well linked to Turkey to the west and Central Asia to the east. An extra important element in the chessboard is the entrance of freight trains directly linking Turkey to China via Central Asia -bypassing Russia.

Earlier this month, the first freight train left Istanbul for a 8,693 km, 12-day trip, crossing below the Bosphorus via the brand new Marmary tunnel, inaugurated a year ago, then along the East-West Middle Corridor via the Baku-Tbilisi-Kars (BTK) railway, across Georgia, Azerbaijan and Kazakhstan.

In Turkey this is known as the Silk Railway. It was the BTK that reduced freight transport from Turkey to China from one month to only 12 days. The whole route from East Asia to Western Europe can now be travelled in only 18 days. BTK is the key node of the so-called Middle Corridor from Beijing to London and the Iron Silk Road from Kazakhstan to Turkey.

All of the above totally fits the EU’s agenda – especially Germany’s: implementing a strategic trade corridor linking the EU to China, bypassing Russia.

This would eventually lead to one of the key alliances to be consolidated in the Raging Twenties: Berlin-Beijing.

To speed up this putative alliance, the talk in Brussels is that Eurocrats would profit from Turkmen nationalism, pan-Turkism and the recent entente cordiale between Erdogan and Xi when it comes to the Uighurs. But there’s a problem: many a turcophone tribe prefers an alliance with Russia.

Moreover, Russia is inescapable when it comes to other corridors. Take, for instance, a flow of Japanese goods going to Vladivostok and then via the Trans-Siberian to Moscow and onwards to the EU.

The bypass-Russia EU strategy was not exactly a hit in Armenia-Azerbaijan: what we had was a relative Turkey retreat and a de facto Russian victory, with Moscow reinforcing its military position in the Caucasus.

Enter an even more interesting gambit: the Azerbaijan-Pakistan strategic partnership, now on overdrive in trade, defence, energy, science and technology, and agriculture. Islamabad, incidentally, supported Baku on Nagorno-Karabakh.

Both Azerbaijan and Pakistan have very good relations with Turkey: a matter of very complex, interlocking Turk-Persian cultural heritage.

And they may get even closer, with the International North-South Transportation Corridor (INTSC) increasingly connecting not only Islamabad to Baku but also both to Moscow.

Thus the extra dimension of the new security mechanism proposed by Baku uniting Russia, Turkey, Iran, Azerbaijan, Georgia and Armenia: all the Top Four here want closer ties with Pakistan.

Analyst Andrew Korybko has neatly dubbed it the “Golden Ring” – a new dimension to Central Eurasian integration featuring Russia, China, Iran, Pakistan, Turkey, Azerbaijan and the central Asian “stans”. So this all goes way beyond a possible Triple Entente: Berlin-Ankara-Beijing.

What’s certain as it stands is that the all-important Berlin-Moscow relationship is bound to remain as cold as ice. Norwegian analyst Glenn Diesen summed it all up: “The German-Russian partnership for Greater Europe was replaced with the Chinese-Russian partnership for Greater Eurasia”.

What’s also certain is that Erdogan, a master of pivoting, will find ways to simultaneously profit from both Germany and Russia.

Update : Transcript Added : A Hard Look at Rent and Rent Seeking with Michael Hudson & Pepe Escobar

December 28, 2020

Update : Transcript Added : A Hard Look at Rent and Rent Seeking with Michael Hudson & Pepe Escobar

Michael Hudson and Pepe Escobar discuss rent and rent-seeking, i.e., unproductive economic activity, in the US and China mainly but including the Russian, Iranian and Brazilian economies.

In the first 15 minutes, an overview from Michael Hudson explains what happened in the US economy once jobs and manufacturing were offshored to mainly China.  He proposes that even if China did not exist, the US economy has been changed to the extent that it is almost impossible to change back to a productive economy without material changes in the economic model.

Pepe keeps the conversation flowing quickly with incisive questions.  The two esteemed gentlemen take a look at the Chinese view on a possible Biden administration and how the military hawks in Washington could be countered.   Outlining the ‘conflict of systems’ between the US and China, Michael Hudson explains the thinking of the Pentagon and paying ‘protection money’ historically to fund oligarchies.  It is a ‘war between systems’, Hudson explains with the thinking being:  “If only China did not export to us, we could reindustrialize.”

“It’s over”: says Hudson, because “we’ve painted ourselves into such a debt corner.  So much money flows to the top 5% that there is no money for investment, no money for growth.”

Hudson explains the concept of capitalism, how it was conceived to work against neo-liberalism, and how it has changed to systemic support for rentier economics.

A wealth of detail follows, around fictitious debt and wealth creation.   Michael discusses the ‘brainwashing’ of Russia vis a vis economic policy and central bank to end up in a position where Russia was paying 100% interest for years under American advisors and privatized rentiers, “a bunch of gangsters.”   Very interesting is the discussion on how the perpetrators, the leading university of the US in the destruction and looting of Russia, could not be brought to a court.

“You don’t need an army to destroy a country any longer.  All you need to do is to teach it American economics.”  Michael Hudson

A question from Pepe regarding the economies of North East Asia, South East Asia, the Asia Crisis and currently further integration with Russia, resulted in this very cogent quote from Michael Hudson.

“The current mode of warfare is to conquer the brains of a country, to shape how people think.  If you can twist their view into unreality economics, to make them think you are there to help them and not to take money out of them, then you’ve got them hooked.  You need to lend them money, and then crash it.”  Michael Hudson.

The conversation ends with an extensive question from Pepe regarding the biggest myth regarding Belt and Road, the supposed ‘debt trap’.  The difference in systems, non-rentier, and rentier, debt, and neo-liberalism again is illustrated in a crystal clear fashion.

Transcript : 

December 16th, 2020

Henry George School of Social Science

Alanna: So, let’s formally start. Once we start to record Ibrahim is going to introduce the Henry George school and welcome everybody then I’m going to introduce from the bios; Michael and Pepe and then Michael will start with rent and rent seeking those who have comments or questions could put that in chat and then we’ll go to the chat at some point.

Ibrahima: Welcome, my name is Ibrahima Drame and I’m the director of education at the Henry George school of Social Science it’s a great honor to have you with us today for this joint webinar co-organized with the International Union for Land Value Taxation with two great thinkers, professor Michael Hudson and Pepe Escobar to discuss rent and rent seeking. I’d like to thank Michael and Pepe for kindly accepting to share their insights and of course our good friend Alanna Hartzok co-founder of Earth Right Institute, she will be moderating this session.

So, before I hand it over to Alanna, I’d like to ask all attendees to keep their microphones muted until we open the Q & A in the meantime you are free to use the chat and please do so responsibly. Alanna please go ahead and introduce our speakers.

Alanna: Okay yes thank you so much to Michael and Pepe for joining us and having this conversation I know that you two have admired each other’s work and writings for many many years so this is your first time to actually, talk together so I’m going to introduce you both from your bios.

Michael Hudson is an American economist professor of economics at the university of Missouri Kansas City and a researcher at the Levy Economics Institute at Bard College he’s a former wall street analyst political consultant commentator and journalist. He identifies himself as a classical economist. Michael is the author of J is for Junk Economics, Killing the Host, the Bubble and Beyond, Super Imperialism subtitled the Economic Strategy of American Empire, Trade Development and foreign debt and the myth of aid among others his books have been published translated into Japanese, Chinese, German, Spanish and Russian.

Pepe Escobar, born in Brazil is a correspondent editor at large at Asia Times and columnist for consortium news Washington dc and strategic culture Moscow since the mid-1980s he’s lived and worked as a foreign correspondent in London Paris, Milan los Angeles, Singapore Bangkok. He has extensively covered Pakistan Afghanistan, Central Asia to China, Iran, Iraq and the wider middle east pepe is the author of Globalistan – How the Globalized world is dissolving into liquid war red zone blues, A Snapshot of Baghdad during the surge he was contributing editor to the empire and the crescent and tuto in 03:09 vendita in italy and his last two books are empire of chaos and 2030. Pepe is also associated with the Paris-based European academy of geopolitics when not on the road he lives between Sao Paulo, Paris and Bangkok so we’ll have Michael begin now then he’s going to describe what uh the meaning is of rent and rent seeking and we’ll just take it from there please put comments and questions in chat thank you let’s go.

Michael Hudson: Well, I’m honored to be here on the same show with Pepe and discuss our mutual concern. And I think you have to frame the whole issue that China is thriving, and the West has reached the end of the whole 75-year expansion it had since 1945.

So, there was an illusion that America is de-industrializing because of competition from China. And the reality is there is no way that America can re-industrialize and regain its export markets with the way that it’s organized today. Financialized and privatized and if China didn’t exist. You’d still have the rust belt rusting out. You’d still have American industry not being able to compete abroad simply because the cost structure is so high in the United States.

The wealth is no longer made here by industrializing. It’s made financially, mainly by making capital gains. Rising prices for real estate or for stocks and for bonds.  In the last nine months, since the coronavirus came here, the top 1% of the U S economy grew by $1 trillion. It’s been a windfall for the 1%. The stock market is way up, the bond market is up, he real estate market is up while the rest of the economy is going down. Despite the tariffs that Trump put on, Chinese imports, trade with China is going up because we’re just not producing materials.

America doesn’t make its own shoes. It doesn’t make its own nuts and bolts or fasteners, it doesn’t make industrial things anymore because If money is to be made off an industrial company it’s to buy and sell the company, not to make loans to increase the company’s production. New York City where I live used to be an industrial city and, the industrial buildings, the mercantile buildings have all been gentrified into high-priced real estate and the result is that Americans have to pay so much money on education, rent and medical care that if they got all of their physical needs, their food, their clothing, all the goods and services for nothing, they still couldn’t compete with foreign labor because of all of the costs that they have to pay that are essentially called rent-seeking.

Housing in the United States now absorbs about 40% of the average worker’s paycheck. There’s a 15% taken off the top of paychecks for pensions, Social Security and for Medicare. Further medical insurance adds more to the paycheck, income taxes and sales taxes add about another 10%. Then you have student loans and bank debt. So basically, the American worker can only spend about one third of his or her income on buying the goods and services they produce. All the rest goes into the fire sector, the finance insurance, and real estate sector and other monopolies.

And essentially, we became what’s called a rent-seeking economy, not a productive economy. So, when people in Washington talk about American capitalism versus Chinese socialism this is confusing the issue. What kind of capitalism are we talking about? America used to have industrial capitalism in the 19th century. That’s how it got richer originally,but now it’s moved away from industrial capitalism towards finance capitalism. And what that means is that the mixed economy that made America rich. The government would invest in education and infrastructure and transportation and provide these at low costs so that the employers didn’t have to pay labor more to afford high financialized and privatized costs of living.

All of this has been transformed over the last hundred years. And we’ve moved away from the ethic of what was industrial capitalism. Before, the idea of capitalism in the 19th century – from Adam Smith to Ricardo, to John Stuart Mill to Marx – was very clear. Marx stated it quite clearly – Capitalism was revolutionary: It was to get rid of the landlord class. It was to get rid of the rentier class. It was to get rid of the banking class essentially, and just bear all the costs that were unnecessary for production, because how did England and America and Germany gain their markets?

They gained their markets basically by the government picking up a lot of the costs of the economy. The government in America provided low-cost education, not student debt. It provided transportation at subsidized prices. It provided basic infrastructure at low cost. And so, government infrastructure was considered a fourth factor of production.

And if you read what the business schools in the late 19th century taught like Simon Patten at the Wharton School, it’s very much like socialism. In fact, it’s very much like what China is doing. And in fact, China is following in the last 30 or 40 years pretty much the same way of getting rich that America followed.

It had its government fund basic infrastructure. It provides, low-cost education. It invests in high speed railroads and airports, in the building of cities. So, the government bears most of the costs and, that means that employers don’t have to pay workers enough to pay a student loan debt. They don’t have to pay workers enough to pay enormous rent such as you have in the United States.  They don’t have to pay workers to save for a pension fund, to pay the pension later on[1]. And most of all the Chinese economy doesn’t really have to pay a banking class because banking is the most important public utility of all.  Banking is what China has kept in the hands of government and Chinese banks don’t lend for the same reasons that American banks lend.

80% of American bank loans are mortgage loans to real estate and the effect of loosening loan standards and increasing the market for real estate is to push up the cost of living, push up the cost of housing. So, Americans have to pay more and more money for their housing, whether they’re renters or they’re buyers, in which case the rent is for paying mortgage interest.

So, all of this cost structure has been built into the economy. China’s been able pretty much, to avoid all of this, because its objective in banking is not to make a profit and interest, not to make capital gains and speculation. It creates money to fund actual means of production to build factories, to build research and development, to build transportation facilities, and to build infrastructure. Banks in America don’t lend for that kind of thing.

They only lend against collateral that’s already in place, because they won’t make a loan if it’s not backed by collateral. Well, China creates money through its public banks to create capital, to create the means of production. So, you have a diametric opposite philosophy of how to develop between the United States and China.

The United States has decided not to gain wealth by actually investing in means of production and producing goods and services, but in financial ways. China is gaining wealth and the old-fashioned way actually by producing it. And whether you call this, industrial capitalism or a state capitalism or a state socialism or Marxism, it basically follows the same logic of real economics, the real economy, not the financial overhead.  So you have China operating as a real economy, increasing its production, becoming the workshop of the world as England used to be called. And America trying to draw in foreign resources, live off of foreign resources, live by trying to make money by investing in the Chinese stock market or now, moving investment banks into China and making loans to China, not in actual industrial-capitalism ways.

So, you could say that America has gone beyond industrial capitalism, and they call it the post-industrial society, but you could call it the neo-feudal society. You could call it the neo-rentier society, or you could call it debt peonage. But it’s not industrial capitalism.

And in that sense, there’s no rivalry between China and America. These are different systems going their own way. I better let the Pepe pick it up from there.

Pepe Escobar: Okay. Thank you, Michael, this is brilliant. And you did it in less than 15 minutes. You told the whole story in 15 minutes. Well, my journalistic instinct is immediately to start questions to Michael. So, this is exactly what I’m gonna do now. I think it is much better to basically illustrate some points of what Michael just said, comparing the American system, which has finance capitalism essentially with industrial capitalism that is in effect in China. Let me try to start with a very concrete and straight to the point question, Michael.

Okay. let’s says that more or less, if we want to summarize it, basically they try to tax the nonproductive rentier class. So, this would be the Chinese way to distribute wealth, right? Sifting through the Chinese economic literature, there is a very interesting concept, which is relatively new, correct me if I wrong, Michael, in China, which they call stable investment. So stable investment, according to the Chinese would be to issue special bonds as extra capital in fact, to be invested in infrastructure building all across China and, and they, choose these projects in what they call weak areas and weak links. So probably in some of the inner provinces, or probably in some parts of Tibet or Xingjian for instance. So, this is a way to invest in the real economy and in real government investment projects.

Right? So, my question in fact, is does this system create extra local debt, coming directly from this financing from Beijing. Is this a good recipe for sustainable development, the Chinese way and the recipe that they could expand to other parts of the global South?

Michael: Well, this is a big problem that they’re discussing right now. The localities, especially rural China, (and China is still largely rural) only cover about half of their working budget from taxation. So, they have a problem. How are they going to get the balance of the money? Well, there is no official revenue sharing between the federal government and its state banks and the localities.

So, the localities can’t simply go to central government and say, give us more money. The government lets the localities be very independent. And it is sort of the “let a hundred flowers bloom” concept. They’ve let each locality just go its own way, but the localities have run a big deficit.

What do they do?  Well in the United States they would issue bonds on which New York is about to default. But in China, the easiest way for the localities to make money, is unfortunately to do something like Chicago did. They will sell their tax rights for the next 75 years for current money now.

So, a real estate developer will come in and say; look we will give you the next seventy-five years of tax on this land, because we want to build projects on this (a set of buildings). So, what this means is that now the cities have given away all their source of rent.

Let me show you the problem is what Indiana and Chicago did. Chicago also was very much like China’s countryside cities. So, it sold parking meters and its sidewalks to a whole series of Wall Street investors, including the Abu Dhabi Investment Fund for seventy-five years. And that meant that for 75 years, this Wall Street consortium got to control the parking meters.

So, they put up the parking meters all over Chicago raised the price of parking, raised the cost of driving to Chicago. And if Chicago would have a parade and interrupt parking, then Chicago has to pay, the Abu Dhabi fund and Wall Street company, what it would have made anyway. And this became such an awful disaster that finally Wall Street had to reverse the deal and undo it because it was giving privatization a bad name here.  The same thing happened in Indiana.

Indiana was running a deficit and it decided to sell its roads to a Wall Street investment firm to make a toll road. The toll on the Indiana turnpike was so high that drivers began to take over the side roads. That’s the problem if you sell future tax revenues in advance.

Now what China and the localities there are discussing is that we’ve already, given the real estate tax at very low estimates to the commercial developers, so what do we do? Well, what I’ve advised them to do, Alanna didn’t say it, but I’ve been a professor of economics at the Peking University, School of Marxist studies for three years, and I’ve had discussions with Central Committee members. I also have an honorary position at Wuhan University. We’ve discussed how China can put an added tax for all of the valuable land, that’s gone up. How can it be done to let the cities collect this tax? Our claim is that the cities, in selling these tax rights for 75 years, have sold what in Britain would be called ground rent. i.e. what’s paid to the landed aristocracy and over and above that there’s the market rent. So, China should pass a market rent tax over and above the ground rent tax to reflect the current value. And there they’re thinking of, well, do we say that this is a capital gain in the land? Well, it’s not really a capital gain until you sell the land, but it’s value. It’s the valuation of the capital. And they’re looking to do whether they should just say that this is the market rent tax over and above the flat tax that has been paid in advance, or it’s a land tax on the capital gain for land.

Now, all of this requires that there be a land map of the whole country. And they are just beginning to create such a land map as a basis for how you calculate how much the rent there is.  What I found in China is something very strange. A few years ago, in Beijing, they had the first, international Marxist conference where I was a main speaker and I was talking about Marx’s discussion of the history of rent theory in volume two and volume three of Capital where Marx discusses all of the classical economics that led up to his view; Adam Smith, Ricardo, Malthus, John Stuart Mill, and Marx’s Theories of Surplus Value was really the first history economic thought that was written, although it wasn’t published until after he died. Well, you could see that there was a little bit of discomfort with some of the Marxists at the conference. And so, they invited for the next time my colleague David Harvey to come and talk about Marxism in the West.

Well, David gave both the leading and the closing speech of the conference and said, you’ve got to go beyond volume one of Capital. Volume I was what Marx wrote as his addition to, classical economics saying that there was exploitation in industrial employment of labor as well as rent seeking and then he said, now that I’ve done my introduction here, let me talk about how capitalism works in Volumes II and III. Volumes II and III are all about rent and finance and David Harvey has published a book on Volume III of Capital and his message to Peking University and the second Marxist conference was – you’ve got to read volumes II, and III.

Well, you can see that, there’s a discussion now over what is Marxism and my friend and colleague at PKU Sasha Buzgalin said, Marxism is a Chinese word; It’s the Chinese word for politics. That made everything clear to me. Now I get it!  I’ve been asked by members of the Academy of Social Sciences in China to create a syllabus of the history of rent theory and value theory. And essentially in order to have an idea of how you calculate rent, how do you make a national income analysis where you show rent, you have to have a theory of value and price and rent is the excess of price over the actual cost value. Well, for that you need a concept of cost of production and that’s what classical economics is all about. Post-classical economics denies all of this. The whole idea of classical economics is that not all income is “earned.”

Landlords don’t earn their income for making rent in their sleep as John Stuart Mill said. Banks don’t earn their income by just sitting there and letting debts accrue interest and compounding and doubling. The classical economists separated actual unearned income from the production and consumption economy.

Well, around the late 19th century in America, you had economists fighting against not only Marx, but also against Henry George, who at that time, was urging a land tax in New York. And so, at Columbia university, John Bates Clark developed a theory that everybody earns whatever they can get. That there was no such thing as unearned income. That has become the basis for American national income statistics and thought ever since. So, if you look at today’s GDP figures for the United States, they have a figure for 8% of the GDP for the homeowners rent. But homeowners wouldn’t pay themselves if they had to rent the apartment to themselves, then you’ll have interest at about 12% of GDP.

And I thought, well how can interest be so steady? What happens to all of the late fees; that 29% that credit card companies charge? I called up the national income people in Washington, when was there. And they said well, late fees and penalties are considered financial services.

And so, this is what you call a service economy. Well, there’s no service in charging a late fee, but they add all of the late fees. When people can’t pay their debts and they owe more and more, all of that is considered an addition to GDP. When housing becomes more expensive and prices American labor out of the market, that’s called increase in GDP.

This is not how a country that wants to develop is going to create a national income account. So, there’s a long discussion in China about, just to answer your question, how do you create an account to distinguish between what’s the necessary cost to production and what’s an unnecessary production cost and how do we avoid doing what the United States did. So again, no rivalry. The United States is an object lesson for China as to what to avoid, not only in de-industrializing the economy, but in creating a picture of the economy as if everybody earns everything and there’s no exploitation, no unearned income, nobody makes money in their sleep and there’s no 1%. Well, that’s what’s really at issue and why the whole world is splitting apart, as you and I are discussing what we’re writing.

Pepe: Thank you, Michael. Thank you very much. So just to sum it all up, can we say that Beijing’s strategy is to save especially provincial areas from leasing their land, their infrastructure for 60 years or 75 years?  As you just mentioned, can we say that the fulcrum of their national strategy is what you define as the market rent tax. Is this the number one mechanism that they are developing?

Michael: Ideally, they want to keep rents as low as possible because rents is a cost of living and a cost of doing business. They don’t have banks that are lending to inflate the real estate market.

However, in almost every Western country, the US, Germany, England the value of stocks and bonds and the value of real estate is just about exactly the same. But for China, the value of real estate is way, way larger than the value of stocks.

And the reason is not because the Chinese central bank, the Bank of China lends for real estate; it’s because they lend to intermediaries and the intermediaries have financed a lot of housing purchases in China. And, this is really the problem for if they levy a land tax, then you’re going to make a lot of these financial intermediaries go bust.

That’s what I’m advocating, and I don’t think that’s a bad thing. These financial intermediaries shouldn’t exist, and this same issue came up in 2009 in the United States. You had the leading American bank being the most crooked and internally corrupt bank in the country, Citibank making junk mortgage, and it was broke.

Its entire net worth was wiped out as a result of its fraudulent junk mortgages. Well, Sheila Bair, the head of the Federal Deposit Insurance Corporation (FDIC) wanted to close it down and take it over. Essentially that would have made it into a public bank and that would be a wonderful thing. She said, look Citibank shouldn’t be doing what it’s doing. And she wrote all this up in the in an autobiography. And, she was overruled by president Obama and Tim Geithner saying, but wait a minute, those are our campaign contributors. So, they were loyal to the campaign contributors, but not the voters; and they didn’t close Citibank down.

And the result is that the Federal Reserve ended up creating about $7 trillion of quantitative easing to bail out the banks. The homeowners weren’t bailed out.  10 million American families lost their homes as a result of junk mortgages in excess of what the property was actually worth.

All of this was left on the books, foreclosed and sold to a private capital companies like Blackstone. And the result is that home ownership in America declined from 68% of the population down to about 61%. Well, right where the Obama administration left off, you’re about to have the Biden administration begin in January with an estimated 5 million Americans losing their homes. They’re going to be evicted because they’ve been unemployed during the pandemic. They’ve been working in restaurants or gyms or other industries that have been shut down because of the pandemic. They’re going to be evicted and many homeowners and, low-income homeowners have been unable to pay their mortgages.

There’s going to be a wave of foreclosures. The question is, who’s going to bear the cost. Should it be 15 million American families lose their homes just so the banks won’t lose money, or should we let the banks that have made all of the growth since 2008. 95% of American GDP of the population has seen its wealth go down. All the wealth has been accumulating for the 5% in statistics. Now the question is should this 5% that’s got all the wealth lose or should the 95% lose. The Biden administration says the 95% should lose basically. And you’re going to see a wave of closures that the question in China should be that, these intermediate banks (that are near banks) they’re not really banks they are sort of like payday loan lenders, should they come in and, bear the loss or should Chinese localities and the people bear the loss. Somebody has to lose when you’re charging, you’re collecting the land’s rent that was paid to the creditors, and either the creditors have to lose or, the tax collector loses and that’s the conflict that exists in every society of the world today.  And, in the West, the idea is the tax collectors should lose and whatever the tax collector relinquishes should be free for the banks to collect. In China obviously, they don’t want that to happen and they don’t want to see a financial class developing along US lines.

Pepe: Michael, there’s a quick question in all this, which is the official position by Beijing in terms of helping the localities. Their official position is that there won’t be any bail outs of local debt. How do they plan to do that?

Michael: What they’re discussing, how are you not going to do it? They think they sort of let localities go their own way. And they think, well you know which ones are going to succeed, and which ones aren’t, they didn’t want to have a one size fits all central planning. They wanted to have flexibility. Well, now they have flexibility. And when you have many different “let a hundred flowers bloom”, not all the flowers are going to bloom at the same rate. And the question is, if they don’t bail out the cities, how are the cities going to operate? Certainly, China has never let markets steer the economy, the government steers the markets. That’s what socialism is as opposed to finance capitalism. So, the question is, you can let localities go broke and yet you’re not going to destroy any of the physical assets of the localities, and all of this is going to be in place. The question is, how are you going to arrange the flow of income to all of these roads and buildings and land that’s in place? How do you create a system?  Essentially, they’re saying well, if we’re industrial engineers, how do we just plan things? Forget credit, forget property claims, forget the rentier claims. How are we just going to design an economy that operates most efficiently? And that’s what they’re working on now to resolve this situation because it’s got fairly critical.

Pepe: Yes, especially in the countryside. Well, I think, a very good metaphor in terms of comparing both systems are investment in infrastructure. You travel to China a lot so, you’ve seen. You’ll travel through a high-speed rail. You’ll see those fantastic airports in Pudong or the new airport in Beijing.

And then you’ll take the Acela to go from Washington and New York city, which is something that I used to do years ago. And the comparison is striking. Isn’t it? Or if you go to France, for instance, when France started development of the TGV, which in terms of a national infrastructure network, is one of the best networks on the planet. And the French started doing this 30 year ago, even more. Is there……, it’s not in terms of way out, but if we analyze the minutia, it’s obvious that following the American finance utilization system, we could never have something remotely similar happening in United States in terms of building infrastructure.

So, do you see any realistic bypass mechanism in terms of improving American infrastructure, especially in the big cities?

Michael: No, and there are two reasons for that. Number one let’s take a look at the long-term railroads. The railroads go through the center of town or even in the countryside, all along the railroads, the railroads brought business and all the businesses had been located as close to the railroad tracks as they could. Factories with sightings off the railroad, hotels and especially right through the middle of town where you have the railway gates going up and down. In order to make a high-speed rail as in China, you need a dedicated roadway without trucks and cars, imagine a car going through a railway gate at 350 miles an hour.

So, when I would go from Beijing to Tienjin, here’s the high-speed rail, there’s one highway on one side. One highway on the other side, there’ll be underpasses. But there it goes straight now. How can you suppose you would have a straight Acela line from Washington up to Boston when all along the line, there’s all this real estate right along the line that has been built up? There’s no way you can get a dedicated roadway without having to tear down all of this real estate that’s on either side and the cost of making the current owners whole would be prohibitive. And anywhere you would go, that’s not in the center of the city, you would also have to have the problem that there’s already private property there.

And there there’s no legal constitutional way for such a physical investment to be made. China was able to make this investment because it was still largely rural. It wasn’t as built up along the railways. It didn’t have any particular area that was built up right where the railroad already was.

So certainly, any high-speed rail could not go where the current railways would be, and they’d have to go on somebody’s land. And, there’s also, what do you do if you want to get to New York and long Island off from New Jersey. 60 years ago, when I went into Wall Street, the cost of getting and transporting goods from California to Newark New Jersey was as large as from Newark right across the Hudson river to New York because not only because of the mafia and control of the local labor unions, but because of the tunnels. Right now, the tunnels from New Jersey to New York are broke, they are leaking, the subways in New York city where I am continually break down because there was a hurricane a few years ago and the switches were made in the 1940s. The switches are 80 years old. They had water damage and the trains have to go at a crawl. But the City and State, because it is not collecting the real estate tax and other taxes and because ridership fell on the subways to about 20%, the City’s broke. They’re talking about 70% of city services being cut back.

They’re talking about cutting back the subways to 40% capacity, meaning everybody will have to get in and, when there’s still a virus and not many people are wearing masks, and there was no means of enforcing masks here. So, there’s no way that you can rebuild the infrastructure because, for one thing the banking system here has subsidized for a hundred years junk economics saying you have to balance the budget. If the government create credit it’s inflationary as if when banks create credit, it’s not inflationary. Well, the monetary effect is the same, no matter who creates the money. And so, Biden has already said that president Trump ran a big deficit, we’re going to run a bunch of surpluses or a budget balance. And he was advocating that all along. Essentially Biden is saying we have to increase unemployment by 20%, lower wages by 20%, shrink the economy by about 10% in order to, in order for the banks not to lose money.

And, we’re going to privatize but we are going to do it by selling the hospitals, the schools, the parks, the transportation to finance, to Wall Street finance capital groups. And so, you can imagine what’s going to happen if the Wall Street groups buy the infrastructure. They’ll do what happened to Chicago when it sold all the parking meters, they’ll say, okay, instead of 25 cents an hour, it’s now charged $3 an hour. Instead of a $2 for the subway, let’s make it $8. You’re going to price American economy even further out of business because they say that public investment is socialism.

Well, it’s not socialism. It’s industrial capitalism. It’s industrialization, that’s basic economics. The idea of what, and how an economy works is so twisted academically that it’s the antithesis of what Adam Smith, John Stuart Mill and Marx all talked about. For them a free market economy was an economy free of rentiers. Free of rent, it didn’t have any rent seeking. But now for the Americans, a free market economy is free for the rentiers, free for the landlords free, for the banks to make a killing. And that is basically the class war back in business with a vengeance. That blocks and is preventing any kind infrastructure recovery. I don’t see how it can possibly take place.

Pepe: Well, based on what you just described, there is a process of turning the United States into a giant Brazil. In fact, this is what the Brazilian finance minister Paulo Guedes, a Pinochetista, as you know Michael, has been doing with the Brazilian economy for the past two years, privatizing everything and selling everything to big Brazilian interests and with lots of Wall Street interests involved as well. So, this is a recipe that goes all across the global South as well. And it’s fully copied all across the global South with no way out now.

Michael: Yes, and this is promoted by the World Bank and the International Monetary Fund. And when I was brought down to Brazil to meet with the council economic advisors under Lula, they said, well the whole problem is that Lula’s been obliged to let the banks do the planning.

So, basically free markets and libertarianism is adopting central planning, but with central planning by the banks. America is a much more centrally planned economy than China. China is letting a hundred flowers bloom; America has concentrated the planning and the resource allocation in Wall Street. And that’s the central planning that is much more corrosive than any government planning, could be. Now the irony is that China’s sending its students to America to study economics. And, most of the Chinese I had talked to say, well we went to America to take economics courses because that gives us a prestige here in China.

I’m working now, with Chinese groups trying to develop a “reality economics” to be taught in China as different from American economics.

Pepe: Exactly because of what they study at Beijing university, Renmin or Tsinghua

is not exactly what they would study in big American universities. Probably what they study in the US is what not to do in China. When they go back to China, what they won’t be doing. It’s an object lesson for what to avoid.

Michael, I’d like to go back to what the BRICS had been discussing the 2000s when Lula was still president of Brazil and many of his ideas deeply impressed, especially Hu Jintao at the time, which is bypassing the US Dollars. Well, at the moment obviously we’re still at 87% of international transactions still in US Dollars. So, we are very far away from it, but if you have a truly sovereign economy, which is the case of China, which we can say is the case of Russia to a certain extent and obviously in a completely different framework, Iran.

Iran is a completely sovereign, independent economy from the West. The only way to try to develop different mechanisms to not to fall into the rentier mind space would be to bypass the US Dollars.

Michael: Yes, for many reasons. For one thing the United States can simply print the Dollars and lend to other countries and then say, now you have to pay us interest. Well, Russia doesn’t need American Dollars. It can print its own Rubles to provide labor. There’s no need for a foreign currency at all for domestic spending, the only reason you would have to borrow a foreign currency is to balance your exchange rate, or to finance a trade deficit. But China doesn’t have a trade deficit. And in fact, if China were to work to accept more Dollars, Americans would love to buy into the Chinese market and make a profit there, but that would push up China’s exchange rate and that would make it more difficult for her to make its exports because the exchange rate would come up not because it’s exporting more but because it’s letting American Dollars come in and push it up. Well, fortunately, president Trump as if he works for the Chinese national committee said, look, we don’t want to really hurt China by pushing up its currency and said we want to keep it competitive. So, I’m going to prevent American companies from lending money to China, I’m going to isolate it and so he’s helping them protect their economy. And in Russia he said, look Russia really needs to feed itself. And, there’s a real danger that when the Democrats come in, there are a lot of anti-Russians in the Biden administration. They may go to war. They may do to Russia what they tried to do to China in the fifties. Stop exporting food and grain. And only Canada was able to break the embargo. So, we’re going to impose sanctions on Russia. So immediately, what happened is Russia very quickly became the largest grain exporter in the world. And instead of importing cheese from the Baltics, it created its own cheese industry. So, Trump said look, I know that Russians followed the American idea of not having protective tariffs, they need protective tariffs. They’re not doing it. We’re going to help them out by just not importing from them and really helping them.

Pepe: Yeah. Michael, what do you think Black Rock wants from the Chinese? You know that they are making a few inroads at the highest levels? Of course, I’m sure you’re aware of that. And also, JP Morgan, City Bank, etc.…. What do they really want?

Michael: They’d like to be able to create Dollars to begin to buy and make loans to real estate; let companies grow, let the real estate market grow and make capital gains.

The way people get wealthy today isn’t by making an income, it’s been by making a capital gain. Total returns are current income plus the capital gains. As for capital gains each year; the land value gains alone are larger than the whole GDP growth from year to year. So that’s where the money is, that’s where the wealth is. So, they are after speculative capital gains, they would like to push money into the Chinese stock market and real estate market. See the prices go up and then inflate the prices by buying in and then sell out at the high price. Pull the money out, get a capital gain and let the economy crash, I mean that’s the business plan.

Pepe: Exactly. But Beijing will never allow that.

Michael: Well, here’s the problem right now, they know that Biden is pushing militarily aggressive people in his cabinet. There’s one kind of overhead that China is really trying to avoid and that’s the military overhead because if you spend money on the military, you can’t spend it on the real economy. They’re very worried about the military and they say, how do we deter the Biden administration from actually trying a military adventure in the China sea or elsewhere. They said well, fortunately America is multilayered. They don’t think of America as a group. They realize there’s a layer and they say, who’s going to represent our interests.

Well, Blackstone and Wall Street are going to represent their interests. Then I think one of the, Chinese officials last week gave a big speech on this very thing, saying look, our best hope in stopping America’s military adventurism in China is to have Wall Street acting as our support because after all, Wall Street is the main campaign contributor and the president works for the campaign contributors.

The politician works for the campaign contributors. They’re in it for the money! So fortunately, we have Wall Street on our side, we’ve got control of the political system and they’re not there to go to war so that helps explain why a month ago they let a wholly owned US banks and bankers in. On the one hand, they don’t like the idea of somebody outside the government creating credit for reasons that the economy doesn’t need. If they kind of needed it, the bank of China would do it. They have no need for foreign currency to come in to make loans in domestic currency, out of China.

The only reason that they could do it is number one, it helps meet the world trade organization’s principles and, number two especially during this formative few months of the Biden administration, it helps to have Wall Street saying; we can make a fortune in China, go easy on them and that essentially counters the military hawks in Washington.

Pepe: So, do you foresee a scenario when Black Rock starts wreaking havoc in the Shanghai stock exchange for instance?

Michael: It would love to do that. It would love to move things up and down. The money’s made by companies with the stock market going up and down; the zigzag. So of course, it wants to do a predatory zigzag. The question is whether China will impose a tax to stop this all sorts of financial transactions. That’s what’s under discussion now. They know exactly what Black Rock wants to do because they have some very savvy billionaire Chinese advisers that are quite good. I can tell you stories, but I better not.

Pepe: Okay. If it’s not okay to tell it all, tell us part of the story then.

Michael: The American banks have been cultivating leading Chinese people by providing them enough money to make money here, that they think that, okay they will now try to make money in the same way in China and we can join in. It’s a conflict of systems again, between the finance capital system and industrial socialism. You don’t get any of this discussion in the U S press, which is why I read what you write because in the US press, the neocons talk about

the fake idea of Greek history and fake idea of the Thucydides’ problem of a country jealous of another country’s development. There’s no jealousy between America and China. They’re different, they are own way. We are going to destroy them. And if you look at what the analogy that the Americans draw, and this is how the Pentagon thinks with the war between Athens and Sparta. It’s hard to tell, which is which. Here you have Athens, a democracy backing other democracies and having the military support of the democracies and the military in these democracies all had to pay Athens protection money for the military support and that’s the money that Athens got to ostensibly support its Navy and protection that built up all of the Athenian public buildings and everything else. So, that’s a democracy exploiting its allies, to enrich itself via the military. Then you have Sparta, which was funding all of the oligarchies, and it was helping the oligarchies overthrow democracies. Well, that was America too. So, America is both sides of the Thucydides war.  If the democracy is exploiting the fellow democracies and is the supporter of oligarchies in Brazil, Latin America, Africa, and everyone else.

So, you could say the Thucydides problem was between two sides, two aspects of America and has nothing to do with China at all except, for the fact that the whole war was a war between economic systems. And that’s what’s they’re acting as if somehow if only China did not export to us, we could be re-industrialized and somehow export to Europe and the Third World.

And as you and I have described, it’s over. We Americans painted ourselves into such a debt corner that without writing down the debts, were in the same position that the Eurozone is in. There’s so much money that goes to the creditors to the top 1% or 5% that there is no money for capital investment, there is no money for growth. And, since 1980 as you know, real wages in America have been stable. All the growth has been in property owners and predators and the FIRE sector, the rest of the economy is in stagnation. And now the coronavirus has simply acted as a catalyst to make it very clear that the game is over; it’s time to move away from the homeowner economy to rentier economy, time for Blackstone to be the landlord. America wants to recreate the British landlord class and essentially what we’re seeing now is like the Norman invasion of England taking over the land and the infrastructure. That’s what Blackstone would love to do in China.

Pepe: Wow. I’m afraid that they may have a lot leeway by some members of the Beijing leadership now, because as you know very well, it’s not a consensus in the political arena.

Michael: We’re talking about Volume II and III of Capital.

Pepe: Exactly. But you know, you were talking about debt. Coming back to that, in fact I just checked this morning, apparently global debt as it stands today is $277 trillion, which is something like 365% of global GDP. What does that mean in practice?

Michael: Yeah, well fortunately this is discussed in the 19th century and there was a word for that – fictitious capital – it’s a debt that can’t be paid, but you’ll keep it on the books anyway. And every country has this. You could say the question now, and the Financial Times just had an article a few days ago that China’s claims on Third World countries on the Belt and Road Initiative is fictitious capital, because how can it collect. Well, China’s already thought of that. It doesn’t want money. It wants the raw materials. It wants to be paid in real things. But a debt that can’t be paid, can only be paid either by foreclosing on the debtors or by writing down the debts and obviously a debt of can’t be paid won’t be paid.

And so, you have not only Marx using the word fictitious capital. At the other end of the spectrum, you had Henry George talking about fictive capital. In other words, these are property claims that have no real capital behind them. There’s no capital that makes profit. That’s just a property claim for payment or a rentier claim for payment.

So, the question is, can you make money somehow without having any production at all, without having wages without having profits without any capital? Can you just have asset grabbing and buying and selling assets. And as long as you have the Federal Reserve in America, come in, Trump’s $10 trillion COVID program gave 2 trillion to the population at large with these $1,200 checks, that my wife and I got and 8 trillion all just to buy stocks and bonds. None of this was to build infrastructure. None of this 8 trillion was to build a single factory. None of this 8 trillion was to employee a single worker. It was all just to support the prices of stocks and bonds, and to keep the illusion that the economy had not stopped growing. Well, it’s growing for the 5%. So, it’s all become fictitious. And if you look at the GDP as I said, it’s fictitious.

Pepe: And the most extraordinary thing is none of that is discussed in American media. Absolutely, there’s not a single word about what you would have been describing.

Michael: And it’s not even discussed in academia. Our graduates at the University of Missouri at Kansas City are all trained in Modern Monetary Theory. And to be hired as professors, they have to be able to publish in the refereed journals and the refereed journals are all essentially controlled by the Chicago school. So, you have a censorship of the kind of ideas that we’re talking about. You can’t get it into the economic journals, so you can’t get it into the economics curriculum. So, where on earth you’re going to get it. If you didn’t have the internet you wouldn’t be discussing at all. Most of my books sell mainly in China, more than in all the other countries put together so I can discuss these there. I stopped publishing in orthodox journals so many years ago because it’s talking to the deaf.

Pepe: Absolutely. Yeah. Can I ask you a question about Russia, Michael? There is a raging, debate in Russia for many years now between let’s say the Eurasianists and the Atlanticists. It involves of course, economic policy under Putin, industrial capitalism Russian style, and the Eurasianists basically say that the central problem with Russia is how the Russian central bank is basically affiliated with all the mechanisms that you know so well, that it is an Atlanticist trojan horse inside the Russian economy. How do you see it?

Michael: Russia was brainwashed by the West when the Soviet Union broke up in 1991. First of all, the IMF announced in advance that there was a big meeting in Houston with the IMF and the World Bank. And the IMF published all of its report saying, first you don’t want inflation in Russia so let’s wipe out all of the Russian savings with hyperinflation, which they did. They then said, well now to cure the hyperinflation the Russian central bank needs a stable currency and you need a backup for the currency. You will need to back it with US Dollars. So, from the early 1990s, as you know, labor was going unpaid. The Russian central bank could have created the rubles to pay the domestic labor and to keep the factories in place. But, the IMF advisors from Harvard said, no you’ll have to borrow US Dollars. I met with people from the Hermitage Fund and the Renaissance Fund and others, we had meetings and, I met with the investors. Russia was paying 100% interest for years to leading American financial institutions for money that it didn’t need and could have created itself. Russia was so dispirited with Stalinism that essentially that it thought, what’s the opposite of Stalinism must be what they have in America.

They thought that America was going to tell it how America got rich, but America didn’t want to tell Russia how it got rich, but instead wanted to make money off Russia. They didn’t get it. They trusted the Americans. They really didn’t understand that, industrial capitalism that Marx described had metamorphosized into finance capitalism and was completely different.

And that’s because Russia didn’t charge rent, it didn’t charge interest. I gave three speeches before the Duma, urging it to impose a land tax. Some of the people I noticed, Ed Dodson was there with us and we were all trying to convince Russia, don’t let this land be privatized. If you let it be privatized, then you’re going to have a such high rents and housing costs in Russia that you’re not going to be able to essentially compete for an industrial growth. Well, the politician who brought us there Vyatchislav Zvolinsky was sort of maneuvered out of the election by the American advisors.

The Americans put billions of Dollars in to essentially finance American propagandists to destroy Russia, mainly from the Harvard Institute of International Development. And essentially, they were a bunch of gangsters and the prosecutors in Boston were about to prosecute them.

So, the attorney general of Boston was going to bring a big case for Harvard against, the looting of Russia and the corruption of Russia. And I was asked to organize and to bring a number of Russian politicians and industrialists over to say how, this destroyed everything. Well, Harvard settled out of court and essentially that made the perpetrators the leading university people up there. I’m associated with Harvard Anthropology Department, not the Economics Department.

So, we never had a chance to bring my witnesses, and have our report on what happened, but I published for the Russian Academy of sciences a long study of how all of this destruction of Russia was laid out in advance at the Houston meetings by the IMF. America went to the leading bureaucrats and said; look, we can make you rich why don’t you register the factories in your own name, and if you’re registered in your own name, you know, then you’ll own it. And then you can cash out. You can essentially sell, but obviously you can’t sell to the Russians because the IMF have just wiped out all of their savings.

You can only cash out by selling to the West. And so, Russia’s stock market became the leading stock market in the world from 1994 with the Norilsk Nickel and the seven bankers in the bank loans for shares deal through 1997. And, I had worked for a firm Scudder Stevens and, the head advisor, a former student of mine didn’t want to invest in Russia because she said, this is just a rip off, it’s going to crash. She was fired for not investing. They said look, we know that’s going to crash. That’s the whole idea it’s going to crash. We can make a mint off it before the crash. And then when it crashes, we can make another mint by selling short and then all over again. Well, the problem is that the system that was put in with the privatization that’s occurred, how do you have Russia’s wealth used to develop its own industry and its own economy like China was doing. Well, China has rules for all of this, but Russia doesn’t have rules, it’s really all centralized it’s president Putin that keeps it this way.

Well, this was the great fear of the West. When you had Yevgeny Primakov, beginning to plan, to do pretty much what is done today, to restrain private capital, the IMF said hold off is that we’re not going to make any loans to stabilize the Russian currency until you remove Mr. Primakov.

The US said we won’t deal with Russia until you remove him. So, he was pushed out and he was probably the smartest guy at the time there. So, they thought the Putin was going to be sort of the patsy. And he sort of almost single-handedly holding the oligarchs in and saying, look, you can keep your money as long as you do exactly what the government would do. You can keep the gains as long as you’re serving the public interest, but none of this has resulted in a legal system, a tax system, and a system where the government actually does get most of the benefits. Russia could have emerged in 1990 as one the most competitive economy in Eurasia by giving all of the houses to its people instead of giving Norilsk Nickel and the oil companies to Yukos, it could have given everybody their own house and their own apartment, the same thing in the Baltics. And instead it didn’t give the land out to the people. And Russians were paying 3% of their income for housing in 1990. And rent is the largest element in every household’s budget. So, Russia could have had low price labor, it could have financed all of its capital investment for the government by taxing, collecting the rising rental value and instead, Russian real estate was privatized on credit and it was even worse in the Baltics. In Latvia, where I was research director for the Riga Graduate School of Law, Latvia borrowed primarily from Swedish banks. And so, in order to buy a house, you had to borrow from Swedish banks.

And they said, well, we’re not going to lend in the Latvian currency because it can go down. So, you have a choice; Swiss Francs or German Marks or US Dollars. And so, all of this rent was paid in foreign currency. There came an outflow that essentially drained all the Baltic economies, Latvia lost 20% of its population, Estonia, Lithuania followed suit.

And of course, the worst hit by neo-liberalism was Russia. As you know, president Putin said that neo-liberalism cost Russia more of its population than World War II. And you know that to destroy a country, you don’t need an army anymore. All you have to do is teach it American economics.

Pepe: Yes, I remember well, I arrived in Russia in the winter of 91 coming from China. So, I transited from the Chinese miracle. In fact, a few days after Deng Xiaoping’s famous Southern tour when he went to Guangzhou and Shenzhen.  And that was the kick for the 1990’s boom, in fact now a few years before the handover and then I took the Trans-Siberian and I arrived in Moscow a few days after the end, in fact, a few weeks after the end of the Soviet Union.

But yeah, I remember the Americans arrived almost at the exact minute, wasn’t it, Michael? I think they already were there in the spring of 1992. If I’m not mistaken.

Michael:  The Houston meeting was in 1990.  But all before that already in, 1988 and 1989, there was a huge outflow of embezzlement money via Latvia. The assistant dean of the university, Gregor Lautchansky,  who ended up creating Nordex. Essentially the money was all flying out because Ventspils in Latvia, was where Russian oil was exported and it was all fake invoicing. So, the Russian kleptocrats basically made their money off false export invoicing, ostensibly selling it for one price and having the rest paid abroad and, this was all organized through Latvia and the man who did it later moved to Israel and finally gave a billion Dollars back to Russia so that, he went on to live safely for the rest of his life in Israel.

Pepe: Well, the crash of the Ruble in 1998 was what, roughly one year after the crash of the Bath and the whole Asian financial crisis, no? it was interlinked of course, but let me see if I have a question for you, in fact, I’m just thinking out loud now. If the economies of Southeast Asia and Northeast Asia, the case of South Korea and Russia were more integrated at the time as they are trying to integrate now, do you think that the Asian financial crisis would have been preventable in 1997?

Michael: Well, look at what happened in Malaysia with Mohammed Mahathir. Malaysia avoided it. So of course, it was preventable. They had capital controls. All you would have needed was to do what Malaysia did. But you needed an economic theory for that.

And essentially the current mode of warfare is to conquer the brains of a country to shape how people think and how they perceive the economy from working. And if you can twist their view into an unreality economics, where they think that you’re there to help them not to take money out of them, then you’ve got them hooked. That was what happened in Asia. Asia thought it was getting rich off the Dollars inflows and then the IMF and all the creditors pulled the plug, crash the industry. And now that all of a sudden you had a crash, they bought up Korean industry and other South Asian industries at giveaway prices.

That’s what you do. You lend the money; you pull the plug. You then let them go under and you pick up the pieces. That’s what Blackstone did after the Obama depression began, when Obama saved the banks, not the constituency, the mortgage borrowers. Essentially that’s Blackstone’s modus operandi to pick up distressed prices at a bankruptcy sale, but you need to lend money and then crash it in order to make that work.

Pepe: Michael, I think we have only five minutes left. So, I would expect you to go on a relatively long answer and I’m really dying for it. It’s about debt, it about the debt that trap. And it’s about the New Silk Road, the Belt and Road Initiative, because I think rounding up our discussion and coming back to the theme of debt and global debt. The number one criticism apart from the demonization of China that you hear from American media and a few American academics as well against the Belt and Road is that it’s creating a debt trap for Southeast Asian nations, Central Asian nations and nations in Africa, etc…. Obviously, I expect you to debunk that, but the framework is there is no other global development project as extensive and as complex as Belt and Road, which as you know, very well was initially dreamed up by the ministry of commerce. Then they, sold it more or less to Xi Jinping who got the geopolitical stamp on it, announcing it, simultaneously, (which was a stroke of genius) in Central Asia in Astana and then in Southeast Asia in Jakarta. So, he was announcing that the overland corridors through the heartland and the Maritime Silk Road at the same time. At the time people didn’t see the reach and depth of all that. And now of course, finally the Trump administration woke up and saw what was in play, not only across Eurasia but reaching Africa and even selected parts of Latin America as well. And obviously the only sort of criticism and, it’s not even a fact-based criticism, that I’ve seen about the Belt and Road is it’s creating a debt wrap because as you know Laos is indebted, Sri Lanka is indebted, Kyrgyzstan is indebted etc…. So, how do you view Belt and Road within the large framework of the West and China, East Asia and Eurasia relations? And how would you debunk misconceptions created, especially in the U S that this is a debt trap.

Michael: There are two points to answer there.  The first is how the Belt and Road began. And as you pointed out, the Belt and Road began, when China said, what is it we need to grow and how do we grow within our neighboring countries so we don’t have to depend upon the West, and we don’t have to depend on sea trade that can be shut down. How do we get to roads instead of seas in a way that we can integrate our economy with the neighboring economies so that there can be mutual growth? So, this was done pretty much on industrial engineering grounds. Here’s where you need the roads and the railroads. And then how do we finance it? Well, the Financial Times article, last week asked, Didn’t the Chinese know that railroad development, they’ve all gone broke. The Panama Canal went broke, you know, the first few times there were European railway investment in Latin America in the 19th century, that all went broke. Well, what they don’t get is China’s aim was not to make a profit off the railroads. The railroads were built to be part of the economy. They don’t want to make profit. It was to make the real economy grow, not to make profits for the owners of the railroad stocks. The Western press can’t imagine that you’re building a railroad without trying to make money out of it.

Then you get to the debt issue. Countries only have a debt crisis if their debt is in a foreign currency. The first way that the United States gained power was to fight against its allies. The great enemy of America was England and it made the British block their currency in the 1940s. And so, India and other countries, that had all these currencies holdings in Sterling, we’re able to convert it all into Dollars. The whole move of the US was to denominate, world debt in Dollars. So that number one US banks would end up with the interest in financing the debt. And number two, the United States could by using the debt leverage control domestic politics. Well, as you’re seeing right now in Argentina, for instance, Argentina is broke because it owes foreign Dollars debt. When I started the first third world bond fund in 1990 at Scudder Stevens, Brazil in China and Argentina, we’re paying 45% interest per year, 45% per year in Dollarized debt. Yet we tried to sell them in America, no American would buy. We went to Europe, no European buy this debt. And so, we worked with Merrill Lynch and Merrill Lynch was able to make an offshore fund in the Dutch West Indies and all of the debt was sold to the Brazilian ruling class in the central bank and the Argentinian bankers in the ruling class, we thought oh, that’s wonderful.

We know that they’re going to pay the foreign Yankee Dollars debt because the Yankee Dollars debt is owed to themselves. They’re the Yankees! They’re the client oligarchy. And you know, from Brazil client oligarchy is, you know, they’re cosmopolitan, that’s the word. So, the problem is that on the Belt and Road, how did these other countries pay the debt to China?

Well, the key there again is the de-dollarization, and one way to solve it is since we’re trying to get finance out of the picture, we’re doing something very much like, Japan did with Canada in the 1960s. It made loans to develop Canadian copper mines taking its payment, not in Canadian Dollars, that would have pushed up the Yen’s exchange rate but in copper. So, China says, you know you don’t have to pay currency for this debt. We didn’t build a railroad to make a profit and you want, we can print all the currency we want. We don’t need to make a profit. We made the Belt and Road because it’s part of our geopolitical attempt to create what we need to be prosperous and have a prosperous region. So, these are self-reinforcing mutual gain. Well, so that’s what the West doesn’t get – Mutual gain?  Are we talking anthropology? What do you mean mutual? This is capitalism! So, the West doesn’t understand what the original aim of the Belt and Road was, and it wasn’t to make a profitable railroad to enable people to buy and sell railway stocks. And it wasn’t to make toll roads to sell off to Goldman Sachs, you know. We’re dealing with two different economic systems, and it’s very hard for one system to understand the other system because of the tunnel vision that you get when you get a degree in economics.

Pepe:  Belt on Road loans are a long-term and at very low interest and they are renegotiable. They are renegotiating with the Pakistanis all the time for instance.

Michael: China’s intention is not to repeat an Asia crisis of 1997. It doesn’t gain anything by forcing a crisis because it’s not trying to come in and buying property at a discount at a distressed sale. It has no desire to create a distressed sale. So obviously, the idea is the capacity to pay. Now, this whole argument occurred in the 1920s, between Keynes and his opponents that wanted to collect German reparations and, Keynes made it very clear. What is the capacity to pay? It’s the ability to export and the ability to obtain foreign currency. Well, China’s not looking for foreign currency. It is looking for, economic returns but the return is to the whole society, the return isn’t from a railroad. The return is for the entire economy because it’s looking at the economy as a system.

The way that neoliberalism works, it divides the economy into parts, and it makes every part try to make a gain. If you do that, then you don’t have any infrastructure that’s lowering the cost for the other parts. You have every part fighting for itself. You don’t look in terms of a system the way China’s looking at it. That’s the great advantage of Marxism, you’ll look at the system, not just at the parts.

Pepe:  Exactly and this is that at the heart of the Chinese concept of a community with a shared future for mankind, which is the approximate translation from Mandarin. So, we compare community with a shared future for mankind, which is, let’s say the driving force between the idea of Belt and Road, expanded across Eurasia, Africa and Latin America as well with our good old friends’, “greed is good” concept from the eighties, which is still ruling America apparently.

Michael: And the corollary is that non greed is bad

Pepe: Exactly and non-greed is evil.

Michael: I see. I think we ran out of time. I do. I don’t know if Alanna that one wants to step in to wrap it up.

Michael: There may be somebody who has a question.

Pepe: Somebody has a question? That’ll be fantastic.

Alanna: Okay. Alanna here. This has been just great guys. I mean, this is the only webinar I’ve been on where the attendance kept increasing with time instead of decreasing.

So, we had spam in the chat but there is a one question that was good from Ed Dodson. He wanted to know why there are these ghost cities in China and he who’s financing all this real estate that’s developed, but nobody’s living there. We’ve all been hearing about that. So, what is happening with that?

Michael: Okay. China had most of its population living in the countryside and it made many deals with Chinese landholders who have land rights, and they said, if you will give up your land right to the community, we will give you free apartment in the city that you could rent out.

So, China has been building apartments in cities and trading these basically in exchange for support what used to be called a rural exodus. China doesn’t need as many farmers on the land is it now has, and the question is how are you going to get them into cities? So, China began building these cities and many of these apartments are owned by people who’ve got them in exchange for trading their land rights. The deals are part of the rural reconstruction program.

Alanna: Do you think it was a good deal? Vacant apartments everywhere.

Pepe: You don’t have ghost cities in Xinjiang for instance, Xinjiang is under-populated, it’s mostly desert. And it’s extremely sensitive to relocate people to Xinjiang. So basically, they concentrated on expanding Urumqi. When you arrive in Urumqi is like almost like arriving in, Guangzhou. It’s enormous. It’s a huge generic sitting in the middle of the desert. And it’s also a high-tech Mecca, which is something that very few people in the West know. And is the direct link between the eastern seaboard via Belt and Road to Central Asia.

Last year I was on an amazing trip. I went to the three borders, the Tajik-Xinjiang border, Kirgiz-Xinjiang border and the Kazakh-Xinjiang border, which is three borders in one. It’s a fascinating area to explore and specially to talk to the local populations, the Kirgiz, the Kazakhs and the Tadjik’s how do they see the Belt and Road directly affecting their lives from now on. So, you don’t see something spectacular for instance, in the Xinjiang – Kazakh boarder, there is one border for the trucks, lots of them like in Europe, crossing from all points, from central Asia to China and bringing Chinese merchandise to central Asia.

There’s the train border, which is a very simple two tracks and the pedestrian boarder, which is very funny because you have people arriving in buses from all parts of Central Asia. They stop on the Kazakh border. They take a shuttle, they clear customs for one day, they go to a series of shopping malls on the Chinese side of the border. They buy like crazy, shop till it drops, I don’t know for 12 hours? And then they cross back the same day because the visa is for one day. They step on their buses and they go back. So, for the moment it’s sort of a pedestrian form of belt and road, but in the future, we’re going to have high-speed rail. We’re going to have, well the pipelines are already there as Michael knows, but it’s fascinating to see on the spot. You see the closer integration; you see for instance Uyghurs traveling back and forth. You know, Uyghurs that have families in Kirgizstan for instance, I met some Uyghurs in Kyrgyzstan who do the back and forth all the time. And they said, there’s no problem. They are seen as businessmen so there’s no interference. There are no concentration camps involved, you know, so but it’s you have to you have to go to these places to see how it works on the ground and with COVID, that’s the problem for us journalists who travel, because for one year we cannot go anywhere and Xinjiang was on my travel list this year, Afghanistan as well, Mongolia.

These are all parts of Belt and Road or future parts of Belt and Road, like Afghanistan. The Chinese and the Russians as well; they want to bring Afghanistan in a peace process organized by Asians themselves without the United States, within the Shanghai Cooperation Organization, because they want Afghanistan to be part of the intersection of Belt and Road and Eurasian Economic Union. This is something Michael knows very well. You don’t see this kind of discussions in the American media for instance, you know integration of Eurasia on the ground, how it’s actually happening.

Michael: That’s called cognitive dissonance.

Alanna: To try to understand it gets you cognitive dissonance.

Pepe: Oh yeah, of course. And obviously you are a Chinese agent, a Russian agent. And so, I hear that all the time. Well, in our jobs we hear that all the time. Especially unfortunately from our American friends.

Alanna: Okay. I know you have other things to do. This has been fabulous. I want to thank you so much, both of you, uh, with so easy to get attendance for this webinar. There were 20 people in five minutes enrolled and in two days we were at capacity. So, I know there are many more people who would love to hear you talk another time, whenever you two are so willing. And I think you both got much out of your first conversation in person. Everybody listening knows these two wonderful gentlemen, they have written more than 10 books, and they have traveled all over the world. They are on the top of geopolitical and geonomic analysis, and they are caring, loving people. So, you can see that these are the people we need to be listening to and understanding all around the world.

So, thank you so much. Ibrahima Drame from the Henry George School is now going to say goodbye to you and will wrap this up.  Thank you again.

Pepe: Michael it was a huge pleasure. Really, it was fantastic. Really nice, we’re on the same website. So, let’s have a second version of this.

Ibrahima:  So, let’s have a second version of this two months from now. Thank you very much for participating and I really hope you liked this event. And, we also want to ask for your support by making a tax-deductible donation to the Henry George School. I believe I shared the link on the chat. Thank you. And see you soon.

Pepe: Thank you very much. Thanks Michael. Bye!

[1] When I said that China can pay lower wages than the U.S., what I meant was that China provides as public services many things that American workers have to pay out of their own pockets – such as health care, free education, subsidized education, and above all, much lower debt service.

When workers have to go into debt in order to live, they need much higher wages to keep solvent. When they have to pay for their own health insurance, they have to earn more. The same is true of education and student debt. So much of what Americans seem to be earning more than workers in other countries goes right through their hands to the financial sector, landlords and insurance companies – the Finance, Insurance and Real Estate (FIRE) sector. So, what seems to be “low wages” in China go a lot further than higher wages in the United States.

A Hard Look at Rent and Rent Seeking with Michael Hudson & Pepe Escobar

Source

A Hard Look at Rent and Rent Seeking with Michael Hudson & Pepe Escobar

December 23, 2020

Michael Hudson and Pepe Escobar discuss rent and rent-seeking, i.e., unproductive economic activity, in the US and China mainly but including the Russian, Iranian and Brazilian economies.

In the first 15 minutes, an overview from Michael Hudson explains what happened in the US economy once jobs and manufacturing were offshored to mainly China.  He proposes that even if China did not exist, the US economy has been changed to the extent that it is almost impossible to change back to a productive economy without material changes in the economic model.

Pepe keeps the conversation flowing quickly with incisive questions.  The two esteemed gentlemen take a look at the Chinese view on a possible Biden administration and how the military hawks in Washington could be countered.   Outlining the ‘conflict of systems’ between the US and China, Michael Hudson explains the thinking of the Pentagon and paying ‘protection money’ historically to fund oligarchies.  It is a ‘war between systems’, Hudson explains with the thinking being:  “If only China did not export to us, we could reindustrialize.”

“It’s over”: says Hudson, because “we’ve painted ourselves into such a debt corner.  So much money flows to the top 5% that there is no money for investment, no money for growth.”

Hudson explains the concept of capitalism, how it was conceived to work against neo-liberalism, and how it has changed to systemic support for rentier economics.

A wealth of detail follows, around fictitious debt and wealth creation.   Michael discusses the ‘brainwashing’ of Russia vis a vis economic policy and central bank to end up in a position where Russia was paying 100% interest for years under American advisors and privatized rentiers, “a bunch of gangsters.”   Very interesting is the discussion on how the perpetrators, the leading university of the US in the destruction and looting of Russia, could not be brought to a court.

“You don’t need an army to destroy a country any longer.  All you need to do is to teach it American economics.”  Michael Hudson

A question from Pepe regarding the economies of North East Asia, South East Asia, the Asia Crisis and currently further integration with Russia, resulted in this very cogent quote from Michael Hudson.

“The current mode of warfare is to conquer the brains of a country, to shape how people think.  If you can twist their view into unreality economics, to make them think you are there to help them and not to take money out of them, then you’ve got them hooked.  You need to lend them money, and then crash it.”  Michael Hudson.

The conversation ends with an extensive question from Pepe regarding the biggest myth regarding Belt and Road, the supposed ‘debt trap’.  The difference in systems, non-rentier, and rentier, debt, and neo-liberalism again is illustrated in a crystal clear fashion.

Behold the dawning of the Age of Aquarius

Behold the dawning of the Age of Aquarius

December 21, 2020

An astrological reading for Planet Earth at a time of Great Mutation

By Pepe Escobar with permission and first posted at Asia Times

The Grand Conjunction of Jupiter and Saturn is upon us and there is no looking back. Image: Twitter

We are all in the gutter, but some of us are looking at the stars. – Oscar Wilde

Today all radio stations on Planet Earth should be playing this song. What the aptly named Fifth Dimension immortalized in their spring of 1969 psychedelic soul classic is now literally true: This is the dawning of the Age of Aquarius – the Grand Conjunction of Jupiter and Saturn on December 21st at 𝟬° in Aquarius.

Aquarius starts just as some dodgy, self-important elites gear up to impose a Great Reset on most of the planet – following a very specific, reductionist and exclusionist political agenda. Yet the real deal is not the Reset; it’s the Mutation.

So we’re all into something much bigger than any neo-Orwellian scenario. To shed much needed light into what seems our current, interminable darkness, I posed selected questions to Vanessa Guazzelli, a respected astrologer, writer and speaker in astrology conferences worldwide, as well as a practicing psychoanalyst and psychologist.

Let astrology fertilize geopolitics. Let the sunshine in.

PE: Arguably not many people around the world are aware that a Jupiter-Saturn conjunction this December 21st seems to represent the ultimate game-changer – defined by serious astrology scholars as the Great Mutation.

Could you please elaborate on what this Mutation really means, astrologically, as it seems to take place every 200 years? And bringing it back to everyday life and politics, are we permitted to infer geopolitical parallels from what the stars are telling us?

VG: By Great Mutation we refer to when the Jupiter-Saturn conjunctions change elements, which happens every 200 years as you mentioned. Jupiter and Saturn are in conjunction, astrologically, by ecliptic longitude, every 20 years, not that long a period. However, they keep on intersecting in signs of the same element for 200 years, with the possibility of another 40 years of transition, indicating a greater cycle.

Jupiter and Saturn are what we call social planets and are to be considered in regards to politics and geopolitics. When the Jupiter-Saturn conjunction starts to effectively happen in the next element, it marks the Great Mutation, denoting important socioeconomic and cultural changes. That’s what is happening now.

We come from a two-century period of conjunctions in Earth signs. The emphasis has been on matter and the more tangible dimension of life – material boys and girls in a material world. As we now move on into the element of air, as they conjoin at 0º of Aquarius, a call for sublimation takes place.

All that is solid mutates into air. Things and procedures can be less material and more digital and, to some extent, virtual. But not only that. Shared ideas and ideals gain yet more importance. More then what we materially have, with whom and what for is what matters most. Collaboration and cooperation are, now more than ever, the winds which make the world go around.

This is indeed a highly significant astrological aspect and configuration happening on December 21, at 18h20 UTC. In parts of Asia and Oceania, it will be already past midnight, on December 22.

This is not only the Great Mutation but a Great Conjunction, when the two farthest visible planets conjoin not merely by longitude but also by latitude (ecliptic coordinates), by both right ascension and declination (equatorial coordinates). That means they are not just aligned in the same direction but really, really close to each other in the sky as seen from Earth, almost as if they were one and the same star.

Last time the two heavenly bodies have been that close was in 1623, but that was not a Great Mutation, just a regular conjunction in terms of ecliptic longitude. Astrologically, the fact that all these enhancements happen together at this time intensifies the significance of what this conjunction now indicates, how powerful a mutation it marks.

In everyday life, it also speaks of an increase in technological development, digitalization of things and procedures, including crypto-currencies and digital money as a sort of “sublimed” money, from matter to a lighter, less material “substance” which can quickly circulate through air.

At a more personal level, we tend to lose interest in social contexts which are not in tune with our ideas and ideals, and we’re pulled towards groups, associations and projects in the same wavelength as we are. It is not a time to merely rely on institutions to take care of people, but a time to discern for oneself and then connect with others with shared interests, ideals, purposes.

The air element is where we open space and make room for the Other, be it in respect for differences or to collaborate and cooperate towards shared interests and projects. Co-op’s, where every participant gets a fair, proportional share, in a joint enterprise, is surely a way to go.

Aquarius is opposite to the centralizing sign of Leo. Geopolitically, that is to say, it is not the time for a hegemonic single star to rule the world, but a time of many stars illuminating the entire sky. It is not a time for a single empire. There can be empires, if in plural. The strength of powerful nations now lies, more than ever, in the quality of their partnerships and alliances in mutual respect, as equals.

Any power which loses sight of that crucial key will see it, in the short or long run, backfire. Some are more powerful than others and some will be more prominent than others. Nonetheless, they are not alone. It is time for a multipolar world – now that is the Mandate of Heaven.

Regarding the Great Mutation’s astro-cartographic map, which shows the lines of planetary positions on the face of the Earth, it is interesting to notice that the IC lines of Jupiter and Saturn go through Beijing, indicating the relevance of China in the foundation of this 200-year cycle, for the IC is the root of an astrological chart.

On the other side of the globe, we see the MC lines of the two planets going through South America (Venezuela, Brazilian Amazon, Bolivia, Argentina), showing the value of the continent’s resources in this new cycle.

What the Davos crew is up to

PE: Our current, turbulent juncture seems to be pointing towards increased bio-security and what some serious systemic analysis defines as techno-feudalism. All this implies hyper-concentration of power – and not only power exercised by the geopolitical hegemon, the United States. Should we now expect a serious mutation of the world-system – as studied by Immanuel Wallerstein, in the sense of serious changes to our capitalist system?

Immanuel Wallerstein. Source: Wikimedia Commons

VG: Yes, we should. We are at the very turning point of the world-system. Along with the Great Mutation, another immensely significant aspect in the 2020s is the Saturn-Neptune conjunction, in February 2026, at 0º of Aries. This is precisely the first degree of the whole Zodiac, also called the Vernal Point – crucial in astrological interpretation.

Saturn and Neptune conjoin every 36 years, which is a relatively short historical cycle. However, as with the Great Mutation, the way it occurs and where in occurs in the Zodiac can lead us to broader historical perspectives and indicate more expressive historical moments.

If we go back up to 7,000 years ago, this conjunction has occurred at the Vernal Point only in 4361 B.C. and 1742 B.C. If we look up three thousand years ahead, the closest it gets to the Vernal Point is 3º of Aries in 3172. Quite rare. So this conjunction at the first degree of the Zodiac, 0º of Aries – the very beginning – is not that small a deal.

Neptune impregnates and conceives; Saturn refers to the concrete structure of reality; and 0º of Aries means new, springing up. Saturn-Neptune on 0º Aries means a new conception of reality.

Aspects between Saturn and Neptune, by historical observation, are associated with socialism and communism – these movements on Earth coincide with the transiting contacts between these two planets in the sky. It has already been proven in mundane astrology historically. Moreover, this does not just tell us about the past, for it is in fact just about to begin – upgrading and advancing, reconfiguring itself in yet new forms of socialism.

According to Wallerstein, during the structural crisis which characterizes the final period of a world-system, a bifurcation of the system can tilt to one of either directions, or to multiple systems. Before passing away last year, he did consider us to be right in the middle of the structural crisis of capitalism, which lasts 60 to 80 years.

I’d say at this moment we are past the mid-point. It could, initially, go towards multiple systems in two branches: on the one hand, the freshness of the Eastern winds inspiring socialism and multipolarity through the Belt and Road Initiative and the integration of Eurasia and its partners; on the other hand, the whirlwind of the collapsing empire and its Western allies as a terminator cyborg operated by the perverse 0.0001% who are so lifeless they cannot conceive other people’s right to exist.

When I first heard about it in June 2020, it astonished me how they set the “Great Reset” for January 2021, so close to the Great Mutation at the end of December 2020. I doubt this is a mere coincidence or “synchronicity.” J P Morgan is known to have affirmed that millionaires don’t need astrologers, but billionaires do.

Possibly aware of this great transition, the Davos crew seem to be actually trying to reset the system they already rule with their own settings and revive the dying system as a cyborg from hell.

‘Wall Street Bubbles – always the same,’ 1901 cartoon by Keppler, depicts J.P. Morgan as a bull blowing soap bubbles for eager investors. Source: Wikimedia Commons

The nefarious potential of the Aquarian emphasis is the control of society through technology, be it techno-feudalism or, gods forbid, techno-slavery. On the brighter side of the Force, Aquarius is about a social project to sustain life and meet the needs of the people. Both dimensions or systems might co-exist on Earth for a while.

Western powers – not to mention the Masters of the Universe, as you say, who pull their strings – seem to have a long way to go before reaching a state of real and respectful cooperation. Perhaps more ancient civilizations found in the East have a deeper, more consistent root from which to draw the wisdom and maturity necessary in such challenging times for humanity.

Often remembered for the food and goods traded along the route, the Silk Roads involved in the past and involve nowadays the exchange of ideas. It is interesting to observe the strong Aquarian edge activated in China’s astrological progressions when the Belt and Road Initiative was first proposed by Xi Jinping in Astana, in 2013, and how it connected to the degree of the Great Mutation (progressed Venus and Jupiter conjunct AC at 1º Aquarius).

When some years before that Vladimir Putin gave his historical speech in Munich, proposing the Eurasian Integration, in February 2007, there was a Saturn-Neptune aspect – an opposition. When at the 70th UN Assembly, both Putin and Xi delivered long, strong and synchronized speeches affirming the multipolarity of the world, in 2015, there was also a Saturn-Neptune aspect – a square.

The next Saturn-Neptune aspect will be the conjunction, in February 2026, inaugurating a brand new cycle and we can expect it to be related to these previous movements, keeping in mind the cycle points towards multipolarity and new forms of socialism.

The Black Moon spell

PE: Could Covid-19, on a certain level, be interpreted as the – unpleasant – preamble towards a Great Mutation? After all the new social (un)reality represents a system upside down: near-total economic devastation, especially of small businesses; canceling of constitutional rights; governments practically ruling by decree, with no popular consultation; global corporations censoring any manner of informed dissent; whole societies practically under house arrest; most of the planet reduced to a sort of totalitarian theme park.

VG: Oh, Covid-19 – we could have a whole conversation just on the implications of it at so many dimensions, and how it can be, to some extent, astrologically tracked. It definitely can be interpreted as the unpleasant preamble, perhaps aiming to the Great Reset, one could ponder.

An unprecedented worldwide collective experience – and experiment. Nevertheless, serving to shake it all up, transforming our very perception of time, preparing for the conception of a new time. To all those paying attention, a call to be yet more alive, more vivid, against all odds.

A nearly black moon. Image: Unsplash

The very dichotomy which has been so emphasized between “either caring for life or caring for the economy” in and of itself shows how absurd a world it already was. How many people so easily got caught into separating one thing from the other, as if it was a means to resist the system and finally say no to the demands of capital accumulation. To eventually see, indeed, small businesses devastated, poverty increasing drastically, whilst billionaires concentrate wealth to yet more bizarre levels.

Something fundamental to consider is how it has affected the human body. The pandemic was declared with Black Moon (the lunar apogee) in Aries and that indicates the importance of being sharply present and responsive as Michael Jackson danced, Bruce Lee moved and Maria Zakharova responds.

In October, Black Moon, this astrological point representing the visceral and instinctive dimension of existence, moved into Taurus, highlighting the importance of being aware of how the life force in us is conditioned or channeled, shaping how we perceive our own existence. For instance, how the confinement of the body might – or might not – confine our psyche.

What are the psychological effects of the lack of touch or the physical experience of constantly having our mouths covered? How those situations affect our psyche is not irrelevant. Both René Descartes and Wilhelm Reich had Black Moon in Taurus. How are mind and body related? Are they a cartesian dichotomy or are they intertwined as bio-energetic unity moved by libido?

This is an important underlying issue in our collective until July 2021.

The fate of the American empire

PE: Astrology in History is full of fascinating stories about celestial interpretations opening the way to a crucial political or military move. For instance, right before the Mongol conquest of Baghdad in 1258, the Great Khan, Hulegu, asked the court astrologer about the prospects ahead. The astrologer, Husam al-Din, said that if he followed his generals and invaded Baghdad, the consequences would be ominous.

But then Hulegu turned to a Shi’a astronomer, Tusi, a polymath. Tusi said the invasion would be a major success. That’s what happened – and Tusi was admitted into Hulegu’s inner circle. So the Mongols – who built the largest empire in history – were big fans of “celestial insurance.” Could “celestial insurance” in our times end up predicting the fate of another empire – the US?

VG: That’s true, there are so many fascinating stories. The end of the Byzantine Empire and conquest of Constantinople by Sultan Mehmet II of the Ottoman Empire was also marked by an astrological prediction of the Ottoman victory related to an eclipse.

The US Pluto return happens in 2022. That’s massive. It’s a cycle of approximately 247 years. Pluto has a sense of fate to it. The return of the lord of the underworld also speaks of the return of that which was repressed, hidden or rejected. It will have three exact hits throughout 2022, and the final and definitive of the next Pluto cycle has the planet of death and regeneration facing Black Moon Lilith in Cancer, in opposition. Karma is a bitch and hits home.

It is also a cycle related to power and power status. It won’t all be bad and some victorious moments will be there, but there is a change in the country’s position in the balance of powers in the world which is not so easy to digest. The power struggle will be intense, both externally and internally, with considerable risks of destructive manifestations. The best way to go through such a moment would be to purge – although it’s hard to believe “the swamp” can be so easily drained.

It is a call for a deep transformation, when all things under the rug and corpses out of the basement are to be dealt with. For the nation’s people it is a call for maturity (Saturn conjoins Moon), compassion and a more humanly receptive disposition (Neptune opposition), letting illusions dissolve and realizing the empire is losing its hegemony and status, but the nation will continue. What nation should it be for its people – as opposed to against other peoples?

This doesn’t mean the American Empire will fall by 2022, but it is collapsing and will undergo dramatic transformations in the coming decade.

A Dystopian Renaissance

PE: Amid so much gloom, looks like you are introducing a very hopeful concept: “Dystopian Renaissance”. That’s the exact opposite of what is being largely interpreted as our inevitable neo-Orwellian future. How would you characterize this Dystopian Renaissance – in terms of individual, collective, political and cultural struggle?

VG: The concept emerges precisely to elucidate the extreme complexity of our times. Well, the renaissance part seems very hopeful, doesn’t it? But, there’s the dystopian part to it too. It is not a utopian renaissance, as we well know. Perhaps in 200 years, when we reach the Great Mutation into water, the same element as the magnificent Italian Renaissance, humanity might be able to feel and better comprehend deeper dimensions of life. Why not aim for Utopia next? But whatsoever may be possible by then passes through right now.

It is now that, along with this special Great Mutation, a few significant astrological aspects point to a real change of the world-system. It takes this crucial moment in time and this period of air to elevate perspectives, to share ideas and ideals and understand how enriching it can be to build “a community with a shared future for mankind,” as Xi Jinping puts it.

A highly enhanced turning point, opening new horizons, offering the possibility of enriching exchanges in a multipolar world, and with a call for socialism like we haven’t known before.

Catalan Atlas, detail showing family Of Marco Polo 1254-1324 traveling by camel caravan, 1375, drawing by Spanish School. Source: Wikimedia

Let’s not forget this moment in time also resonates with the 13th century, when Venetian Marco Polo, traveling through the Silk Roads to Asia, brought back to Europe the freshness of the Eastern winds, with news from Kublai Khan’s Yuan Dynasty, including the “sublimation” of money into a lighter form, from coin to paper.

At that time, there was a stellium (a concentration of planets) in Capricorn just as we had in 2020, with the following Jupiter-Saturn conjunction in Aquarius (although not as a Great Mutation), and Pluto’s ingress into Aquarius as we will also have in 2023/2024. It is an absurdly dystopian context, but a turning point for a new conception of reality and the possibility for surprising new horizons.

A new world system is in the air

PE: Giorgio Agamben has referred to that famous Foucault intuition in Les Mots et les Choses, when Foucault writes that humankind may disappear like a figure drawn in the sand being erased by waves hitting the shore. The striking image may apply to our present, mutating condition, as we are about to enter a trans-human and even post-human era, dominated by artificial intelligence (AI) and genetic engineering.

Agamben argues that Covid-19, global warming and, more radically, direct digital access to our psychic life – all these elements are destroying humanity. Would the Great Mutation install a different paradigm – and lead us away from post-humanity?

FG: The rapid development in technology will be something seriously complex to deal with. It will be amazing in many ways, but not all pretty, presenting undeniable challenges, some of which are already here and about to intensify.

What are the effects of technology and artificial intelligence in both our organic and our subjective bodies? Mind control with bidirectional devices, both collecting information and inducing commands is a work in progress.

Perverse levels of technological control of society are a serious concern as Pluto, aka Hades, lord of the underworld, will also transit in technological and futuristic Aquarius from 2023/24 on, up until 2043/44 – times of intense social transformation, when technological advancements will blow our minds and the very conception of science will change considerably, but with serious risks of trans-human and post-human madness.

We cannot disregard our organicity. We cannot disregard our subjectivity, either. Pluto is about transformation or domination – in other words, quoting a recent article of yours: “Here’s our future: hackers or slaves.”

We’ve got to go hacking not only in the objective sense – which surely becomes more and more a desirable skill – but in the subjective sense as well, finding lines of flight and keeping Eros alive, the life force in us vivid.

Considering we’re already here, living through dystopian times, we might as well make the best out of this undeniably epic adventure. Instead of succumbing to fear and isolation, overtaken by the doom and gloom, let’s not forget Wallerstein’s observation on destiny versus free will – a very cool take, by the way, which my experience as an astrologer observing collective and individual cycles very much confirms: Both exist.

During the stable period of a world-system, its normal life when its structure is functioning well, even if there are some fluctuations in it, it is very hard to change things in the system, it tends to stabilization. It’s destiny: you gotta put a whole lot of effort to get perhaps very little change trying to escape destiny.

But when the world-system has reached its final phase, it can no longer be rescued and there is a lot of instability. The crisis is not going away and the only possibility is change, in one way or another – it’s free will time. In the structural crisis, Wallerstein says we have more free will, our actions have a stronger impact and every little move counts to decide in which direction the change of the system will go.

In our personal lives at this turning point in time, as Foucault questions, we may also ask ourselves: As humans, are we an obstacle or obstruction? Are we a way of imprisoning life – or are we an opening, a line of flight?

In regard to Foucault’s words you and Agamben bring to light, please allow me to refer to the previous paragraph, just before that final one in Les Mots et les Choses, when he states that by “taking a relatively short chronological sample within a restricted geographical area – European culture since the sixteenth century – one can be certain that man is a recent invention within it.”

The “man” he is referring to as the effect of a change in the fundamental arrangements of knowledge a couple of centuries ago, with the newer arrangements perhaps about to end, is within European references. That is neither the beginning nor the end of man, nor its only interesting expression. With huge, deep appreciation for so much of European culture, perhaps one of the things coming to a necessary end is Eurocentrism.

Nonetheless, of course, it is deeply worrying how faces are being at the same time digitally traced by machines and hidden from other humans by masks – especially the effects of that in children. The current transition is not without epistemological effects and effects on how we conceive man, humans. But it’s not all said and done.

To counter the objectification of humans, it may be timely to draw from the Tupis’ conception of human beings: tu + pi , seated sound. A human being is a sound which has taken a seat, has taken place and vibrates. We gotta keep our bodies, faces and words vibrant. For the native South American Tupis, each human being is a new music, a new word vibrating and co-creating life with others and nature.

Albert Eckhout painting of a Tupi man. Source: Wikipedia

It seems that the deeper roots of aboriginal-indigenous wisdom still need to be more fully acknowledged and reintegrated in the Americas before the reinvention of the world in the West can take place.

Now winds blow from the East and from Eurasia, inspiring new forms of co-existence. But the controllers of capital, wealth and worldly power won’t give it up without a fight – or a few wars and a heavy load of social control via technology, capturing bodies and minds. What will it be – Great Reset or Great Mutation?

Is there a way out? Yes. And it seems to go along the New Silk Roads and the Eurasia Integration – literally to some important extent, but symbolically as well. The West can gain a lot from opening up to the Eastern winds, the news and the ideas they bring, stories of a community of shared future for mankind. A new world-system is in the air.

Kim No-VAX does DARPA

Kim No-VAX does DARPA

December 20, 2020

A Back to the Future exercise: time-traveling to survey the sci-tech scene in the mid-1980s

by Pepe Escobar with permission and first posted at Asia Times

HAL9000_I’m_Sorry_Dave, Motivational Poster. Wikimedia Commons

I have been going through my Asia Times archives selecting reports and columns for a new e-book on the Forever Wars – Afghanistan and Iraq. But then, out of the blue, I found this palimpsest, originally published by Asia Times in February 2014. It happened to be a Back to the Future exercise – traveling in time to survey the scene in the mid-1980s across Silicon Valley, MIT’s AI lab, DARPA and the NSA, weaving an intersection of themes, and a fabulous cast of characters, which prefigure the Brave New Techno World we’re now immersed in, especially concerning the role of artificial intelligence. So this might be read today as a sort of preamble, or a background companion piece, to No Escape from our Techno-Feudal World, published early this month. Incidentally, everything that takes place in this account was happening 18 years before the end of the Pentagon’s LifeLog project, run by DARPA, and the simultaneous launch of Facebook. Enjoy the time travel.

In the spring of 1986, Back to the Future, the Michael J Fox blockbuster featuring a time-traveling DeLorean car, was less than a year old. The Apple Macintosh, launched via a single, iconic ad directed by Ridley (Blade Runner) Scott, was less than two years old. Ronald Reagan, immortalized by Gore Vidal as “the acting president,” was hailing the mujahideen in Afghanistan as “freedom fighters.”

The world was mired in Cyber Cold War mode; the talk was all about electronic counter-measures, with American C3s (command, control, communications) programmed to destroy Soviet C3s, and both the US and the USSR under MAD (mutually assured destruction) nuclear policies being able to destroy the earth 100 times over. Edward Snowden was not yet a three-year-old.

It was in this context that I set out to do a special report for a now-defunct magazine about artificial intelligence (AI), roving from the Computer Museum in Boston to Apple in Cupertino and Pixar in San Rafael, and then to the campuses of Stanford, Berkeley and MIT.

AI had been “inaugurated” in 1956 by Stanford’s John McCarthy and Marvin Minsky, a future MIT professor who at the time had been a student at Harvard. The basic idea, according to Minsky, was that any intelligence trait could be described so precisely that a machine could be created to simulate it.

My trip inevitably involved meeting a fabulous cast of characters. At MIT’s AI lab, there was Minsky and also an inveterate iconoclast, Joseph Weizenbaum, who had coined the term “artificial intelligentsia” and believed computers could never “think” just like a human being.

Joseph Weizenbaum. Source: Chatbots

At Stanford, there was Edward Feigenbaum, absolutely paranoid about Japanese scientific progress; he believed that if the Japanese developed a fifth-generation computer, based on artificial intelligence, that could think, reason and speak even such a difficult language as Japanese “the US will be able to bill itself as the first great post-industrial agrarian society.”

And at Berkeley, still under the flame of hippie utopian populism, I found Robert Wilensky – Brooklyn accent, Yale gloss, California overtones; and philosopher Hubert Dreyfus, a tireless enemy of AI who got his kicks delivering lectures such as “Conventional AI as a Paradigm of Degenerated Research.”

Meet Kim No-VAX

Soon I was deep into Minsky’s “frames” – a basic concept to organize every subsequent AI program – and the Chomsky paradigm: the notion that language is at the root of knowledge, and that formal syntax is at the root of language. That was the Bible of cognitive science at MIT.

Marvin Minsky at MIT Lab. Photo: Massachusetts Institute of Technology

At the MIT cafeteria, Minsky delivered a futurist rap without in the least resembling Dr Emmett Brown in Back to the Future:

I believe that in less than five centuries we will be producing machines very similar to us, representing our thoughts and point of view. If we can build a miniaturized human brain weighing, let’s say, one gram, we can lodge it in a spaceship and make it travel at the speed of light. It would be very hard to build a spaceship to carry an astronaut and all his food for 10,000 years of travel …

With Professor Feigenbaum, in Stanford’s philosophical garden, the only space available was for the coming yellow apocalypse. But then one day I crossed Berkeley’s post-hippie Rubicon and opened the door of the fourth floor of Evans Hall, where I met none other than Kim No-VAX.

No, that was not the Hitchcock blonde and Vertigo icon; it was an altered hardware computer (No-VAX because it had moved beyond Digital Equpment Corporation’s VAX line of supercomputers), financed by the mellifluously acronymed Pentagon military agency DARPA, decorated with a photo of Kim Novak and humming with the sexy vibration of – at the time immense – 2,900 megabytes of electronic data spread over its body.

The US government’s Defense Advanced Research Projects Agency – or DARPA – was all about computer science. In the mid-1980s, DARPA was immersed in a very ambitious program linking microelectronics, computer architecture and AI way beyond a mere military program. That was comparable to the Japanese fifth generation computer program. At MIT, the overwhelming majority of scientists were huge DARPA cheerleaders, stressing how the agency was leading research. Yet Terry Winograd, a computer science professor at Stanford, warned that had DARPA been a civilian agency, “I believe we would have made much more progress”.

It was up to Professor Dreyfus to provide the voice of reason amidst so much cyber-euphoria: “Computers cannot think like human beings because there’s no way to represent all retrospective knowledge of an average human life – that is, ‘common sense’ – in a form that a computer may apprehend.” Dreyfus’s drift was that with the boom of computer science, philosophy was dead – and he was a philosopher: “Heidegger said that philosophy ended because it reached its apex in technology. Philosophy in fact reached its limit with AI. They, the scientists, inherited our questions. What is the mind? Now they have to answer for it. Philosophy is over.”

Hubert Dreyfus. Source: Berkeley Campus News

Yet Dreyfus was still teaching. Likewise at MIT, Weizenbaum was condemning AI as a racket for “lunatics and psychopaths” – but still continued to work at the AI lab.

NSA’s wet web dream

In no time, helped by these brilliant minds, I figured out that the AI “secret” would be a military affair, and that meant the National Security Agency – already in the mid-1980s vaguely known as “no such agency,” with double the CIA’s annual budget to pay for snooping on the whole planet. The mission back then was to penetrate and monitor the global electronic net – that was years before all the hype over the “information highway” – and at the same time reassure the Pentagon over the inviolability of its lines of communication. For those comrades – remember, the Cold War, even with Gorbachev in power in the USSR, was still on – AI was a gift from God (beating Pope Francis by almost three decades).

So what was the Pentagon/NSA up to, at the height of the star wars hype, and over a decade and a half before the revolution in military affairs and the full spectrum dominance doctrine?

They already wanted to control their ships and planes and heavy weapons with their voices, not their hands; voice command a la Hal, the star computer in Stanley Kubrick’s 2001: A Space Odyssey. Still, that was a faraway dream. Minsky believed that “only in the next century” would we be able to talk to a computer. Others believed that would never happen. Anyway, IBM was already working on a system accepting dictation; and MIT on another system that identified words spoken by different people; while Intel was developing a special chip for all this.

Although, predictably, prevented from visiting the NSA, I soon learned that the Pentagon was expecting to possess “intelligent” computing systems by the 1990s; Hollywood, after all, already had unleashed the Terminator series. It was up to Professor Wilensky, in Berkeley, to sound the alarm bells:

Human beings don’t have the appropriate engineering for the society they developed. Over a million years of evolution, the instinct of getting together in small communities, belligerent and compact, turned out to be correct. But then, in the 20th century, man ceased to adapt. Technology overtook evolution. The brain of an ancestral creature, like a rat, which sees provocation in the face of every stranger, is the brain that now controls the earth’s destiny.

It was as if Wilensky was describing the NSA as it would be 28 years later. Some questions still remain unanswered; for instance, if our race does not fit anymore the society it built, who’d guarantee that its machines are properly engineered? Who’d guarantee that intelligent machines act in our interest?

What was already clear by then was that “intelligent” computers would not end a global arms race. And it would be a long time, up to the Snowden revelations in 2013, for most of the planet to have a clearer idea of how the NSA orchestrates the Orwellian-Panopticon complex. As for my back to the future trip, in the end I did not manage to uncover the “secret” of AI. But I’ll always remain very fond of Kim No-VAX.

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