Massenbach-Letter. NEWS 26.5.17

Massenbach-Letter. News

  • The Future of the US Navy
  • Pope and Trump discuss peace, dialogue, support for immigrants
  • Syrien: Für Christen keine Alternative zum Assad-Regime
  • Guarding the Guards at the CIA
  • Dmitri Trenin: Moscow Carnegie Center: What Can Japan Offer Russia?
  • Carnegie Moscow Center:The Silk Road to Nowhere
  • Saudi-U.S. Ties Shift as Kingdom Turns to Trump for Investments
  • France’s Mistral amphibious carrier arrived in Japan

From our Russian News Desk. (The views expressed are the author‘s own.)

  • Russia–Japan Political Dialogue at the Highest Level: Opportunities and Perspectives
  • The Syrian Arab Army
  • Russia and the West: How to Deal with the Threat of Extremism
  • russia and europe in times of uncertainty
  • How Does Social Media Influence Elections?
  • The Demise of the Turkish Democratic Model
  • How Rouhani Won a Second Presidential Term

Massenbach*Pope and Trump discuss peace, dialogue, support for immigrants

(Vatican Radio) Pope Francis and U.S. President Donald Trump met in the Vatican on Wednesday, discussing issues of peace, interfaith dialogue and religious freedom, as well as the role of the American Church in education, healthcare and support for immigrants.

The American leader spent half an hour in conversation with the Pope behind closed doors in the Apostolic Palace, before meeting with Vatican Secretary of State, Cardinal Pietro Parolin, and Archbishop Paul Gallagher, the Holy See’s Secretary for Relations with States or foreign minister.

Press office statement

A statement from the Vatican press office said during the course of the cordial encounter, the two men discussed the good bilateral relations that exist between the U.S. and the Holy See. They also spoke of their “common commitment in favour of life, religious liberty and freedom of conscience”.

The statement expressed the hope for a “serene cooperation between the State and the Catholic Church in the United States, which is committed to serving the population in the fields of health care, education and assistance to immigrants.

Dialogue and negotiations

It said the Pope and the President also exchanged views on international affairs and on the promotion of peace through political negotiations and interfaith dialogue, mentioning especially the situation in the Middle East and the protection of Christian communities.

Following the papal audience, Trump will meet with Vatican Secretary of State, Cardinal Pietro Parolin, together with Archbishop Paul Gallagher, the Holy See’s Secretary for Relations with States or foreign minister.

http://en.radiovaticana.va/news/2017/05/24/pope,_trump_discuss_peace,_dialogue,_support_for_immigrants/1314399

http://en.radiovaticana.va/news/2017/05/23/pope_and_us_president_vital_role_of_soft_power_diplomacy/1314287

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Syrien: Für Christen keine Alternative zum Assad-Regime

Die Christen in Syrien unterstützen das Regime von Präsident Bashar Assad allein aus dem Grund, weil sie keine Alternative haben. Das betont der Salzburger Ostkirchenexperte Dietmar Winkler. „Wenn Assad fällt, was passiert dann? Der Einfluss des fundamentalistischen Islam ist im Land bereits so stark, dass es für die Christen dann ganz düster aussehen würde“, so Winkler wörtlich in einem Interview in der aktuellen Ausgabe der Zeitschrift „Information Christlicher Orient“. Sogenannte „gemäßigte“ Rebellen gibt es laut Winkler in Syrien de facto nicht.

„Im Krieg gibt es keine Waisenknaben“, so Winkler. Kriegsverbrechen würden von allen Seiten begangen. Und wenn von mancher Seite das Assad-Regime als unschuldig dargestellt wird, stimme das natürlich auch nicht. Aber, so Winkler: „Die lokalen Bischöfe sagten und sagen mir immer wieder in Gesprächen: Was ist die Alternative für die Christen? Wer schützt die Christen, wenn nicht das Assad-Regime? Welche Perspektiven gibt es überhaupt?“

Natürlich sei das Assad-Regime eine Diktatur mit einer „gefürchteten und brutalen“ Geheimpolizei. Und trotzdem: „Vor dem Krieg war Syrien ein relativ stabiler Staat unter der Herrschaft des säkularen Baath-Regimes. Wer sich an den vorgegebenen politischen Rahmen hielt, konnte seine Religion frei leben.“ Das Verhältnis zwischen den Religionen – Sunniten, Alawiten, Christen oder Drusen – sei ein relativ gutes Nebeneinander und oft auch ein Miteinander gewesen.

Dazu komme die Beobachtung: „Dort, wo das Assad-Regime nach wie vor oder nun wieder an der Macht ist, so wie beispielsweise in Aleppo, dort ist die Lage wieder stabiler geworden.“ Nachdem die Assad-Truppen ganz Aleppo unter Kontrolle gebracht hatten, konnten die Christen dort wieder relativ sicher Ostern feiern. „Das war vorher so nicht der Fall. Und das ist auch der Blickpunkt der Christen“, so Winkler.

Christen sind nicht Kollaborateure, sondern Spielball

Dabei dürfe man aber auf keinen Fall sagen, dass die Christen mit dem Assad-Regime kollaborieren. Dafür seien sie auch eine viel zu kleine Minderheit. „Eigentlich sind sie seit vielen Jahrhunderten ein Spielball in Händen der jeweiligen Herrscher vor Ort. Und irgendwie mussten sie immer das Auskommen mit den Herrschenden suchen.“ Deshalb sei es auch nur allzu verständlich, dass Christen an der Gründung der säkularen Baath-Bewegung in Syrien in den 1940er und 1950er-Jahren beteiligt waren. Eine säkulare Politik, die weitgehend Religionsfreiheit einräumt, sei schließlich in einem muslimischen Umfeld die beste Variante für die Christen, zeigte sich Winkler überzeugt.

Das sei natürlich keine Freiheit bzw. Demokratie nach westlichem Muster, räumte der Ostkirchenexperte ein, Man müsse aber vorsichtig sein, westliche demokratische Vorstellungen auf Länder im Nahen Osten zu projizieren. Winkler: „Europa hat 500 Jahre Aufklärung und Reformation inklusive der damit verbundenen Religionskriege durchgemacht. Das Ergebnis dieser europäischen Entwicklung kann man nicht einem anderen Land und seiner Bevölkerung einfach von heute auf morgen überstülpen. Das funktioniert nicht.“ Die Schaffung eines demokratischen Bewusstseins in der Bevölkerung sei ein langer und schwieriger Prozess.

Kein Bürgerkrieg in Syrien

Die Frage, ob der Syrien-Krieg ein Bürgerkrieg sei, verneinte Winkler. Der Krieg sei von außen in das Land getragen worden. „Und es sind die vielen Mächte von außen, die ihre eigenen Interessen verfolgen: die Amerikaner, denen es um Öl geht, die Russen, die ihre Basis im Mittelmeerraum nicht verlieren wollen, der Iran, der seinen Einfluss zum Mittelmeer ausdehnen will; Saudi Arabien, das seine Art des sunnitischen Islam in Syrien und sich als Regionalmacht etablieren will, oder auch die Türkei, die vor allem auch gegen die Kurden operiert.“

Und von allen Seiten würden Waffen geliefert und werde der Krieg nach wie vor befeuert. Winkler: „Der Unterschied ist, dass wir es bei den Russen genau wissen, dass und wie sie Assad unterstützen. Bei den anderen internationalen Akteuren, militärischen Beratern, Spezialeinheiten und Rebellengruppen ist das nicht so deutlich zu erkennen.“ Deutlich sei aber, „dass der Waffennachschub von außen für alle Seiten nach wie vor funktioniert, sonst wäre der Krieg längst zu Ende.“ Ganz klar sei auch, „dass sich die christlichen Führer wieder und wieder für ein Ende der Gewalt und ein Ende der Interventionen von außen ausgesprochen haben“.

http://de.radiovaticana.va/news/2017/05/22/syrien_für_christen_keine_alternative_zum_assad-regime_/1313856

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From our Russian News Desk. (The views expressed are the author‘s own.)

  • Russia–Japan Political Dialogue at the Highest Level: Opportunities and Perspectives
  • The Syrian Arab Army
  • Russia and the West: How to Deal with the Threat of Extremism
  • russia and europe in times of uncertainty
  • How Does Social Media Influence Elections?
  • The Demise of the Turkish Democratic Model
  • How Rouhani Won a Second Presidential Term

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Moscow Carnegie Center: What Can Japan Offer Russia?

By Dmitri Trenin

The window of opportunity for improving Russo-Japanese relations is still open, at least for now. Russia’s main objectives are to attract Japanese investment into its national economic development programs and to continue to diversify its policies in the Asia-Pacific and on the international stage, where Japan plays an important and increasingly independent role.

Japanese Prime Minister Shinzo Abe has made it clear that he wants to resolve his country’s long-standing territorial dispute with Russia over the Kuril Islands and to prevent an overly close alliance between Moscow and Beijing—and Russo-Japanese relations are heating up as a result.

In December, Putin visited Abe in the prime minister’s home prefecture of Yamaguchi. Three months later, the Russian and Japanese foreign and defense ministers met in Tokyo for the first time in almost four years. Then in April Abe visited Moscow, marking only the second time in almost fifteen years that a Japanese premier has made an official visit to Russia.

The Kremlin is not rebuking Japanese diplomatic advances, but it is being more cautious than its counterpart; Moscow wants to improve bilateral relations with Tokyo in other ways before entering into concrete negotiations on the Kuril Islands.

The problem is that Russo-Japanese relations cannot move far beyond where U.S.-Russian relations have been since the 2014 Ukraine crisis: Japan is a close ally of the United States and has been steadfast in complying with all of the G7’s decisions regarding sanctions on Russia.

More than one hundred days into his presidency, Donald Trump has not backed away from the sanctions regime against Russia that Barack Obama introduced. Meanwhile, the results of the French presidential election and the forecasts for the upcoming German parliamentary elections leave no doubt that the countries of the European Union will also maintain sanctions against Moscow. This significantly limits the potential payoff of Russia’s main objective in improving relations with Japan.

This article originally appeared in Russian in RBC.

Still, there are differences between Russia’s relationship with the United States and its relationship with Japan. If Russia is able to emerge from the current crisis and start down the road of economic development, technological cooperation with and investment from Japan will be invaluable for Russia—particularly for Siberia and the Far East.

The key issue is not Tokyo’s willingness to provide resources but rather Moscow’s willingness to embark on a policy of economic development. Although we should not overestimate Russia’s enthusiasm for change in the run-up to the 2018 presidential election or in the period that follows, sooner or later Russia will have to reform its economy and its system of state administration.

The latest rapprochement between Russia and Japan has lasted for almost a year, though Tokyo has changed its priorities recently. Whereas initially Japan emphasized the importance of economic development, its focus has now shifted to security issues.

Prime Minister Abe’s visit to Moscow took place against a background of heightened concerns about North Korea’s nuclear and missile programs. Accordingly, the possibility of a military conflict in Northeast Asia requires a deep, confidential, and candid dialogue between Moscow and Tokyo.

Russia does not hold much sway in North Korea right now, but it could advise Japan on approaches to stabilizing relations and reducing the risk of confrontation, as well as on sensitive points where applying pressure to North Korea would be counterproductive or dangerous. Such a discussion could be more constructive in establishing a new model of Russo-Japanese relations than usual discussions of the U.S. missile defense system in South Korea or the increased presence of Russian armed forces in the region.

In March, representatives of an association of former residents of the southern Kuril Islands visited Russia. Because the local population was evacuated to Japan in 1947, there are few living former residents left. However, their children still honor their ancestors who lived on the islands. Naturally, any solution to the Kuril Islands dispute will not only need to be ratified by the Russian and Japanese parliaments, but also accepted by those countries’ populations.

Thus, in the interests of intensifying relations with Japan, Russia has expressed a willingness to take steps to accommodate the wishes of the former residents of the islands and their descendants. Visa-free travel to the islands, the right to visit Japanese cemeteries, various opportunities for “nostalgia tourism,” and other interactions between Japanese and Russian citizens could create a new fabric of relations and bring the two nations closer together.

Russia and Japan are still early in their journey toward normalizing bilateral relations, and a broader and deeper relationship will take time to develop. However, delays in the process of normalization benefit neither Moscow nor Tokyo, meaning that both sides are looking for regular, tangible achievements sooner rather than later. With this in mind, concrete measures for expanding and strengthening bilateral contacts (whether between diplomats, generals, or representatives of civic associations) present an opportunity to improve Russo-Japanese relations without waiting for top-level decisions to be made.

The objectives of Japan’s “Russia strategy” are evident. Russia’s main objectives are to attract Japanese investment into its national economic development programs and to continue to diversify its policies in the Asia-Pacific and on the international stage, where Japan plays an important and increasingly independent role. The window of opportunity for improving Russo-Japanese relations is still open, at least for now.

http://carnegie.ru/commentary/?fa=69934&mkt_tok=eyJpIjoiTjJWbFpXWTNPR00zTlRZeCIsInQiOiJnWVdMRlwvYjlrY0JGWWNaVEpmSmVDcUdGTjE3TXBiWkhqdm94bGNsQTB1ZTJmNlZUdDc0eVZJZGtUVXdVZUtoUEhwbkozNmx1d0FcL2E1Sm5WbldCTGZJcEpoRGMrWGRBUkMrNzI5YmdWSVc1ZFdjbU4rdGsxT3VUdnlEYzErQnZXIn0%3D

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Policy= res publica

Freudenberg-Pilster* Guarding the Guards at the CIA

By George Friedman

Trusting an agency to tell the lies it must is a tough enough sell in a democracy.

By George Friedman

Over the weekend, The New York Times published a report detailing the discovery and systematic degradation of the U.S. espionage network in China from 2010 to 2012. The report cites 10 officials, former and current, who describe the penetration of the network and speculate on the reason for its failure. Some claim there was a Chinese mole in the CIA. Others claim that lines of communication between assets and the agency had been breached.

The timing of the report is as interesting as the content itself. CIA officials, after all, have already been accused of leaking information designed to weaken President Donald Trump. And now, not only have a handful of officials revealed a massive intelligence failure, but they have done so, apparently in concert, five years after it happened.

One explanation is that a faction in the CIA means to weaken the agency’s credibility by revealing the failure. (I have no evidence for this, but then again, evidence to substantiate charges is optional in Washington.) This would, in effect, undermine the credibility of those claiming to know about secret Russian plots. “You claim to know about them, but you are actually not very good at intelligence,” or so the argument would go.

A Tough Question

Human intelligence is a game of deception. The acquisition of government sources depends on duplicity, and the intelligence agency must lie to protect the source. It is an industry in which secrecy and dishonesty are moral imperatives. Take World War II, for example. The United States and Britain won World War II in large part because they had broken the German and Japanese codes. They knew what their enemies were planning and could counter it. In order for the breach to work, it had to be kept secret from the public. The secrets of the breach were revealed years after the war, but had the Germans and the Japanese caught wind of it sooner, they would have changed their codes, and the outcome of the war might’ve been different.

In the long run, the CIA can’t deceive the Chinese government without also deceiving, in some way, the American public. This leaves us with an obvious problem: Should we believe anything the CIA says?

It’s a tough question for a democracy to answer. Trust is built on the tacit agreement that the “bad things” an agency does are good for the country. If the public believes that that is no longer the case – if it believes the agency is acting out of self-interest and not national interest – then the agreement is broken. The intelligence agency is seen as an impediment of the right to national self-determination, a means for the ends of the few.

Trust is also built on competence, and so it is always reasonable to question the intelligence of the intelligence agency. When questioned, the CIA, which again traffics in deception, tends to say something along the lines of, “If you only knew what I know, you would respect me completely.” But the public has no way of knowing whether the CIA is keeping secret its successes or its failures.

Trusting an agency to tell the lies it must is a tough enough sell in a democracy – it’s partly the reason the United States didn’t even have an intelligence service before World War II – but it becomes even more difficult the moment the agency enters the political arena, which is where it finds itself now. In addition to determining if the agency is telling the truth, the public must also ascertain whether its involvement in politics is such that it has lost its ability to carry out its mission – namely, gathering foreign intelligence. The question then becomes: Has the CIA been captured by an American political faction, and if so, can it still be an effective intelligence agency?

A High Price

It’s possible that the CIA has information that the president is in some way colluding with a foreign power. That is vital information, if it exists. But it is information that should be passed to Congress, via the intelligence committees, because only Congress is endowed with the constitutional responsibility to act on such a matter. In releasing intelligence to the public, the CIA may be revealing sources and methods, and more important, it is assuming powers of the Constitution — which each member of the CIA is sworn to “preserve, protect and defend” — that the CIA doesn’t have.

Participating in political debates will, in turn, divide the CIA, since CIA employees are no more of one mind on the politics of the day than anyone else. So when 10 officials step forward to reveal the intelligence failures in China, as they did in the New York Times report, we need to consider why they chose to do it now. Was the timing merely coincidental? Was it an attempt to undermine a possible faction in the CIA that is leaking damaging information on the president? This is all speculation, of course, but that’s the point: Once the CIA enters domestic politics, it is subject to the same speculation as others in the arena.

This is why moral rectitude is important for an intelligence organization in a democracy. The secrecy and duplicity needed to be effective are obviously distasteful, and the fear that the intelligence agency is using its trade to interfere in domestic politics is always there. Intelligence must have a moral standing to elicit the trust that its lies and deception are in defense of the Constitution and not an attempt to impose the will of a faction on the country. Once that suspicion becomes widespread, the intelligence organization loses its moral standing, the importance of which is paramount for gathering foreign intelligence. Once an agency loses its moral standing, then things like the New York Times report about China will be seen not as an act of public accountability but as an act of manipulation.

Forgoing foreign intelligence is not an option. A global power must know what is happening around the globe. A democratic global power must tolerate the discontents of deception, the risks it poses for a democracy notwithstanding. It’s an important if imperfect balance, and it’s thrown off when an intelligence organization enters public discourse. The organization betrays its oath by using its foreign intelligence capability selectively in favor of one or another faction. This calls into question its very survival.

The China report is a reminder of the high price we pay for having the CIA, which is no stranger to entering U.S. politics. The officials who will not go on the record because they are not allowed to are simply sowing seeds of distrust that will at some point consume them and weaken the United States. If the people of the CIA are guardians, then who will guard them?

https://geopoliticalfutures.com/guarding-guards-cia-1/

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Barandat* Carnegie Moscow Center:The Silk Road to Nowhere

It will take years for Russia to increase trade with China. To do so, Russia will need to strengthen its institutions, overcome non-tariff barriers to the Chinese market, and enhance its reputation among Chinese investors.

On May 14–15, 28 heads of state, including Vladimir Putin, attended the Belt and Road Forum for International Cooperation in Beijing, an event that was supposed to showcase the success of Chinese leader Xi Jinping’s Silk Road revival.

It didn’t.

The joint declaration issued at the conclusion of the forum is rife with platitudes about supporting the common good and opposing evil that were included to assuage fears that China is using the initiative to drag other countries into its sphere of influence. Instead, Beijing came off as disingenuous.

Perhaps most importantly, the Belt and Road Initiative suffers from a lack of performance criteria. Although Xi Jinping did announce five broadly defined areas of cooperation in 2013, Beijing never set any concrete goals. Chinese planners simply shrug off questions about key performance indicators, saying that the Silk Road incorporates too many countries and involves too many variables over which Beijing has no control.

While China’s partners think this uncertainty is problematic, it’s seen as a good thing inside China, including by Xi Jinping himself. After all, the lack of performance criteria allows the government to declare anything a success.

Beijing isn’t doing anything new with the Belt and Road Initiative. Long before plans to revive the Silk Road were made public, Chinese companies built infrastructure in other countries, ran pipelines and fiber-optic networks across Eurasia, and handed out loans, while Beijing invested billions in enhancing its soft power. It’s not surprising, then, that many of China’s old projects, like the construction of Gwadar Port in Pakistan, which began in 2002, are touted as the Belt and Road’s flagship achievements.

Developing transcontinental routes between Europe and China is in fact the only new and large-scale vector of the Silk Road initiative that Xi Jinping has discussed. Beijing has numerous reasons for devoting resources to this effort, one of which is geopolitical: Chinese military officials want to create land routes for cargo shipments (primarily oil) to bypass the Strait of Malacca in light of the current tensions over the South China Sea.

Other factors are purely economic: EU-China trade volumes are incredibly high, totaling 1.5 billion euros per day. Labor costs are increasing in coastal provinces but still low inland, making it an attractive place for investment. China has been constructing infrastructure in these areas since 2000 as part of the government’s program to develop the country’s western regions.

What’s more, land shipments save time: they take twelve to sixteen days, as opposed to thirty days or more by sea. If China concentrated on working out its land routes to Europe, it would hardly find a faster route than through the Eurasian Customs Union (Russia, Kazakhstan, and Belarus).

Still, actual trade numbers have thus far failed to live up to expectations. For now, overland and maritime transit costs are about equal, but sea transit is expected to again be at least 1.5 times cheaper than land in the future. And at the end of the day, delivery time, which Chinese officials love to talk about when they advertise the Silk Road, is not as important to businesses as the cost of shipping.

In the past three years, projects facilitating transportation links between China and Europe have received much less Chinese investment than many analysts, including this one, expected. This is particularly true in the post-Soviet states. Beijing has thus far failed to act on the list of 40 potential transportation projects prepared by the Russian government and the Eurasian Economic Commission. The Chinese have also slowed down the construction of a high-speed railroad between Moscow and Kazan, insisting that the project be commercially viable, which is rather unlikely.

What changed? Why is China, which once generously invested heavily in dubious construction projects all over the world, calculating its risks more carefully now?

This change has to do with Beijing’s reassessment of bad debt levels in China’s financial system, which began to rise two years ago. The Chinese stock market crashed in the summer of 2015, reducing market capitalization by $4.5 trillion. China managed to avoid a serious financial crisis, but the authorities did launch a comprehensive audit of the country’s entire financial sector, including state banks and leading development institutions like the China Development Bank and the Export-Import Bank, which had been seen as important sources of financing for the Silk Road initiative.

At the same time, Beijing started cleaning up debt pyramids accumulated by local governments, which had reached almost $4 trillion by the end of 2014. Money was borrowed through nontransparent mechanisms used to finance money-losing and superfluous infrastructure projects, which created economic growth, jobs, upward mobility for government officials, and, of course, opportunities for graft. By the end of 2015, it had become clear to Chinese authorities that it would be extremely dangerous to continue down a similar path internationally.

The work of the Silk Road Fund (SRF), with its $40 billion in capital, clearly illustrates this policy change. Created in 2014, the fund was slated to become the main driver of investment in the Silk Road project, but has closed only six deals in the past three years. Instead, Beijing now uses the SRF as a political purse: it is not linked to the global financial system and can therefore finance politically controversial projects. In fact, the Chinese used the SRF to invest in Yamal SPG and Sibur, which are co-owned by the head of the Russia-China Business Council, Gennady Timchenko, a close friend of Putin’s who is on Western sanctions lists. These two politically motivated investments are arguably the only tangible results of Russia’s participation in the Belt and Road Initiative.

This doesn’t mean that Russia should shy away from attracting Chinese investment and increasing trade with China. In 2016, Chinese companies invested over $225 billion overseas, twice as much as in 2014. Just as before, most of this investment went to European, American, and Australian markets, while Russia received only 2 percent of the money. To compete for Chinese money and increase trade with China, Russia will need to improve its investment climate.

It will be particularly difficult to do so now, as Moscow picked all the low-hanging fruit following the annexation of Crimea in 2014. Russia now needs to strengthen its institutions and overcome non-tariff barriers on China’s market (and be ready for stiff competition once it gets there). Russia also needs to enhance its reputation among Chinese investors. It will take years of persistent work to accomplish this—work that is unlikely to bring swift victories or praise for government officials and businessmen. Still, it is the only realistic way forward.

The New Silk Road has led nowhere so far. The idea of a Great Eurasian Partnership (a union of the SCO, EAEU, ASEAN, and even the EU), which Vladimir Putin spoke about in Beijing, is no less futile. It would be a mistake to spend the government’s limited human resources on this pipe dream instead of directing them to specific small-scale projects for Russian and Chinese businesses.

This article originally appeared in Russian in Vedomosti.

http://carnegie.ru/commentary/?fa=70061&mkt_tok=eyJpIjoiTjJWbFpXWTNPR00zTlRZeCIsInQiOiJnWVdMRlwvYjlrY0JGWWNaVEpmSmVDcUdGTjE3TXBiWkhqdm94bGNsQTB1ZTJmNlZUdDc0eVZJZGtUVXdVZUtoUEhwbkozNmx1d0FcL2E1Sm5WbldCTGZJcEpoRGMrWGRBUkMrNzI5YmdWSVc1ZFdjbU4rdGsxT3VUdnlEYzErQnZXIn0%3D

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Middle East

Saudi-U.S. Ties Shift as Kingdom Turns to Trump for Investments

Just a few years back, the business relationship between the U.S. and Saudi Arabia was pretty simple: The Americans bought oil, and the Saudis spent much of what they earned on equipment to keep the crude flowing and on planes, tanks, and missiles to protect their borders.

With crude prices down by half over the past three years, U.S. domestic oil production up dramatically, and the kingdom embarking on unprecedented economic reforms — including the sale of a stake in its state-owned oil company — the leverage is shifting toward the Americans as the U.S. emerges as a rival energy exporter. The changing relationship will come into sharp focus this weekend, as American corporate titans visit Riyadh for an investment summit scheduled to coincide with Donald Trump’s first foreign trip as U.S. president.

“At this point, the Saudis need the U.S. more than the reverse,” said Philippe Dauba-Pantanacce, global geopolitical strategist at Standard Chartered Plc in the U.K. “They need foreign direct investment to transform the economy, and the U.S. doesn’t need oil anymore.”

For Trump, the visit could provide a welcome respite from the turmoil he has unleashed in Washington over his firing of FBI Director James Comey and the investigation into Russian meddling in the presidential campaign. Saudi King Salman bin Abdulaziz wants backing for a plan to reduce the role of the state and wean the economy off of oil — without stoking popular discontent.

The American executives will want deals. Some, like Jamie Dimon, chief executive officer of JPMorgan Chase & Co., and Morgan Stanley boss James Gorman, already have agreements to advise oil giant Saudi Aramco on its initial public offering, which may be the largest ever. JPMorgan and Citigroup Inc. helped arrange a $17.5 billion Saudi bond sale last year and a $9 billion Islamic bond issue in April. This weekend the banks will aim for more contracts as the Saudis prepare to sell other state assets.

Defense Sales

Boeing Co. CEO Dennis Muilenburg and Lockheed Martin Corp. head Marillyn Hewson will be looking to cement defense sales. Aramco could sign at least 10 deals with companies including General Electric Co. and oil field-service businesses Schlumberger Ltd. and Halliburton Co. to open manufacturing plants in the kingdom, people familiar with the plans say.

The U.S. executives are expected to meet the Saudi ministers of finance, energy, and commerce and the head of the kingdom’s sovereign wealth fund, according to a draft agenda for the conference, which was hastily arranged after the Trump visit was announced just two weeks ago. They’ll discuss privatizations, investment opportunities, and the role of the Saudi sovereign fund, then they’ll travel to the Royal Court to sign agreements totaling billions of dollars as Trump and King Salman look on.

“Though ties have historically been strong, nothing of this scale and depth has ever happened before,” said John Sfakianakis, a director at the Gulf Research Center in Riyadh. “The relationship with the U.S. is entering a new phase.”

Asia Tour

In March, King Salman returned from a tour of Asia with agreements potentially worth tens of billions of dollars, including $65 billion from China, $13 billion from Malaysia and Indonesia, and 43 potential projects with Japanese companies. Contracts unveiled this weekend could well eclipse those deals, Sfakianakis said.

The Saudis have been enthusiastic about Trump after a lukewarm relationship with Barack Obama. The kingdom claimed relations had reached a “historic turning point” in March when Trump met Deputy Crown Prince Mohammed bin Salman at the White House. After the meeting, Trump offered his support for a new U.S.-Saudi program in energy, industry, infrastructure and technology that could lead to more than $200 billion in investments over the next four years.

That’s not to say the Saudis, who have cash reserves topping $500 billion, are no longer looking for investment opportunities. The country’s Public Investment Fund is expected to announce plans to plow $40 billion into U.S. infrastructure, and it’s seeking partners in the defense industry to help develop domestic arms production.

The goal is to create jobs. The government’s reform plan has so far focused largely on trimming generous fuel and energy subsidies, and scrapping bloated infrastructure projects — moves that have helped slow economic growth from 10 percent in 2011 to just 0.4 percent this year, the International Monetary Fund predicts.

‘Not All About Austerity’

“A big part of Saudi Arabia’s message is that the reform program is not all about austerity,’’ said Monica Malik, chief economist at Abu Dhabi Commercial Bank PJSC. “They will be keen to show some concrete commitments from U.S. companies and that this is a two-way street.’’

Some analysts caution that while the executives may announce billions of dollars worth of agreements, many of those will have long been in the works. And some newer deals announced with great fanfare will simply be agreements to explore investment opportunities, which can later be quietly dropped with few repercussions, said Peter Salisbury, a fellow at Chatham House, an international affairs research group in London.

“I expect to see a flurry of exciting-sounding deals with some large figures attached,” Salisbury said. “When you dig into them, they will be largely pre-existing agreements or early agreements that may or may not actually translate into action.”

https://www.bloomberg.com/news/articles/2017-05-18/saudi-u-s-business-ties-shift-as-kingdom-seeks-investment

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*Massenbach’s Recommendation*

The Future of the US Navy

How big a naval force does the U.S. need? Increased competition between the U.S., China, and Russia are bringing this eversimmering debate to a boil. Several big think-tank studies have emerged in the past year to argue that today’s 275-warship fleet is insufficient, woefully insufficient, or dangerously insufficient. In May, Chief of Naval Operations, Adm. John Richardson, offered his own thoughts in a nine-page white paper: 355 ships is the right size — but the 2040 target is about two decades too late. America’s competitors are building navies that outstrip our own, he writes, and so it’s time to challenge all assumptions and start turning out better, more flexible ships and aircraft for far less money and time. We’ll lead off this ebook with a look at his vision.

France’s Mistral amphibious carrier arrived in Japan

France’s Mistral amphibious carrier has arrived in Japan to take part in Pacific drills, as tensions in the region relating to North Korea’s nuclear tests, American responses and Chinese maritime aspirations grow.

© AFP 2017/ GERARD JULIEN

Why France is Boosting Its Military Muscle in Pacific

The Mistral arrived at the Japanese naval base of Sasebo on Saturday. The carrier will take part in military drills next month to practice amphibious landings on an island near Guam, about 2,500 km south of the Japanese capital of Tokyo, according to various media reports.

The media first reported the idea to dispatch the Mistral to the Pacific almost s month ago, at the end of March. The French ship also has two British helicopters onboard.

The drill coincides with North Korea’s latest failed missile test, but officials say the drills had been planned for some time.

"We did not expect the start of our visit to coincide with a North Korean missile launch," French Ambassador to Japan Thierry Dana said on the Mistral’s bridge, according to RT.

"Cooperation between our four nations in upholding laws, peace and stability in the region will display our readiness to deal with North Korea," he added.

Both Japan and the United States are concerned about what they call China’s efforts to extend its influence beyond its coastal waters and the South China Sea. France, which also owns several islands in the Pacific, shares these concerns to some degree.

However, Chinese maritime aspirations have been overshadowed by North Korea’s repeated missile tests. US President Donald Trump ordered several US ships, including the USS Carl Vinson supercarrier, to move to demonstrate to North Korea the potential military consequences of its nuclear ambitions.

The Mistral is an amphibious carrier — a ship that carries amphibious armored vehicles for ground attack inside its hull. It can also carry helicopters and VTOL (vertical takeoff and landing) aircraft to support the littoral assault.

https://sputniknews.com/military/201704301053144881-french-mistral-carrier-pacific/

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A Russian comment:

Why France is Boosting Its Military Muscle in Pacific

In an interview with Sputnik, Russian military expert Vasily Kashin gave his thoughts on France’s plans to deploy its Mistral-class helicopter carrier to the area near the Tinian Island in the Pacific Ocean to join the war games which will involve the US, Japan and Britain.S/ Stephane Mahe

Earlier this week, media reports said that France’s Mistral-class assault ship is due to be deployed to the area near Tinian Island in the Pacific Ocean where the vessel is due to join the military exercises which will include Japanese and US personnel as well as two assault helicopters from Britain.

Commenting on the issue in an interview with Sputnik, Russian military expert Vasily Kashin specifically drew attention to the fact that the Mistral ship is expected to pass through the South China Sea while en route to Tinian Island.

He recalled that Paris recently made a number of statements about its plans to increase France’s presence in the region, including a desire to support the freedom of navigation in the South China Sea.

"It seems that we have another example of the EU-style behavior pattern, namely, persistent demonstration of one’s involvement in world problems through lively gesticulation, not backed by any real opportunities," Kashin pointed out.

He described the Mistral as the best vehicle that the European Union can currently send to the Pacific given that Britain, one of the two leading European naval powers apart from France, does not possess aircraft carriers.© REUTERS/ U.S. Navy/Handout

As for France, it has only one aircraft carrier, the Charles de Gaulle, which has been under repair since the end of its Middle East military mission in February 2017. The repair work is expected to last for at least a year and a half, according to Kashin.

He also recalled that the Mistral is designed for low-intensity conflicts and has negligible survivability; theoretically, it could be useful in a possible war in the Pacific only as a carrier of anti-submarine helicopters.

"But compared to the huge and superbly armed Japanese warships, including the Izumo-class helicopter destroyers, the Mistral’s value will be extremely low. It is not quite clear what exactly the Europeans wanted to ‚demonstrate‘ when deploying the Mistral to the drills," Kashin said.

He warned that "in a situation where France can face China as a potential enemy, the use of the Mistral may lead to a catastrophe because the ship is almost defenseless."

Focusing on why the EU is so interested in taking part in disputes and conflicts in the Pacific, Kashin mentioned at least two reasons.

"First and foremost, the EU wants to demonstrate its significance against the backdrop of the European foreign policy flops. Secondly, Brussels hopes that the EU adhering to the American policy of deterring China will have a positive impact overall on EU security cooperation with Washington," Kashin noted.

For these reasons, the EU is ready to spend significant sums related to its participation in military events on the other side of the world, something that comes amid the ongoing degradation of European military capabilities, including those of France and the UK, according to him.© AFP 2017/ PATRICK HERTZOG

He also said that after the end of the Cold War, Europe turned into a kind of dependent for the US in military respect.

While European defense capabilities are unable to ensure the EU’s own security, Europeans spend significant funds to increase their military presence in the Pacific in the hope that it will allow them to demand US services in return.

The US, for its part, demands that Europe should boost investment in the defense sector, hoping that it will help them free up US forces in Europe. The EU’s position draws obvious fatigue and irritation from Washington, according to Kashin.

"At the same time, Europe’s current military impotence means that during any possible aggravation of the situation in Eastern Europe, Americans will be forced to concentrate all forces in this region to the detriment of their commitments in other parts of the world," Kashin concluded.

https://sputniknews.com/world/201703241051931097-france-china-pacific-ocean-drills/

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see our letter on: http://www.massenbach-world.de/41259.html

*Herausgegeben von Udo von Massenbach, Bärbel Freudenberg-Pilster, Joerg Barandat*

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UdovonMassenbachMailJoergBarandat

05-24-17 – Russia_Japan – Syria – Turkey – EU- Elections&Media.docx

05-24-17 Defense One- The Future of the US Navy.pdf

need your advice

Hello!

I’m writing an article and I think you can help me with some issues, please take a look message

See you around, President-AGBC-Berlin

From: udo von massenbach-wordpress [mailto:]
Sent: Friday, May 19, 2017 11:49 PM
To: mg@ggpartner.de
Subject: 613 – Ottawa

All my respects to your regiment, its been an amazing war, I will never forget how Saffron and the Aquamarines pushed each other to greatness, in the end we all won. I hope we stay strong until the next war, to each and everyone one of you, happy new year and may you reach greatness this year. Take care and until next time.

Sent from Mail for Windows 10

Massenbach-Letter. NEWS 19.5.17

Massenbach-Letter. News

  • U.S. Sec. of Defense – Mattis Fills Key Executive Positions at the Pentagon
  • U.S. Senator Bob Corker: Strongly Supporting John Sullivan as Deputy Secretary of State
  • GPF: The Latest Trump Crisis
  • GPF: The Cost of Fixing Russia’s Economy
  • FT / Nick Butler: The importance of the Iranian election
  • Frankly Speaking: China’s Belt and Road blueprint augurs changed global order
  • U.S. Dep. of State: Direct Line – Argentina: Transportation Infrastructure Opportunities for U.S. Business

Massenbach. Ordensfrau: Nordafrika total überfordert von Flüchtlingszustrom

Die nordafrikanischen Staaten, die ans Mittelmeer angrenzen, sind von der „regelrechten Invasion“ durch Menschen, die aus dem Süden Afrikas stammen und nach Europa wollen, völlig überfordert – und eine langfristige Lösung ist nicht in Sicht: Ernüchternd hat die Don-Bosco-Schwester Maria Rohrer am Wochenende vor Journalisten in Wien die Lage in Nordafrika geschildert. Die 70-jährige Ordensfrau, die seit vier Jahrzehnten in Afrika lebt und wirkt, besuchte Wien anlässlich der 20-Jahr-Feiern des Hilfswerks „Jugend Eine Welt“.

Tunesien sei in den vergangenen Jahren zum Korridor nach Europa geworden, so der Eindruck Rohrers, die seit 2010, kurz vor Beginn des „Arabischen Frühlings“, in dem Maghreb-Land tätig ist. Das Kommen und Gehen mache sich in ihrer katholischen Pfarrei im Nordosten der Hauptstadt Tunis stark bemerkbar, wo bei den Gottesdiensten Menschen aus 80 Nationen anzutreffen seien und die Zahl der Schwarzafrikaner plötzlich stark zugenommen habe. „Fast alle wollen in Tunesien Geld verdienen, um damit den Schlepper nach Europa zu bezahlen“, so die aus der Schweiz stammende Ordensfrau, die in der Seelsorge für Studentinnen aus Schwarzafrika tätig ist.

Viele der in Tunesien Gestrandeten seien Opfer von Menschenhändlern, gab Rohrer an. Massenweise würden Mütter oder auch minderjährige Mädchen etwa in der Elfenbeinküste mit „tollen Arbeitsangeboten“ gelockt; das Ticket dafür wäre bereits bezahlt, werde ihnen gesagt. „Wenn sie in Tunesien am Flughafen ankommen, werden sie genötigt, als Familienhilfe, Putzfrau oder in der Prostitution zu dienen und man sagt ihnen: Wir haben für dich bezahlt, du musst deine Schulden jetzt abarbeiten.“ Aus Angst, sonst nicht mehr nach Europa weiter reisen zu können, ließen sich die Opfer in Tunesien keine Aufenthaltsbewilligung ausstellen.

Ist das Geld nach Monaten der harten Arbeit dann aufgetrieben, verschwinden die Migranten laut Rohrers Berichten in Richtung Libyen, von wo aus die Flüchtlingsboote nach Europa starten. Doch bei der Ankunft im Nachbarland würde ihnen alles abgenommen – Geld, Uhren, Dokumente und Handys. „Man nutzt sie erneut aus, als Arbeiter oder für Sexdienste, sperrt sie in Gefängnisse, die man Lager nennt, die aber mit den KZs aus dem Zweiten Weltkrieg vergleichbar sind“, verwies die Don-Bosco-Schwester auf Betroffenen-Berichte. Manche überlebten die Schikanen nicht, viele würden Opfer von Misshandlungen und Vergewaltigungen. „Wenn sie dann endlich auf die Schiffe steigen, sind sie so abgemagert und krank, dass sie auf der Überfahrt sterben.“

Misshandlungen auch auf Booten

Die Flüchtlingsboote queren bei der Überfahrt nach Lampedusa teils tunesische Gewässer – und werden oft von der Küstenwache abgefangen, die in den vergangenen Jahren durch internationale Unterstützung mit Schiffen, Hubschrauber und Waffen aufgerüstet wurde, um Migranten nicht nach Europa durchkommen zu lassen. Flüchtlingsboote werden zurückgeholt, die Lebendigen im Falle eines Untergehens gerettet und die Leichen geborgen. Sexuelle Ausbeutung gebe es auch auf den Booten, erklärte Sr. Rohrer: „Wenn es Frauen zurückschaffen und darüber reden, berichten sie, wie schlimm es ihnen ergangen ist. Sie sind schockiert und traumatisiert.“

Beklemmend ist jedoch auch die Konfrontation mit den ständig an die tunesischen Küste gespülten Leichen, über die es keinerlei Zahlen oder Medienberichte gibt, wie die Ordensfrau betonte. Obwohl dies nicht zutreffe, würden die toten Schwarzafrikaner von den tunesischen Behörden pauschal als Christen angesehen und an die christlichen Pfarreien für die Bestattung in Massengräbern „zurückgegeben“. Es gebe somit ein „christliches Begräbnis für Unbekannte. Denn da die Toten vor der Bootsfahrt aus Sicherheitsgründen alle Identitätsnachweise weggeworfen haben, weiß man nachher nicht, wer sie sind, aus welchem Land sie kommen und ob ihre Familie weiß, dass sie ertrunken sind.“ Der in Tunis für die Begräbnisse zuständige Priester – ein Tansanier – sei an seiner Belastungsgrenze, berichtete Rohrer; allein in der ersten Maiwoche habe man 180 Leichen gefunden.

Überlebende Flüchtlinge, welche die tunesische Küstenwache zurückbringt, werden des Landes verwiesen, darunter laut Rohrers Angaben auch viele Minderjährige. Die meisten würden jedoch zwei Monate später wieder auftauchen und es trotz der enormen Schwierigkeiten erneut probieren.

http://de.radiovaticana.va/news/2017/05/16/ordensfrau_nordafrika_total_überfordert_von_flüchtlingszust/1312481

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founded by George Friedman.

The Cost of Fixing Russia’s Economy.

May 12, 2017 Putin must choose between trying to save the economy and saving himself.

By Xander Snyder

Russia is facing an economic crisis, and the search for palatable solutions has come up empty. Low oil and natural gas prices have hamstrung the Russian economy, which depends on the sale of hydrocarbons. President Vladimir Putin knows the status quo must change, but he has put off a decision on the path forward as long as he could, reluctant to face the negative political and social consequences of action. Details of a plan are now on the table, but if he isn’t careful, it could cost Putin the support of rich and poor alike.

A Man With a Plan

Last year, Putin tasked Alexei Kudrin with devising an economic plan for the future. Kudrin served as deputy prime minister from 2000 to 2004 and finance minister from 2000 to 2011 but has been out of government ever since. A well-known advocate of liberal economic policies, Kudrin will present his plan, known as Plan K, to Putin later this month. From what we know, the plan is meant to invest more government money in areas that are more likely to produce greater economic growth – namely, technology and education – without unduly increasing the budget. This would entail cuts in other areas, specifically pensions. The extent of those cuts was laid out last week in an article by Russian newspaper Vedomosti, which said Kudrin’s policy includes reducing the number of pensioners by 9 percent.

The reduction in pensions is a core component of Kudrin’s plan, but the political backlash is difficult to balance against the potential economic benefits. The plan would decrease the number of pensioners by increasing the age limit to draw a pension from 55 to 63 years old for women and from 60 to 65 for men. It would also increase the number of years an individual must pay into the pension system to be eligible.

Needless to say, these suggestions are not popular. About 43 million Russians, 30 percent of the population, draw pensions. Pension income has already been falling – in real terms, it dropped by 7 percent from 2014 to 2016. If Kudrin’s plan is implemented, fewer people will collect pensions. This will exacerbate the challenging living situations for many retired Russians since, unlike in the West, the vast majority of Russian retirees depend almost exclusively on their pension income (over 90 percent of Russian retirees lived entirely on their pensions as of 2013). Currently, pensions are at 1.5 times subsistence levels (down from 1.8 times in 2012), or about 34 percent of the average Russian salary. A recent BBC article reported on 4,000 pensioners who filed complaints about their pensions being too low. People have taken to the streets across the country to voice their displeasure about missing or skipped pension checks. That Kudrin’s plan is even being considered given the unrest already underway shows how hard-pressed the Kremlin is for funds.

Putin appears to prefer Kudrin’s approach, but it isn’t the only option. A second plan was proposed by the Stolypin Club, a group of Russian economists formed in 2012 to prepare alternative economic strategies for the country. Both approaches focus on growing investment, but Stolypin’s suggests that new investment should come predominantly from the government, facilitated by looser monetary policy (that is, printing money) and greater government borrowing. Kudrin’s plan, on the other hand, aims to spur greater investment by small and medium-sized businesses by redirecting government spending without significantly increasing it.

The shortcoming of the Stolypin Club’s plan is that an increased money supply does not equal an increase in real purchasing power. Fiscal stimulus can be effective, but only if the increase in government spending is not offset by a decrease in the value of its currency, which would occur if the increase in spending were “financed” by printing more money instead of raising taxes (which is not politically appealing).

The Stolypin Club’s proposed solution to limit the depreciation of the ruble is to replace the floating exchange regime with a fixed-rate regime. The central bank would spend foreign reserves to purchase rubles, thereby maintaining demand for the ruble and preventing its depreciation. The extent to which the bank can do this is limited, however, by the amount of foreign reserves it has on hand. Should it run out, it would cause a run on the ruble as those who hold rubles rush to exchange them before they lose further value. This would not be a new phenomenon for Russia – a high fixed exchange rate was one of the primary causes of its 1998 financial crisis. The Stolypin Club’s plan can therefore act as a stopgap, but it is not a long-term solution to Russia’s economic predicament.

Now that more details about Kudrin’s plan are available, the fact that Putin is still planning to meet with him is a sign that the president is taking the idea of austerity seriously. Putin recognizes the political challenge that a drop in pension income presents, but he also knows that the Russian economy cannot sustain itself if it continues to rely so heavily on hydrocarbons. The Russian people still widely support Putin, but their support is based on the belief that he can fix the economy. Many in the civil-military elite, however, feel that the president’s best days are behind him – he lost Ukraine, and now the state is losing oil revenue – and are beginning to consider alternatives. Russians have a profound and impressive ability to endure hardship when they believe it is for a purpose, but Russian history shows that there is a limit to how long the Russian people are willing to suffer if leaders’ solutions appear to be failing. Putin will probably be re-elected in 2018 if he runs, but he will be expected to have an economic game plan.

Only So Much

In the meantime, Putin must find a way to implement structural economic reforms that can diversify Russia away from its dependence on energy sales while limiting the short-term economic hardships – and thus political consequences – that such policies would entail. Russia is already experiencing social unrest. Putin has already reformed the leadership of the security services, reshuffled various state ministries and replaced regional governors. There is only so much that can be done. Russia needs austerity, but too much can push the ongoing unrest beyond the point where the security forces can control it. Putin saw firsthand how this can lead to regime change: Large-scale protests after the default crisis of 1998 paved the way to his own rise to power.

At the same time, the masses are not the only potential threat to Putin’s continued rule. Kudrin’s plan to save the country would require judicial reform to work – he wants to encourage small and medium-sized businesses to invest, which they will not do if they feel that the judicial system is rigged against them and that their investments aren’t protected. But reforming the courts would mean subjecting hitherto protected oligarchs to the rule of law to a greater extent, something that risks turning many of Putin’s inner circle against him. It would represent a decentralization of the Kremlin’s power: No longer could Putin decide who is and is not above the law. Given Putin’s moves the past two years to consolidate power, this is obviously something he would like to avoid. But as Kudrin has stressed, without judicial reform, the market would continue to lack sufficient property protection to encourage greater business investment.

One of Geopolitical Futures’ major forecasts is a deterioration of the Russian economy as it struggles to branch out from its reliance on hydrocarbons while energy prices are low and the government’s coffers are dwindling. Diversification will require some degree of austerity, which will not only dampen consumption at the expense of greater government-driven investment – suppressing economic growth at least initially – but it will also generate resentment among the middle and lower-middle classes that constitute Putin’s base of support. Meanwhile, judicial reform, central to Kudrin’s plan, would threaten Putin’s support from the upper class.

Putin has a limited number of options, none of which are good. Maintaining the status quo is a dead end because low energy prices will only continue to wreck the Russian economy. Therefore, Putin will implement austerity measures, but he will do so slowly in hopes that the short-term political consequences will not be so severe as to break his hold on power.

https://geopoliticalfutures.com/cost-fixing-russias-economy/

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Policy= res publica

Freudenberg-Pilster* The Latest Trump Crisis

founded by George Friedman.

By Jacob L. Shapiro

It’s becoming a weekly tradition: a Donald Trump misstep and a media explosion, and not always in that order. The Washington Post reported late Monday that U.S. President Donald Trump had revealed “highly classified” information to Russia’s foreign minister, and in so doing, Trump jeopardized the source of the information, as well as the intelligence-sharing agreement with the unnamed ally (since identified by The New York Times as Israel) that provided the information. According to the Post, Trump shared details of a specific IS terrorist plot, including the IS-controlled city where the information came from.

The media has proceeded to work itself into a frenzy over Trump’s misdeeds, but we cannot lose our minds each time some new scandal appears in the headlines. Geopolitical Futures tries to avoid wading into superficial and inconsequential internal politics. Still, there are some important things here that must be understood. First, there is an allegation that Trump has compromised U.S. access to intelligence from its partners. This is a serious allegation with geopolitical ramifications if true, so to the extent possible, its veracity must be evaluated. Second, the battle royal between Trump and the media is a symptom of a deep division within the United States itself. Trump’s election and inconsistency in American foreign policy are other symptoms of this divide. The divide and Trump’s handling of it are already affecting and will continue to affect U.S. foreign policy.

Trump and Russia

To understand the first issue, we must begin with some basic facts about the U.S.-Russia relationship. Trump has sought Russia’s help in combating the Islamic State – and Russia has played a major role in containing the Islamic State in Syria. Russia has a large Muslim population susceptible to radicalization. Russia has also been vulnerable to terrorist attacks, and specifically attacks targeting passenger airplanes, which was reportedly the subject of the information Trump shared. In October 2015, 224 people died when an IS bomb brought down a Russian passenger plane over the Sinai Peninsula. The United States outwardly protests Russia’s support for the Bashar Assad regime, and now even bombs the regime, but in the midnight hour, Washington is grateful that someone intervened and prevented the Islamic State from marching on Damascus, which was a very real concern as recently as 2015.

Where the United States and Russia do not see eye to eye is in Eastern Europe. Russia sees NATO and U.S. moves in Eastern Europe as violating post-Cold War assurances that the West would not extend military forces into former Soviet countries. The United States seeks to contain Russia and to preserve the independence of the states in its buffer zone to keep Russia weak and unable to challenge U.S. hegemony. For the Americans, the objective is to prevent conflict, not to start it, and Trump’s is not the first U.S. administration to try to reach an understanding that skirts conflict with Russia. One of the first things President Barack Obama’s administration tried was a Russian reset, with Secretary of State Hillary Clinton leading the effort. Trump’s supposed ties to Russia cast a pall over his outreach, but leaving aside the allegations and investigations, what matters is that Trump’s policy toward Russia is not strange or groundbreaking. It’s actually rather banal.

It makes sense, then, for Trump to try to build a basis for cooperation with Russia in the fight against the Islamic State. It even makes sense for Trump to brag about how good U.S. intelligence is in Syria to remind Russia that the United States is powerful and that it is watching what Russia does on the ground. The American media does not like that Trump invited the Russians into the Oval Office, but it seems petty to pick a fight over where Trump decided to meet them. Trump is guilty of a similar level of pettiness for not allowing U.S. photographers into the room. That is part of the Trump-media squabble. As for what transpired during the meeting, it appears that nothing Trump did was illegal, and by the Post’s own admission, some of what he disclosed was apparent when the Department of Homeland Security announced it was considering banning laptops and other large electronic devices on flights between Europe and the United States.

A House Divided

Upon deeper scrutiny, the issue is not necessarily what Trump has done or said. It is that Trump cannot trust even his inner circle of advisers. Whoever leaked the information was either in the room or had access to the minutes of the meeting. That means that someone with fairly robust access was willing to risk not just his or her own career but also the effectiveness of U.S.-Russia moves against the Islamic State, as well as U.S. credibility in the world and with allies that share intelligence. It makes Trump look bad, it makes the United States look worse, and it damages U.S. credibility for as long as the Trump administration is in power. That is a victory for the Islamic State, and for all would-be enemies of the United States.


U.S. President Donald Trump boards Air Force One at Andrews Air Force Base on May 4, 2017. BRENDAN SMIALOWSKI/AFP/Getty Images

The deeper problem for Trump is that he is too reliant on charisma. Max Weber, the father of modern social science, wrote in “Politics as a Vocation” that political power can be maintained three ways: by tradition, by charisma and by legality. Of these, Trump has only charisma. He does not have the power to persuade, nor can he guarantee the loyalty of his subordinates. The legislative branch and the judicial branch have already blocked his moves at multiple points. Many of the bureaucrats and technocrats have no love for him. Trump has risen to power by generating popular support from a significant faction of the population. It was enough to get him to power, but it is not enough to enable him to govern. That faction represents only about 35-41 percent of the electorate, based on his approval ratings. Many like to compare Trump to leaders like Duterte, Xi, Putin or Erdogan. The comparison is faulty for many reasons, but one of the least mentioned is that Trump is far less popular in his country than any of them are in theirs.

Which leads us to the second, far more consequential issue, one that we have written about at length but that is no less important for having been stated before. The core of Trump’s strength is the white lower-middle class. The middle class in general in the United States is under pressure and can no longer easily afford the basics of the American dream – a house, a car, the ability to provide for a family and even to go on vacation from time to time. According to the Pew Research Center, real wages for American workers have been flat or even falling for decades. A 2013 University of California, Berkeley study by Emmanuel Saez found that from 2009 to 2012, the real incomes of the top 1 percent in the United States grew by 31.4 percent, while the bottom 99 percent saw growth of just 0.4 percent. Trump leveraged enough of this discontent to propel himself to office.

That Trump’s proposed polices so far generally don’t help the very class of voters that brought him to power matters little. That is the telltale sign of a charismatic leader: a figure who is compelling enough that voters cast ballots against their self-interest. Trump capitalized on the feelings of American workers who believed that they were getting a raw deal and were willing to try something different, and Trump offered different in spades. For the white lower-middle class in particular, the fact that Trump didn’t much care whom he offended, and didn’t care for the identity politics that has mired the left in electoral irrelevance, was just further sign of Trump’s independence and willingness to go against the grain.

There is a fundamental, class-based division in the United States that has emerged between the working and lower-middle class on one hand and the urban, coastal, liberal elites on the other. The former are the Trump faction, and the latter are the Washington Post faction.

The former want Trump to Make America Great Again. The latter oppose Trump’s moves for no other reason than that they come from Trump and that they find Trump repugnant.

Trump’s faction so deeply distrusts the press that every time Trump comes under fire, it validates their perception of Trump as embattled because he is brave enough to fight for them. The Washington Post faction so deeply distrusts the Trump administration that it demands its newspapers make mountains out of molehills on a weekly basis to undermine Trump’s credibility. Trump is caught in the crossfire, a slave to his faction and constrained in what he can do by his need to placate it. The Washington Post is a slave to its faction, which buys more subscriptions because the Post is out for blood.

The result is much moaning and wailing and gnashing of teeth, the manufacturing each week of a new political crisis that will prove once and for all that Trump really is the boogeyman the media makes him out to be, or for Trump, that the media really is out to get him and that he will soon be exonerated of the allegations levied against him. This is what America’s Founding Fathers intended: They wanted paralysis in governance to defend against factions should they appear and claim power. The result, however, is bad for the United States in the short term. The fight against the Islamic State gets placed on the back burner for flashy headlines. Kim Jong Un’s claim that North Korea now has a perfect weapons system doesn’t even make page two. China pushes as hard as it can to erode U.S. influence in Southeast Asia, and Washington is too distracted to do much about it.

Trump may learn that the power of the presidency is to persuade, not to demand loyalty. Even if he does, his opponents are so deeply entrenched and committed to his failure that the question arises whether he can gather the momentum needed to reshape the relationship. He is deeply constrained because any move he makes to garner support from those outside his base jeopardizes his relationship with the base, and he’s constrained by the other factions because they care more about his demise than they do about the success of the executive.

None of this is to say that the United States’ pre-eminence is at risk: The broad geopolitical forces that govern the behavior of nations tell us that the United States will remain the most powerful country in the world for many decades. But those same forces produced Trump and the current situation in the United States, and as long as the country is this polarized, the near term is going to be a bumpy ride, and the application of U.S. power abroad will suffer for it.

https://geopoliticalfutures.com/latest-trump-crisis/

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Barandat* U.S. Sec. of Defense-Mattis Fills Key Executive Positions at the Pentagon

Defense Secretary James Mattis began to fill out his staff last week, announcing his choices for three key positions at the department. Experts said the appointees seem well qualified and broadly in line with that of his predecessors.

Mattis named Elbridge Andrew Colby to serve as deputy assistant secretary for strategy and force development. Colby most recently was a Robert M. Gates Senior Fellow at the Center for a New American Security, a national security think tank that produced several appointees in the Obama administration.

He tapped Pete Giambastiani to become principal deputy assistant secretary for legislative affairs. A Naval Academy alumnus, Giambastiani most recently worked as chief of staff to Rep. Tom Rooney, R-Fla., a member of the House Appropriations and Intelligence committees. During the George W. Bush administration, Giambastiani served as a special assistant to the deputy undersecretary of the Navy and the secretary of the Navy.

And Thomas Goffus was named deputy assistant secretary for Europe and NATO. Goffus, a retired Air Force colonel, most recently served as a staffer on the Senate Armed Services Committee.

All three posts are Senior Executive Service positions. Bill Valdez, president of the Senior Executives Association, said the appointments are among the 800 SES slots that can be used for political hires.

http://www.govexec.com/defense/2017/05/defense-chief-fills-key-executive-positions/137891/?oref=govexec_today_pm_nl

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Middle East

The importance of the Iranian election

FT- Nick Butler

The spring of 2017 is certainly the season for elections, with contests in France, Britain and South Korea and the election for the chancellorship in Germany to follow in the autumn. For the international energy companies and the global energy market none is more important than the presidential election in Iran that takes place on May 19.

There are 12 candidates but the main contest will be between the current President Hassan Rouhani and his main challenger Ebrahim Raisi. To label them as moderate and hard line is a convenient western shorthand. The nuances of policies and allegiances makes the comparison more complex. Mr Rouhani is not a secular liberal and Mr Raisi, at least on the basis of his past role as attorney general, is perhaps not as rigid as some imagine. Both are survivors in the complex and often vicious game of knives which has existed in Iran since the 1979 revolution.

But who wins matters. Within the country the next president will have a voice in the choice of the successor to the ailing Supreme Leader Ayattollah Ali Khamenei. Within the region he will determine whether the bitter conflict with Saudi Arabia will continue to destroy Yemen and whether Iran will continue to support the Assad regime in Syria. And internationally the next president will be critical in determining Iran’s relationship to the US and the future of the sanctions regime which for the moment is constraining foreign investment particularly in the oil and gas sector.

As things stand most of the world’s major companies are holding back. American sanctions were partially lifted when agreement was reached on Iran’s nuclear plans in 2015 but some remain in place. Under current US sanctions rules US nationals are not allowed to participate in any activity involving Iran. In several major western companies senior managers who have an American passport have to leave the room whenever Iran is discussed. The sanctions also limit the ability of international investors to use the international banking system to finance activity in Iran.

After the Banque Paribas case, in which in a European bank was fined $8.9bn for breaking US sanctions on Iran, compliance officers have taken a negative view of any involvement whatsoever.

The companies’ desire to get involved in Iran is of course very high. Iran has reserves amounting to 150 bn barrels of oil, more than 1,000 tcf of natural gas and beyond that huge unexplored resources. Costs are low. Much of the infrastructure required for development is already in place even if it needs upgrading. Most of the companies have their own identified targets in mind. For producers, the service sector and the supporting cast of legal and technical specialists Iran is a gold mine waiting to be opened.

The Iranians certainly need investment and technology. Production has risen since the nuclear agreement was reached and Iranian oil output is now at 3.8m barrels per day of which 2.3mbd is exported. But there are signs that the limits of Iran’s capabilities are being reached. It will be impossible to get oil production to the government’s target 5 or 6 mbd and to start producing serious volumes of gas for export without full scale international engagement. It will equally be impossible for the Iranian government to meet the expectations of those who thought that the nuclear deal would bring an end to decades of economic hardship without increasing oil output and sales.

So far the involvement of the majors has been limited to exploratory conversations around potential transactions which can only become real if sanctions are removed. Even this level of engagement has been restricted in the last six months by uncertainties around the intentions of President Trump, who described the Iranian nuclear agreement as “the worst deal ever” but who has noticeably not torn up the agreement during his first 100 days in office. Uncertainty has become a US negotiating tactic, in the face of which potential investors can do nothing other than wait.

The outlier among the western companies is the French oil and gas major Total. Total’s CEO Patrick Pouyanne has taken the lead in engaging with Iran and the company has agreed a joint venture to develop Phase 11 of the huge South Pars gas field. Total is working in partnership with the Chinese state enterprise CNPC which could allow development to be financed by Chinese banks, making it immune to US sanctions. But even with the support of the French government Total is being cautious and the transaction remains on hold.

For the moment Iran’s most active partners are the Indian state company ONGC which has just submitted a $3bn bid for development of the Farzad B gas field and a group of Russian companies led by Rosneft and Lukoil. The Indian deal is proceeding but is small scale compared to what is needed. The Russian deal is bigger but Iranians would be forgiven for scepticism as to whether Russia really wants to see large scale additional volumes of gas developed given the current glut and the intensive competition which is driving prices down.

The election on May 19 will shape the outcome. There is a clear risk that entrenched positions and the residual hostility between Iran and the US, which goes back decades, could freeze the situation and delay serious investment for years to come.

On the other hand there is no sign that the new US administration wants to engage in another shooting war in the Middle East and every sign that US companies would like to join the party in Iran. There could be a mutuality of interest in “reviewing” the existing nuclear deal, changing the font and proclaiming victory.

If that happens and sanctions are relaxed, investment will flow into Iran very quickly, funding new developments and production, some of which could be brought onstream very quickly. Anyone hoping that the cycle of oil prices will soon turn, and that the market will tighten over the next two years, should be watching the Iranian election results very carefully.

http://blogs.ft.com/nick-butler/2017/05/14/the-importance-of-the-iranian-election/

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*Massenbach’s Recommendation*

Frankly Speaking: China’s Belt and Road blueprint augurs changed global order

16 May 2017. On 14 May … in Beijing Chinese President Xi Jinping showcased his ‘Belt and Road Initiative’ (BRI) … provide compelling insights into a rapidly transforming global order … while the West takes time out, the rest of the world is in transition. (for more see att._ China makes bid for global economic leadership at Belt and Road forum in Beijing

)

The trillion-dollar BRI, Beijing’s ‘project of the century’, was spotlighted last weekend … Not since America’s Marshall Plan pumped millions of dollars to revive war-devastated Europe has a country undertaken an endeavour of such spectacular scope, vision and financial magnitude …

The Chinese leader is no amateur when it comes to undertaking bold, headline-grabbing initiatives. He made a strong stand for economic globalisation and open trade at the Davos World Economic Forum in January this year.

And the BRI is only part of the story. Significantly, China’s Asian Infrastructure Investment Bank (AIIB) is already working to meet the world’s enormous infrastructure investment needs.

Also, as the US withdraws from the Trans-Pacific Partnership (TPP), the pan-Asian trade pact which excluded China, Beijing and countries in the Association of Southeast Asian Nations (ASEAN) are moving ahead with the Regional Comprehensive Economic Partnership (RCEP) to boost trade within the region …

Xi’s blueprint articulates Beijing’s self-confident repositioning in an uncertain era. Not surprisingly, the US and Japan are not pleased. Most Europeans are interested but cautious …

China may not always be the gentlest of interlocutors, but many countries are ready for a change. After all, the world needs to get better connected. Global infrastructure needs are enormous. Better connectivity is crucial for trade, to attract investments and to achieve some of the most crucial anti-poverty goals included in the Agenda 2030 Sustainable Development Goals (SDGs).

Clearly, BRI is not just about helping others. The search for new engines for domestic Chinese economic growth is an important driver. China wants to boost growth in its western regions, which lag behind the well-developed east coast. Steel and cement are in oversupply and will be used in the BRI projects. There will be job creation for thousands of Chinese workers, as well as foreign nationals …

China will have to ensure that BRI becomes more transparent, procurement rules become more rigorous and projects fit in with the SDGs, including environmental standards … for all the Western concerns that the BRI will allow China to steamroll its partners, in most countries China is not the only show in town.

Most states have access to US and European funds, not to mention aid from Japan and Saudi Arabia. It’s not a zero-sum game. Asian, African and other representatives I met in Beijing underlined the importance of the tectonic geopolitical shift taking place. “This a historic and transformative moment. We can see the world is changing,” an African ambassador told me. The way ahead is going to be complicated and difficult. China will need to learn how to deal with complex demands and painful facts on the ground in its myriad partner countries. But if he was worried, President Xi certainly wasn’t showing it. Nobody should expect quick fixes, he cautioned. “We will move forward step by step”. Beijing’s journey to greater global influence has truly begun.

http://www.friendsofeurope.org/global-europe/frankly-speaking-chinas-belt-road-blueprint-augurs-changed-global-order/

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But: U.S. Dep. of State: Direct Line: Argentina: Transportation Infrastructure Opportunities for U.S. Business

Bureau of Economic and Business Affairs

June 22, 2017

05-16-17 Full text_ Joint communique of leaders roundtable of Belt and Road forum – X.pdf

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US Senator Bob Corker: Strongly Supporting John Sullivan as Deputy Secretary of State

At the conclusion of a hearing on Tuesday to consider the nomination of John J. Sullivan to serve as deputy secretary of state, Senator Corker expressed his intention to “strongly support” Sullivan’s confirmation.

“Short of something unusual happening, I have to tell you [that] I look forward to very strongly supporting your nomination,” said Corker. “I think you’ve acquitted yourself exceptionally well today. It is evident that in your private meetings with members on both sides of the aisle you’ve done the same there. And I really do believe that the experiences that you’ve had in other departments and the professionalism that you have [shown] as an individual have equipped you to be an exceptional deputy secretary. We thank you for your willingness to serve [and] for your family’s willingness to allow you to do something that we know is going to be a seven-day-a-week job, at least in the beginning, and probably all the way through.”

About: John J. Sullivan (WIKI): His firm biography continued:

He also has served as a senior adviser to four presidential campaigns … [Sullivan] has focused his practice on the growing intersection of global trade/investment and US national security and foreign policies. He advises CEOs, general counsels, and other senior executives on US sanctions and export controls, international trade disputes and regulation, and foreign investment in the United States, the Middle East, Russia, and other countries. His clients include major oil and gas companies, consulting, accounting, and financial services firms, petrochemical companies, and manufacturers. He has represented these clients before executive departments and agencies of the US and foreign governments, as well as in litigation in the United States, where he has filed briefs and presented oral argument in courts across the country.

The biography also discussed work on client business in Russia, Iran, Cuba and Iraq and „advising a multinational manufacturing company on security policies and risk issues in countries with a high threat of terrorism, violence, and political instability“. In the Obama Administration, Sullivan was chairman of the US-Iraq Business Dialogue, „an advisory committee on economic relations between the two countries“.[4]

In February 2004, U.S. Secretary of Defense Donald Rumsfeld appointed Sullivan as Deputy General Counsel of the United States Department of Defense. In this capacity, he was responsible for all litigation involving the department and for counsel on major criminal and congressional investigations. During his tenure, he was awarded the Secretary of Defense’s Medal for Exceptional Public Service.[3]

Sullivan then moved to the U.S. Department of Commerce, where he served as General Counsel. As the department’s chief legal officer and Designated Agency Ethics Official, Sullivan managed the work of over 400 lawyers in the 14 legal offices providing legal advice to all components of the department.[3]

Upon the resignation of Deputy Secretary David Sampson, Sullivan was assigned as Acting Deputy Secretary beginning on September 1, 2007. He was soon thereafter nominated by George W. Bush to serve in a permanent capacity, and was sworn in on March 14, 2008 after confirmation by the United States Senate. As the department’s chief operating officer, he managed a $6.8 billion budget and 38,000 employees in 13 operating units. He was also a member of President Bush’s Management Council and a member of the Board of Directors of the Overseas Private Investment Corporation.[3]

https://en.wikipedia.org/wiki/John_J._Sullivan_(American_lawyer)

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see our letter on:  http://www.massenbach-world.de/41259.html

*Herausgegeben von Udo von Massenbach, Bärbel Freudenberg-Pilster, Joerg Barandat*

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UdovonMassenbach@t-online.de   Mail@Freudenberg-Pilster.de   JoergBarandat@yahoo.de

 

 

 

Massenbach-Letter. NEWS 12.5.17

Massenbach-Letter. News

  • WSJ:Trump Set to Arm Kurds in ISIS Fight, Angering Turkey
  • U.S. Sec. of State Rex W. Tillerson-Grundsatzrede zur US-Außenpolitik /
  • Remarks to U.S. Department of State Employees
  • U.S. Senator Bob Corker (Tennessee): Corker Votes Against Trillion Dollar Spending Bill
  • DIW Women’s Finance Summit 2017 – Berlin
  • Friedman/Shapiro: The Best-Laid Plans of Saudi Arabia and Russia
  • Ophir to Borrow $1.2 Billion from Chinese Banks for Fortuna Floating LNG
  • Carnegie-Moscow: Local Civic Activism in Moscow
  • From our Russian News Desk. (The views expressed are the author‘s own.)
  • Iran_Oil_Industry
  • US_Russia_INF
  • Azerbaijan
  • China_Aircraft_Carrier

Massenbach* WSJ: Trump Set to Arm Kurds in ISIS Fight, Angering Turkey

Aim is to take Raqqa with help of YPG, but Turkey considers it a terrorist organization

May 9, 2017 2:12 p.m. ET

President Donald Trump approved plans to directly arm Kurdish fighters battling Islamic State in Syria, U.S. officials said Tuesday, paving the way for an offensive against the extremist group’s de facto capital but angering Turkish allies who view the Kurdish fighters as terrorists.

After months of internal debate, Mr. Trump approved a proposal to arm the YPG, the Kurdish organization in Syria that the U.S. military considers its most reliable military ally in the country.

But Turkey, a North Atlantic Treaty Organization ally, considers the YPG to be a terrorist group that threatens its borders, and it has long opposed the U.S. plans.

The decision sets the stage for the YPG and its Arab allies to launch an offensive on Raqqa, Islamic State’s de facto capital in Syria.

Top Turkish officials met on Monday in the White House for a tense meeting to discuss the U.S. plans.

On Tuesday, the Pentagon said the U.S. is moving ahead with the plan, despite Turkish objections.

“We are keenly aware of the security concerns of our coalition partner Turkey,” said Dana White, the chief Pentagon spokeswoman. “We want to reassure the people and government of Turkey that the U.S. is committed to preventing additional security risks and protecting our NATO ally.”

https://www.wsj.com/articles/trump-approves-direct-arming-of-kurds-in-fight-against-isis-1494353541#_=_

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From our Russian News Desk. (The views expressed are the author‘s own.)

  • Iran_Oil_Industry
  • US_Russia_INF
  • Azerbaijan
  • China_Aircraft_Carrier

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The Best-Laid Plans of Saudi Arabia and Russia

May 9, 2017

By Jacob L. Shapiro

It was only a few months ago that OPEC, once the de facto arbiter of oil markets, seemed to have a plan to inflate the price of oil: The cartel, along with several non-OPEC members, agreed in December to cut production by roughly 1.2 million barrels per day. And for the first quarter of 2017, OPEC largely made good on its pledge. It produced 1.1 million fewer barrels of oil per day in the first quarter of 2017 than it did in the final quarter of 2016. Saudi Arabia, OPEC’s largest producer, accounted for 55 percent of the cuts.

And yet on May 4, oil prices reached a new low for the year, dropping to roughly $48 per barrel and hovering there ever since. The original deal wasn’t meant to return oil prices to previously high levels; it was meant only to keep them from crashing altogether. Still, the plan appears to be failing, and its failure bodes ill for Saudi Arabia – and for Russia, which was a little disingenuous in how much its own cuts would affect prices.

Saudi Arabia can shoulder so much of the burden of production cuts because, unlike most other countries, it has roughly $500 billion of reserves to fall back on. Put simply, it can afford short-term losses that other countries cannot. When prices are in the $50 per barrel range, as they have been for most of 2017, Riyadh doesn’t have to dip too far into its reserves to cover its budget deficit.

But the prospect of low prices, not to mention the reinstatement of government spending on public sector salaries and bonuses, means that Riyadh will soon feel the pain that so many other countries have felt for some time. The days when Saudi Arabia could dictate market prices by itself have passed. And so the country needs to do what it can to maximize value now, before its ability to dictate the market wanes further and before it invests even more money into diversifying its economy.

There are, of course, reasons beyond Riyadh’s control that oil prices are falling. The United States, for example, has increased production – something it tends to do when prices reach producers’ break-even point in the $50 per barrel range. Projections by the U.S. Energy Information Administration from late 2016 estimated that the United States would produce 8.7 million barrels per day in 2017. The EIA has already begun to revise its forecast upward: New estimates suggest the country will produce 9.2 million barrels per day in 2017, and perhaps as much as 10 million barrels per day in 2018. If these rates continue, the United States would produce more crude oil than Saudi Arabia would if it, too, maintained current rates.

https://geopoliticalfutures.com/wp-content/uploads/2017/05/us-crude-oil-production.png
(click to enlarge)

Then there is Russia, which has arguably misrepresented how closely it has adhered to the December agreement. This is because Russia simply can’t afford to cut production. Russian Energy Minister Alexander Novak has said Russia met its promised cuts of 300,000 barrels per day. Russian Energy Ministry statistics suggest that number may even be 400,000 barrels.

https://geopoliticalfutures.com/wp-content/uploads/2017/05/russia-crude-oil-production.png
(click to enlarge)

But these numbers are misleading. Decreased production and intentional cuts aren’t the same thing. There was a similarly steep drop in Russian production – 432,000 barrels per day – at this time in 2016, raising the question of whether this is just a monthly seasonal adjustment. Crude oil production cuts are in the eye of the beholder. Russia has technically met its obligation to cut 300,000 barrels per day if the benchmark for the cuts is December 2016. Russia has not met its obligations, however, if the standard is a year-on-year comparison of cuts. As the chart above shows, Russia raised crude production in January and March 2017 when compared with the previous year. The April 2017 decrease in production, when viewed year-on-year, is just over half of Russia’s commitment to OPEC.

The ebbs and flows of oil prices, for whatever their reasons, are best analyzed by oil experts. The bottom line is that there is more supply than there is demand, and when the price hits a certain point, U.S. production begins to kick in, increasing supply and offsetting other cuts agreed to by OPEC and non-OPEC countries. That puts a ceiling on the price of oil, putting countries such as Russia that depend on oil exports in a difficult situation. Moscow could afford a short-term production cut if cutting production put prices into the $70 and $80 per barrel range. But it could not afford a short-term cut that would close production facilities because of how dependent some regions in Russia are on oil. A long-term production cut to keep the bottom from falling out of oil prices would also be difficult for Russia to maintain. After all, it’s already on pace to exhaust one of its reserve funds this year.

With Russia unable to stomach even a short-term cut, the bulk of the responsibility for decreasing production has fallen to Saudi Arabia, which has a large but not-inexhaustible amount of money to cover losses. The result is that GPF’s forecast on Russia, which identified Russian aggressiveness abroad and political instability at home as the key drivers of Russia’s geopolitical situation in 2017, is on track. The same is true of GPF’s forecast on Saudi Arabia, which predicts that Saudi Arabia is standing on the brink of an existential political crisis that a Saudi Aramco IPO and a “Vision 2030” will not be able to avert.

OPEC bought itself some time with its agreement to cut production in December. But it now faces the difficult choice of ending those cuts and watching prices fall (an untenable choice for most OPEC and non-OPEC countries), or continuing those cuts to keep prices at their current levels – an increasingly difficult thing to guarantee, given producers’ history of adhering to OPEC agreements. Sooner or later, the result is going to be lower oil prices, at which point many of the predictions GPF made at the beginning of the year will begin to form more quickly.

The post The Best-Laid Plans of Saudi Arabia and Russia appeared first on Geopolitical Futures.

https://geopoliticalfutures.com/best-laid-plans-saudi-arabia-russia/

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Policy= res publica

Freudenberg-Pilster* DIW Women’s Finance Summit 2017 – Berlin
Structural Change in the Financial Sector – Women’s Perspectives
May 23, 2017

Almost ten years after the crisis, the financial sector is still in the midst of a far-reaching transformational process. The macroeconomic environment and regulatory frameworks are changing quickly and profoundly, whereas new technologies are challenging established players – both from the public and private sector – like never before. These developments and their implications for the financial services industry and economies at large will be discussed primarily by leading female exponents. The ways in which organizations benefit from a sound gender balance in management and supervisory boards, among other topics, will also be addressed in the discussions.

Welcome addresses by
Marcel Fratzscher and Elke Holst

Keynote addresses by
Christine Lagarde, Managing Director, IMF (by Video)
Brenda D.H. Trenowden, Global Chair, 30% Club, and ANZ
Sir Philip Hampton, Chairman, GlaxoSmithKline plc, Chair of the Women on Board’s Review
Viviane Reding, Member, European Parliament

Panels
Changing Finance – international perspectives | Regulation – Digitalization – Political uncertainty
with Megan Butler, Christine Graeff, Sabine Keller-Busse, Sylvie Matherat, and Sandie O’Connor

Changing Finance – German perspectives | Beyond the crisis – the German financial sector in transition
with Dorothee Blessing, Christine Bortenlänger, Ingrid Hengster, Elke König, and Carola von Schmettow

Changing Finance – Governance and Diversity | Positive aspects of having women in leadership positions, and how to increase their numbers
with Douglas Flint, Peter Grauer, Sir Philip Hampton, and Axel A. Weber

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Barandat* U.S. Senator Bob Corker (Tennessee): Corker Votes Against Trillion Dollar Spending Bill

May 04 2017

WASHINGTON – U.S. Senator Bob Corker (R-Tenn.), a member of the Senate Budget Committee, today released the following statement after voting against the fiscal year 2017 omnibus spending bill.

“While this bill funds a number of important priorities, I could not support it because it increases spending by using the OCO slush fund without appropriately offsetting those increases in other places,” said Corker. “Every day that goes by, our fiscal situation becomes more of a threat to our country’s national security.”

The fiscal year 2017 omnibus spending bill designates $104 billion for Overseas Contingency Operations (OCO), exceeding the recommended amount agreed to in the Bipartisan Budget Act of 2015 by $30 billion. OCO is intended to provide emergency funding for military missions overseas but has been repeatedly abused to fund normal operations at the Departments of Defense and State in order to avoid exceeding statutory spending caps.

https://www.corker.senate.gov/public/index.cfm/2017/5/corker-votes-against-trillion-dollar-spending-bill

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Middle East/Africa

Ophir to Borrow $1.2 Billion from Chinese Banks for Fortuna Floating LNG

British oil and gas explorer Ophir Energy plans to borrow $1.2 billion from Chinese banks to back the development of its Fortuna floating liquefied natural gas (FLNG) export project in Equatorial Guinea.

The project is set to be cleared at the end of June, while the buyer of the LNG and the financial structure underpinning the scheme should be announced by the end of this month, Ophir Energy CEO Nick Cooper said on Monday.

The choice of Chinese banks reflected the unwillingness of Western institutions to back African oil and gas projects, Cooper told Cooper an industry conference in Amsterdam…

Fortuna FLNG will be Africa’s first deepwater floating liquefaction facility, with production capacity of 2.2 million tonnes per year and an estimated start-up in 2020.

Italian oil and gas group Eni is advancing its own FLNG project, Coral, in waters off Mozambique.

Eni expects to approve the investment imminently after a breakthrough in convincing its Chinese partner, CNPC, which had previously withheld its blessing, to back the scheme, industry sources said.

The two African FLNG projects are expected to be the only multi-billion-dollar LNG projects to be given the go-ahead globally this year, as low oil and gas prices make companies rethink investment plans.

Ophir’s Cooper said Fortuna FLNG was highly competitive against rival producers, which have heavier capital investments, allowing it to deliver supply to Europe more cheaply than even new projects in the United States.

While Ophir has not announced the identity of the buyer of output from its facility, industry sources have said the majority of interest has come from European players, including utilities.

Shipping company Golar LNG, also a partner in Fortuna FLNG with oil services firm Schlumberger via a joint venture, will build, own and deliver the FLNG vessel, which is called the Gimi.

The Gimi is an LNG tanker which Golar is fitting out with liquefaction technology.

Conversions like these are highly price competitive against traditional and more costly onshore liquefaction plants, said Chris Holmes, managing director of gas and LNG at IHS.

Malaysia’s Petronas brought on stream the world’s first FLNG project this year, called PFLNG 1. On the other end of the spectrum, the world’s biggest FLNG project, the giant Prelude plant being specially built by Royal Dutch Shell for deployment off the coast of Australia, staggers in at a cost of $12 billion. It is due to start next year.

By the end of the decade, 14 million tonnes of FLNG production is expected to come online, Holmes said.

https://www.oilandgaspeople.com/news/14169/ophir-to-borrow-12-billion-from-chinese-banks-for-fortuna-floating-lng/

About Orphir Energy: https://www.ophir-energy.com/about-us/

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*Massenbach’s Recommendation*

U.S. Sec. of State Rex W. Tillerson

Grundsatzrede zur US-Außenpolitik

WASHINGTON – (AD) – Nachfolgend veröffentlichen wir die unwesentlich gekürzte Rede, in der US-Außenminister Rex Tillerson am 3. Mai 2017 vor den Mitarbeitern des US-Außenministeriums einen Überblick über die amerikanische Außenpolitik der Regierung Trump gab.[…]

Ich bin jetzt seit etwa drei Monaten hier, wir arbeiten Seite an Seite, und deshalb dachte ich, es ist vielleicht nützlich, wenn ich einige meiner Gedanken darüber mit Ihnen teile, wo wir meines Erachtens stehen und was auf uns zukommt, was sicherlich von Interesse für Sie ist.

[…]

Ich möchte also mit Ihnen über einige Themen sprechen. Ich möchte meine Sichtweise dessen erklären, wie die Politik dieser Regierung – „Amerika zuerst“ – in unsere Außenpolitik und die auswärtigen Angelegenheiten einzuordnen ist. Darauf werde ich also eingehen. Und dann will ich einen kurzem Rundgang um die Welt machen. Die meisten von Ihnen wissen in etwa, was auf der Welt vor sich geht, aber ich habe mir dennoch gedacht, dass ich kurz auf die einzelnen Regionen eingehe, um zu erklären, wo wir meines Erachtens stehen und welchen Bereichen wir noch nicht die Aufmerksamkeit zuteilwerden lassen konnten, die wir ihnen gerne widmen würden – und ich möchte auf keinen Fall den Eindruck erwecken, wir hielten diese Bereiche nicht für wichtig. Die Frage ist: Welches ist die gefährlichste Situation, die wir angehen müssen?…..

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Remarks to U.S. Department of State Employees

Rex W. Tillerson
Secretary of State

Dean Acheson Auditorium

Washington, DC

May 3, 2017

……So I thought we’d talk about a couple of things. I want to share my perspective as to how does this administration’s policies of “America first” fit into our foreign policy and foreign affairs. And so I want to touch on that. And then I’ll take a quick walk around the world. Most of you have some familiarity of what’s going on around the world, but I thought just regionally I’d hit each one of them very quickly, to share with you my perspective on kind of where I feel we are, and then in some areas where we’ve not yet had time to devote the attention to we would like, and I don’t want that to be in any way considered that we don’t think those are important. It’s kind of a – what’s the hottest fire that we’ve got to deal with?

So I want to talk about that a little bit, and then spend some time at the end talking about where we’re going in the future of the department, USAID, and, as you know, we just kicked off this listening exercise.

So let’s talk first about my view of how you translate “America first” into our foreign policy. And I think I approach it really that it’s America first for national security and economic prosperity, and that doesn’t mean it comes at the expense of others. Our partnerships and our alliances are critical to our success in both of those areas. But as we have progressed over the last 20 years – and some of you could tie it back to the post-Cold War era as the world has changed, some of you can tie it back to the evolution of China since the post-Nixon era and China’s rise as an economic power, and now as a growing military power – that as we participated in those changes, we were promoting relations, we were promoting economic activity, we were promoting trade with a lot of these emerging economies, and we just kind of lost track of how we were doing. And as a result, things got a little bit out of balance. And I think that’s – as you hear the President talk about it, that’s what he really speaks about, is: Look, things have gotten out of balance, and these are really important relationships to us and they’re really important alliances, but we’ve got to bring them back into balance……

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Carnegie Moscow Center

Local Civic Activism in Moscow

In March 2017, major Russian cities witnessed their largest anticorruption protests in years. Recently, Moscow has also been facing an upsurge in local civic activism in response to government inefficiency, controversial urban planning projects, and the resettlement of inhabitants of khrushchevki, a low-cost housing developments implemented during the Soviet period as a solution to urban housing shortages, which were not designed to be standing over half a century later.

A new article on local civic activism in Moscow by Carnegie’s Andrei Kolesnikov and the Levada Center’s Denis Volkov draws on in-depth interviews and focus groups conducted by the Carnegie Moscow Center and the Levada Center with people actively involved in various civic initiatives, local and national officials, and average citizens.

This analysis does not paint an exhaustive picture, but rather indicates that activism in Moscow is becoming increasingly dynamic. For the most part, local activists have not expressed political ambitions to date, but the more the authorities fail to address the people’s concerns, the more political this activism is likely to become. If the government does not want the current wave of civic activists to become a political opposition movement, it needs to open proper channels of dialogue with them.

http://carnegie.ru/2017/05/02/defending-one-s-backyard-local-civic-activism-in-moscow-pub-69822

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see our letter on: http://www.massenbach-world.de/41259.html

*Herausgegeben von Udo von Massenbach, Bärbel Freudenberg-Pilster, Joerg Barandat*

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UdovonMassenbachMailJoergBarandat

05-03-17 U.S. Sec. of State – Rex W. Tillerson_ Remarks to U.S. Department of State Employees.pdf

05-03-17 U.S. Sec. of State Rex W. Tillerson – Grundsatzrede zur US Aussenpolitik.pdf

05-05-17 05-05-17 Iran_Oil_Industry – US_Russia_INF – Azerbaijan – China_Aircraft_Carrier.docx

Massenbach-Letter. NEWS 05.05.17

Massenbach-Letter. News

  • WSJ:The Calculated Rise of France’s Emmanuel Macron
  • Mega-ship era is starting early at the Port of New York and Jersey
  • OPEC output cuts whet Asia’s appetite for North Sea oil
  • Bundeswehr-Debatte: Überzogen und ungerecht
  • Officials: DoD must update how it buys and uses new equipment, technology for future battlefield
  • GPF/Friedman: Recasting Hamas

Massenbach*Bundeswehr-Debatte: Überzogen und ungerecht

Die Bundeswehr hat kein „Haltungsproblem“. Es scheint eher auf Seiten der Politik zu bestehen. Wer deutsche Soldaten und Soldatinnen in Krisen und Kriege schickt, muss sie – und sich – auf die Härte vorbereiten, die sie dort erwartet.

So manches verkürzte öffentliche Urteil über die Bundeswehr erscheint in seiner Pauschalität überzogen und ungerecht“, schreibt Bundesverteidigungsministerin Ursula von der Leyen in einem offenen Brief an die Angehörigen der Bundeswehr. Diese Feststellung wird in deren Reihen auf große Zustimmung stoßen – auch weil das nach einer Selbstbezichtigung klingt. Die Ministerin hatte zuvor der Bundeswehr „ein Haltungsproblem“, „falsch verstandenen Korpsgeist“ und „Führungsschwäche auf verschiedenen Ebenen“ vorgeworfen.

Autor: Berthold Kohler, Herausgeber.

Das ist starker Tobak für die Inhaberin der Befehls- und Kommandogewalt, die damit wohl eher einem zivilen Publikum zeigen will, dass jedenfalls die oberste Leitung nicht von Führungsschwäche befallen sei. Der Truppe aber kann dieses Pauschalurteil nur unangemessen und unfair erscheinen. Denn die „übergroße Mehrheit“ der Soldatinnen und Soldaten leistet, wie die Ministerin nachschob, um die Wogen der Empörung wieder etwas zu glätten, „tagtäglich anständig und tadellos ihren wichtigen Dienst für unser Land“.

Die Bundeswehr –ein Staat im Staate?

Anständig und tadellos, aber mit falsch verstandenem Korpsgeist und einem Haltungsproblem gegenüber dem „völkischen Gedankengut“, das in der Masterarbeit eines Oberleutnants erst dann entdeckt wurde, als dieser auch noch als falscher Flüchtling aufflog? Dieser merkwürdige Fall, der für ein krasses Behördenversagen vor allem außerhalb der Bundeswehr steht und auch noch einmal wie eine glühende Nadel in die immer noch schwärende Wunde der verfehlten Flüchtlingspolitik der Regierung Merkel sticht, war offenkundig der letzte Tropfen, der das Frühwarnfass der Ministerin zum Überlaufen brachte.

Wenn ein möglicher Missstand bis zu ihr streuen könnte, siehe G36, dann fackelt sie nicht lange. Man könne nun, so äußerte sie unter Verweis auch auf die Exzesse und Schikanen in den Kasernen von Pfullendorf, Bad Reichenhall und Sondershausen, nicht mehr von Einzelfällen sprechen. In zu vielen Bereichen der Bundeswehr gebe es keinen Konsens darüber, wo die Grenze zum Extremismus, aber auch zu überzogener Härte, Herabwürdigung und Schikane überschritten werde. Diese Grenzlinien müssten klarer definiert und die Ausbildung neu ausgerichtet werden.

Mehr zum Thema

Nun steht außer Frage, dass die Bundeswehr nicht zu einem Sammelbecken für Sadisten und Extremisten aller Art werden darf. Diese Gefahr mag sogar etwas größer geworden sein, seit die Wehrpflicht ausgesetzt wurde. Denn seither bekommt die Bundeswehr ihren Nachwuchs nicht mehr aus der Mitte des Volkes zugeteilt, sondern muss ihn selbst rekrutieren. Und nicht alle, die ihrem Werben erliegen, werden wegen der kinderfreundlichen Kasernen kommen, auf die von der Leyen großen Wert legt. Doch muss man deswegen schon befürchten, die demokratischste Armee, die Deutschland je hatte, könnte zu einem Staat im Staate werden, in dem der oberste Wert der Republik nichts mehr gelte?

Zweifellos ging der Rollenwechsel, den die Politik der Bundeswehr befahl, nicht spurlos an ihr vorüber. Bis zum Ende des Kalten Krieges war sie eine Übungsarmee, die allenfalls nach Unwettern zum Räumeinsatz kam. Der Ernstfall trat für sie erst mit den Luftschlägen gegen Belgrad ein, in den Kampf Mann gegen Mann musste sie erst in Afghanistan ziehen. Seither halten ihre Soldatinnen und Soldaten vom Hindukusch bis ins tiefste Afrika ihre Knochen hin, wenn es darum geht, die Interessen Deutschlands und seiner Verbündeten zu verteidigen.

Mechanismen der Kontrolle und Selbstkontrolle

Sie bringen aus diesen Einsätzen, von denen sich die meisten Zivilisten keine Vorstellung machen (können), Erfahrungen mit, die nicht immer perfekt zu den Vorstellungen des makellosen Bürgers in Ausgehuniform passen, denen man in der deutschen Politik nachhängt. Gerade weil es für die Soldaten um Leben und Tod geht, dürfen die Mechanismen der Kontrolle und Selbstkontrolle nicht versagen. Doch scheint in der Kritik an den exzessiven Ritualen und Schikanen in manchen Einheiten noch immer das Wunschbild durch, die Bundeswehr möge eine Art Pfadfindertruppe sein, die überall die frohe Botschaft des Grundgesetzes verbreitet, damit die Welt endlich am neuen deutschen Wesen genese.

Auch das wird eine Illusion bleiben. Wer Soldaten und Soldatinnen in Krisen und Kriege schickt, muss sie – und sich – auf die Härte und Grausamkeit vorbereiten, die sie dort erwarten. Wie weit man in der Ausbildung gehen darf, wird vom Grundgesetz und von den einschlägigen Gesetzen festgelegt. Diese Grenzen dürfen, wie es auch das bewährte Prinzip der „Inneren Führung“ gebietet, nicht überschritten werden. Soldaten müssen die Einschränkung einiger Rechte hinnehmen; doch auch ihre Menschenwürde bleibt unantastbar.

Hier hat die Bundeswehr wahrlich kein „Haltungsproblem“: Sie übt und kämpft seit ihrer Gründung in diesem Geist. Weil die Bundeswehr aber in der Tat „keine Institution wie jede andere“ (von der Leyen) ist, sondern eine, die ihren Angehörigen das Kämpfen und Töten beibringt, auch um nicht selbst getötet zu werden, muss sie bei der Ausbildung ihrer Kampfeinheiten bis hart an die Grenzen der noch zulässigen Härte gehen dürfen. Eine Armee, der das untersagt wird und in der Kameradschaft und Korpsgeist eher als problematisch denn als wünschenswert angesehen werden, könnte man auch gleich auflösen.

http://www.faz.net/aktuell/politik/inland/warum-die-debatte-ueber-das-haltungsproblem-der-bundeswehr-ueberzogen-und-ungerecht-ist-14997059.html

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From our Russian News Desk. (The views expressed are the author‘s own.)

No article this week.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Public discussion

"Russia 2017: (De) Activation of the scope for civil society commitment?"

May 16th, 2017, 6 p.m. – 8 p.m.

Location: Mauermuseum – Museum Haus am Checkpoint Charlie

*

Öffentliche Diskussion

“Russland 2017: (De)Aktivierung des Spielraums für zivilgesellschaftliches Engagement?”

16. Mai 2017, 18:00-20:00 Uhr

Ort: Mauermuseum – Museum Haus am Checkpoint Charlie

*

Открытая дискуссия
«Россия-2017:
(не)возможность гражданской деятельности?»

16 мая 2017 года, 18:00-20:00

Место проведения: МузейБерлинской стены — дом-музейу Чекпойнт Чарли

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Policy= res publica

Freudenberg-Pilster* WSJ: The Calculated Rise of France’s Emmanuel Macron

French presidential candidate skipped electoral politics, instead connecting with the elite and acquiring market experience; at stake, the future of Europe.

April 28, 2017 2:32 p.m. ET

PARIS—At the height of the financial crisis, Rothschild & Cie. assigned one of its veteran bankers to groom a new hire named Emmanuel Macron.

Mr. Macron had no experience in banking. Instead, he had powerful mentors who had recommended him to Rothschild as a danseur mondain—literally, high-society dancer—who could drum up business.

“He was identified as being a very singular person with lots of contacts,” recalls Cyrille Harfouche, the veteran assigned to shepherd Mr. Macron. By the time Mr. Macron left Rothschild four years later, he had negotiated a multibillion-dollar deal and become one of its youngest-ever partners.

Mr. Macron’s banking career followed a playbook that now has upended the political order and placed the French presidency within his grasp, with a final-round election against Marine Le Pen on May 7. Mr. Macron made friends in high places who propelled him to ever-higher echelons of French society. Along the way he acquired a repertoire of skills, from piano and philosophy to acting and finance, that helped impress future mentors.

The approach allowed Mr. Macron to shortcut the traditional political path. Rather than run for office in his hometown, gradually building a constituency, he proceeded straight to Paris, where he became an expert on banking and European technocracy. He acquired a mastery of arcane regulations, from the 3,334-page French national labor code to the plumbing of the European Union’s single market, that made him a valuable potential aide to politicians being whipsawed by the EU’s complexity and the gyrations of global markets.

Now the future of France, and in considerable measure of the EU itself, could be in the hands of a 39-year-old who was little-known to much of the world until this year. His duel with Ms. Le Pen over France’s place in Europe has redrawn French politics, sweeping aside mainstream candidates and the traditional left-right divide they represent.

Mainstream French parties have called on their supporters to rally behind Mr. Macron in the contest against Ms. Le Pen, the far-right nationalist who would withdraw France from the EU’s common currency.

A Macron win would put Europe’s second-largest economy under an outspoken EU supporter who wants to establish a command center for the Continent’s defense, create a border police force, loosen France’s rigid labor rules, cut payroll taxes and reduce French public-sector employment by 120,000.

Mr. Macron is a political pragmatist who has long cast himself as an outsider. He was musician to his banking colleagues and a capitalist inside a Socialist government before squaring off with nationalists as a pro-Europe candidate.

Interviews with Mr. Macron over two years, as well as with campaign aides, government officials and friends, reveal a man who set his sights on high office early, showing a willingness to defy convention in pursuit of that goal. That drive ultimately set Mr. Macron on a collision course with the one mentor who elevated him to the senior ranks of government, President François Hollande.

Born to a family of doctors in the northern city of Amiens, Mr. Macron met his future wife, Brigitte Trogneux, while he was in high school and she was his drama coach. She was more than 20 years his senior, a member of a prominent business family of chocolatiers, and married. 0

The teenager spent hours with Ms. Trogneux to adapt a play by the Italian playwright Eduardo de Filippo about a clever actor who tries to outsmart a powerful local official. She cast him in the lead role. “We worked a lot together,” he recalled.

Mr. Macron’s parents sent him to finish high school in Paris, but he remained in touch with Ms. Trogneux. A couple of years later, she broke off her marriage and moved to Paris to live with Mr. Macron.

By then he was making his way into rarefied circles. He studied philosophy and became the assistant of Paul Ricoeur, one of France’s best-known philosophers. He enrolled in the Ecole Nationale d’Administration, the elite academy that trains French ministers, central bankers and presidents.

Graduating near the top of his class, Mr. Macron earned a post in the Inspectorate General of Finance, a corps of state auditors that serves as a finishing school for the establishment. He cultivated powerful alumni such as French power broker Alain Minc and former Prime Minister Michel Rocard.

One alumnus he courted recalled sitting down with Mr. Macron for the first time and asking him where he saw himself in 30 years. “President of the Republic,” he replied, according to this person.

Mr. Macron remembered the exchange differently—that he simply said he was open to a career in politics.

Emmanuel Macron with his wife, Brigitte Trogneux, in Le Touquet, France.

The alumnus advised Mr. Macron to avoid conventional politics, saying it wouldn’t guarantee him financial security, and helped line up a job for him at Rothschild, a venerable investment bank that straddles the worlds of French finance and politics.

Mr. Macron impressed his bosses by seeking to do more than open doors. Mr. Harfouche said Mr. Macron wanted to learn “the hard way.” So he was given a crash course in the number-crunching and financial modeling that goes into mergers and acquisitions. Word also spread of his piano virtuosity. “He could have been an artist,” Mr. Harfouche said.

While at the Inspectorate, Mr. Macron had worked as an assistant to an economic committee of eminences grises that included Nestlé SA Chairman Peter Brabeck-Letmathe. Mr. Macron began meeting with the executive regularly, pitching an acquisition target: Pfizer Inc.’s baby-food business.

Ultimately he persuaded Nestlé about the acquisition as a way to boost its presence in China, one of the few baby-food markets where the Swiss company wasn’t a market leader. When a bidding war broke out with French rival Danone SA, Mr. Macron scrambled to clinch the $11.8 billion Nestlé purchase.

Macron’s Platform

· Economy: Cut corporate income tax rate to 25% from 33.3%. Abolish some local taxes. Eliminate 120,000 public-sector jobs over five years. Spend more on renewable energy, upgrades to public services.

· Labor: Cut payroll taxes. Expand unemployment-benefit eligibility. Let firms negotiate directly with employees on working hours

· Security, Foreign Policy: Hire 10,000 more police. Increase prison capacity. Boost defense spending to 2% of GDP. Negotiate with EU countries to create border force of 5,000. Process refugee applications faster.

· Education : Cut class size. Allow bilingual instruction. Don’t expand ban on Islamic headscarfs to universities.

· Electoral Reform: Reduce number of lawmakers and senators. Bar them from hiring family as assistants.

The deal made Mr. Macron, by then a partner at Rothschild, a wealthy man. It also made him an adviser sought after in French political circles, including Mr. Hollande, the Socialist Party leader who was then challenging French President Nicolas Sarkozy. Mr. Hollande hired Mr. Macron as an aide, dispatching him to reassure investors and business leaders nervous about the candidate’s plan for a 75% tax on incomes above €1 million.

After winning the presidency in 2012, Mr. Hollande brought Mr. Macron to the Élysée Palace as deputy chief of staff. As business leaders threatened to leave France, citing the tax policy, Mr. Macron warned his boss in an email that he risked turning France into “Cuba without the sun.”

Mr. Hollande relented, scaling back his contentious tax plan and introducing some corporate tax cuts dubbed the “responsibility pact.” The U-turn enhanced the reputation of his pro-business consigliere among members of the Socialist Party’s frustrated free-market wing who had flocked to Mr. Macron’s side.

Among them was Gérard Collomb, a senator and mayor of Lyon. “I was quite on edge about Mr. Hollande’s policies, so [Mr. Macron] dined with me and some lawmakers to try and calm things down,” Mr. Collomb said.

Other interventions followed. When Mr. Hollande’s left-wing economy minister, Arnaud Montebourg, tried to scuttle a General Electric Co. bid for Alstom SA’s turbine business, Mr. Macron stepped in and brokered GE’s $17 billion purchase.

With the wind in his sails, Mr. Macron abruptly quit as an Hollande aide in the summer of 2014, saying he wanted to try starting his own business. Mr. Hollande hosted an elaborate Élysée Palace send-off at which the president quipped in a toast that whenever he travelled abroad, people remarked: “Ah! You work with Emmanuel Macron.”

Mr. Macron responded with a serious speech, urging the assembled politicians to overhaul the country.

Weeks later, Mr. Hollande ousted Mr. Montebourg over the economy minister’s opposition to spending cuts—and offered Mr. Macron the job.

Mr. Macron didn’t immediately say yes. He demanded a mandate to overhaul the economy.

“You will be here to reform,” Mr. Hollande replied.

Four days into the new post, Mr. Macron invited Sigmar Gabriel, then Germany’s economy minister and vice chancellor, to a private dinner in Paris. They agreed to commission a report from economists that could serve as a blueprint for a grand bargain Mr. Macron envisioned to revive the EU’s fortunes: Germany would provide stimulus by spending more, and France would become a European model of economic rectitude by paring back its generous labor protections.

Emmanuel Macron, right, in late 2014, when he was France’s economy minister, talking with his German counterpart Sigmar Gabriel.

“From the start I proposed a European New Deal—undertake reform, but at the same time persuade Europe to invest more,” Mr. Macron said in an interview last year shortly before declaring his run for the presidency.

In his view, France’s job market was hemmed in by a rigid educational system that set young people on a narrow career trajectory and by labor rules that discouraged companies from hiring them. The result was an unemployment rate of nearly 10%, and twice that among the young.

Mr. Macron, as economy minister, crafted a bill to streamline hiring and firing procedures, slash red tape and permit more shops to open on Sunday. The contentious proposals, dubbed the Macron Law, thrust him into the limelight as unions organized large street protests.

Mr. Hollande, fearing the bill would fail in Parliament, to the embarrassment of his government, didn’t put it to a vote. He instead stripped out key provisions that would ease hiring and firing restrictions, then enacted the bill by decree.

That sowed the seeds of Mr. Macron’s future rebellion. Interviewed by The Wall Street Journal later on that day in early 2015, Mr. Macron was asked whether he had ever harbored presidential ambitions.

“No, but when you decide to do something, it’s to do the best—to become [a] billionaire when you create a startup,” Mr. Macron said.

He joked: “Or king. I want to change the regime.”

He continued prodding Mr. Hollande, sending him a letter on Christmas Eve 2015 that again urged the president to make deeper economic changes and to push Europe and Germany to loosen their purse strings.

Emmanuel Macron, right, greeting French President François Hollande, left, in whose government Mr. Macron formerly served.

“We need to go further, and, at the same time, it’s crucial that Europe have a stimulus policy,” Mr. Macron said months later, describing the contents of the letter.

Mr. Hollande didn’t write back. He was grappling with historically low poll numbers that jeopardized his chance of re-election. The last thing he needed was to revive street protests.

Mr. Hollande’s inaction was a final spur to Mr. Macron’s presidential ambitions, said Richard Ferrand, a veteran Socialist politician who sometimes guided Mr. Macron in the legislative process.

In the months that followed, Mr. Macron huddled with Socialist heavyweights such as Messrs. Ferrand and Collomb to plot a run for the presidency. Without the backing of a long-established party, he would need to tap his contacts in the business world. That meant taking the unusual step in French politics of hosting private fundraising dinners, inviting people who had their own networks of potential donors.

Last spring, Mr. Macron unveiled his own political party, En Marche, or “On The Move,” mortally wounding Mr. Hollande’s re-election chances. At first, the president refused to publicly acknowledge Mr. Macron wanted his job.

“It’s not just a question of hierarchy—he knows what he owes me. It’s a question of personal and political loyalty,” Mr. Hollande said in a TV interview at the time.

Days later, Mr. Macron delivered the coup de grâce in a local newspaper interview confirmed by his spokeswoman.

“When a president names someone minister,” he said, it’s “not to make him a servant.”

Last Aug. 30, with TV cameras watching, Mr. Macron boarded a covered riverboat docked at the economy ministry and rode it down the river Seine to the Élysée Palace to deliver his resignation.

https://www.wsj.com/articles/the-calculated-rise-of-frances-emmanuel-macron-1493404345#_=_

****************************************************************************************************************** Politics: From Vision to Action

Barandat* Officials: DoD must update how it buys and uses new equipment, technology for future battlefield.

FREDERICKSBURG, Va. — Future soldiers may enter a battlefield alongside autonomous fighting vehicles on the ground and a "ghost fleet" of unmanned ships at sea, as swarms of miniature drones buzz overhead.

All the while, commanders will analyze data from social networks to understand the public sentiment and trends as the fighting unfolds.

This is what the battlefield of the future likely will resemble.

But for that to happen, several speakers at the National Defense Industrial Association’s annual Armament Systems Forum in Fredericksburg, Virginia, said Tuesday that much has to change about how the military acquires and implements new gear.

And based on what the speakers said, the defense industry, both on the government and civilian side, may need to take some pointers from Silicon Valley’s approach to research and development.

The conference schedule this week combines more than 300 military and industrial participants and covers topics that range from leadless bullet primers to special operations equipment acquisitions.

The defense community is in the beginning stages of a “Third Offset” that will radically transform the military in ways that may take decades to unfold. Much of what is going to happen is in testing stages or on the drawing board, and much remains unknown.

But experts at the conference made clear that these changes are happening, and enemies are not waiting. Instead, they are adapting.

The “First Offset” was when the U.S. military shifted from traditional war fighting common during the Korean War and previous modern wars that often resulted in “many soldiers — many bullets — one kill,” said Ted Maciuba, deputy director of the Army’s Mounted Requirements Division at the Maneuver Center of Excellence, Fort Benning, Georgia.

Then-President Dwight Eisenhower moved the military into a nuclear-focused, Cold War fighting organization that meant “fewer soldiers — one big nuclear bullet — many kills.”

But the collateral damage associated with such attacks, along with nuclear waste and the Mutually Assured Destruction, or MAD, doctrine, was unsustainable and not applicable to counterinsurgency warfare and post-Cold War realities, Maciuba said.

At that time came the “Second Offset,” which meant precision-guided weapons and communications systems such as GPS. That is credited for much of the stunning success of the Persian Gulf War, said Vincent Sabio, program manager at the Department of Defense’s Strategic Capabilities Office.

The military is in the beginning stages of the “Third Offset,” which will include robotics, miniaturization of technologies and big data to produce “one soldier — many bullets — many kills.”

But to do that, Sabio argues, the industry/defense partnership needs to move away from a “high quality” production system that sometimes brings costly systems into the inventory, or fails to produce systems after decades of investment, to a “good enough” approach that aims to “fail early and fix early.”

That means prototypes being made and tested much earlier in the process, rather than trying to create a perfect system before putting it into the hands of the war fighter, Sabio said.

He quickly cautioned that systems that protect people’s lives must retain the highest standards of quality.

Sabio said there cannot be anymore $100 million field tests where “failure is not an option.” He did not specify any program as an example.

The future soldier must be adaptable, but the systems must have an “intuitive interface” like an iPhone, said Maciuba.

Historically, training has been the last consideration when new equipment was developed. But direction from the Joint Chiefs of Staff has integrated training and users into the process, he said.

Maciuba said new systems will require training, but the military cannot equip a high-school educated soldier with equipment that takes PhD-level expertise to operate.

https://www.armytimes.com/articles/officials-dod-must-update-how-it-buys-and-uses-new-equipment-technology-for-future-battlefield?utm_source=Sailthru&utm_medium=email&utm_campaign=EBB%2005.03.2017&utm_term=Editorial%20-%20Early%20Bird%20Brief

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Middle East

Recasting Hamas

(founded by George Friedman)

May 2, 2017 Hamas’ new charter seeks to soften the group’s tone.

By Jacob L. Shapiro

Hamas has produced an updated version of its charter. Hamas leader Khaled Mashaal presented it Monday at a press conference in Doha.

Sections of the document were leaked early Monday, and by evening the entire draft was made public in English. Al-Jazeera reported on one of the leaked sections that garnered the most attention earlier in the day.

It said that Hamas “considers the establishment of a fully sovereign and independent Palestinian state, with Jerusalem as its capital along the lines of the 4th of June 1967 … to be a formula of national consensus.” This seemed to suggest Hamas was on the verge of at least tolerating Israel’s existence, if not entirely recognizing it. Israel quickly sought to douse the move in cold water. A spokesman for Israeli Prime Minister Benjamin Netanyahu said Hamas is “attempting to fool the world.” An official statement from Netanyahu’s office called the new charter a “smokescreen.”

Based on what the new charter states, there is reason for skepticism. (Read the entire version of the charter in English here.)

It says that Hamas will not relinquish a single acre of land in what it describes as historic Palestine. Hamas also still embraces armed resistance in its quest to liberate Palestine “from the river to the sea.” The existence of internal contradictions in the new document doesn’t necessarily preclude the possibility that Hamas is undertaking a monumental shift in its position. But it does raise doubts from the outset. It is also possible that Hamas is only doing this for international legitimacy. Some countries may require the correct formula of words to be enshrined on paper before they can accept Hamas as a legitimate political entity. (That a full copy was immediately available in English buttresses this point.)

Determining whether Hamas is changing its position requires a better understanding of its current one and how Hamas got here.

Hamas was founded in 1987, but the religious currents that were its lifespring had been developing for decades. Hamas saw itself as a religious alternative to the secular Palestine Liberation Organization. Its development was tacitly encouraged by Israel, which viewed the formation of another Palestinian faction as a net positive because it would weaken the overall Palestinian position. In the long run, Hamas did just that. Hamas won U.S.-backed Palestinian elections in the West Bank and Gaza Strip in 2006. The transition of power was not peaceful. The result was that Hamas ruled Gaza and Fatah ruled the West Bank. This split remains in place today.

Hamas gained legitimacy and credibility among Palestinians from its use of force against Israel during the first and second intifadas. Hamas also provided much-needed social services and a version of Palestinian nationalism that embraced the role of Islam. This worked well for Hamas when its raison d’être was resistance, not governance. The moment Hamas took over official governance in the Gaza Strip, the group began to weaken. Hamas tried to become more than a militant organization: It wanted to assume the mantle of the Palestinian people’s rightful representative. This was more difficult in practice than in theory. Gaza is a crowded, isolated, poor enclave blockaded by Israel. With much of the world identifying Hamas as a terrorist organization, Gaza became even more isolated when Hamas took over in 2007.

Hamas continued to fight Israel in small wars in 2008-2009, 2012 and 2014. But its rule in the Gaza Strip has failed to make the daily lives of Gazans any better. This is not due to a lack of desire.

Any government attempting to rule Gaza would find it incredibly difficult due to overcrowding and a lack of resources. Hamas’ problem is that it is now held accountable for these failures. It is not just a militant group – it is the political entity responsible for governance. This problem has defined Hamas’ development for the last decade, and different factions have been fighting over how to address this issue the entire time. The faction that wants to moderate Hamas to legitimize its position in the world has been pushing for the publication of an updated charter for years. It finally succeeded.

This faction correctly views the old charter as an albatross. The Hamas Covenant of 1988 is a document rife with allusions to the destruction of both Israel and Jews. It pitches the Israeli-Palestinian conflict as a religious war requiring jihad on the part of all Muslims. Israel has relations with many countries that do not recognize its existence. But Hamas is an enemy that has stated on paper that one of its main missions is to destroy the state of Israel. This gave Israel an easy Palestinian scapegoat and substantiated Israel’s claim that it did not have a willing partner for peace on the other side. Hamas’ actions after Israel disengaged from the Gaza Strip and its violent assumption of power there have been used to confirm this position.

The new charter removes the emphasis on religious conflict, and in its place employs the words and ideals of both nationalism and Western liberalism. The new document uses the language of natural right, declaring that the Palestinian desire for nationhood is an “inalienable right” possessed by the Palestinian people.

This is not just clever language. It gets to the heart of the conflict. Article 1 of the U.N. Charter says that one of the U.N.’s purposes is to promote equal rights and the self-determination of all peoples. The problem is that the U.N., the French and American revolutions, and the entire corpus of international law – based as it is on relationships between nation-states – do not have a solution for when two peoples claim self-determination over the same land.

This tension is also reflected in a section of the new charter. It states that the Israeli-Palestinian conflict is political, not religious, and that Hamas’ fight is with Zionism, not with Jews by virtue of their religion.

This is an attempt by Hamas to purge its association with anti-Semitism, which is hard to avoid when reading Hamas’ founding charter. The problem with this argument is that it is impossible to separate Zionism from Judaism. An equally appropriate name for Zionism is “Jewish nationalism.” Zionism was just one form of Jewish nationalism that developed in many strands in Europe in the 18th and 19th centuries. The focus on settlement in what was then called Palestine gave Zionism its name, but the notion that Zionism can be evaluated as separate from Judaism is a fallacy.

Why Hamas decided to do this now is unclear. It could be that the internal factional war finally had a victor. It could be that the Saudis pressured Hamas to do it, which would explain the “Gulf Arab sources” that initially broke the news to Reuters. It could be that Qatar, which has housed Hamas since 2012, wants to show that it has power over important things and should be treated with more respect by major regional players.

The why is ultimately less important than understanding how constrained Hamas is. The problem for Hamas is that it does not have any good options. It is currently in an impossible political situation, and moderating its views and garnering acceptance from the international community makes sense. But Hamas cannot turn in its credentials of resistance. It is already struggling for supremacy in the Gaza Strip, and repudiating its stance on fighting Israel would open the door to the Islamic State, which has an active chapter across the desert in the Sinai. This also could facilitate other jihadist groups looking for pockets of discontent in which to grow. If Hamas were to give up the fight against Israel, another group would attempt to fill the gap.

It is unlikely, then, that this will come to much of anything. Hamas wants international legitimacy, but to obtain it Hamas must moderate its positions. Moderating its positions opens up Hamas’ tenuous hold on Gaza to attack. Three weeks ago, Geopolitical Futures investigated the possibility of another war between Hamas and Israel because of dire economic conditions in the Gaza Strip. The publication of a new document and the installation of a new leader after Mashaal steps down does not change the underlying conditions that prompted the investigation. Ironically, Israel is most susceptible to Hamas’ moderation, not to the forces it can bring to bear. The development of a nonviolent Palestinian movement demanding equal rights (or even a less violent one that unambiguously recognized Israel as a country) would put Israel in an extremely difficult position both at home and abroad.

But that is not what this is. This is a low-cost, Hail Mary attempt by Hamas to improve its international standing without giving up its aspirations for an Islamic, Palestinian state without an Israeli neighbor. This document won’t compel Israel to end the blockade. It won’t add money to Hamas’ coffers to pay salaries or provide services to the Gazan people. It won’t compel the region’s Muslim states to accept Hamas or to push Israel into making a deal with Hamas it does not need or want. And it is too weak a facelift for the West to consider recognizing Hamas as something other than the terrorist group that the European Union, the United States, the Egyptians and others categorize Hamas as. It is useful for understanding how difficult Hamas’ position is. But other than that, this “Document of General Principles and Policies” will be consigned to the dustbin of history.

https://geopoliticalfutures.com/recasting-hamas/

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*Massenbach’s Recommendation*

OPEC output cuts whet Asia’s appetite for North Sea oil

OPEC production cuts have created record Asian demand for European oil and made China the second biggest consumer of North Sea crude as flows from its usual Middle East suppliers dip.

Rising Asian appetite for North Sea crude has largely been fueled by the falling premium charged for North Sea crude over rival Middle East oil and this demand could last beyond OPEC’s supply cuts if that favorable pricing persists.

Thomson Reuters Eikon data shows China imported almost 38 million barrels of North Sea crude from the start of the year until late April, compared with about 8 million barrels by the same point in 2016.

China now lies second to Britain, the biggest consumer of North Sea crude, which had bought 49.7 million barrels by late April this year. In January to April 2016, China ranked seventh.

The Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers agreed to cut output by 1.8 million barrels per day (bpd) in the first half of 2017 to lift prices and reduce global inventories.

With stockpiles still bulging, Gulf producers and other producers say cuts could be extended to December, adding a further incentive for Asian buyers to look beyond their usual suppliers.

"East of Suez, crude balances look like they will get progressively tighter year-on-year all the way through to the end of 2017," FGE analyst James Davis said.

"We suspect there will be, from a supply perspective, a need for crude to move across to Asia from the North Sea," he said.

Reluctant to relinquish market share to U.S. oil shale producers, OPEC states have kept their official selling prices low and used their crude stockpiles to keep clients supplied.

But they have tended to cut output of medium, more sulphurous crudes that are cheaper, and maintained flows of lighter, less sulphur-rich oil, which usually sell for more.

With less of those medium crudes on the market prices for that oil have climbed, sending the premium that is usually paid for North Sea oil to its lowest since 2010.

CRUDE DIET

The premium for North Sea Brent, the peg for many of world’s lighter crudes, over the Dubai benchmark, which underpins medium and heavier grades common in the Middle East, has fallen below 50 cents a barrel from $2.50 in late November, when OPEC announced its cuts.

"North Sea crude keeps coming to Asia and now there should be more given the price structure," a trader at a North Asian refinery said.

China customs data shows the cost of importing North Sea oil was even more favorable in March, showing importing a barrel of British crude cost $56.70, compared with $57.80 for a barrel from the United Arab Emirates, even when the UAE lies 8,000 miles closer to China than Scotland’s North Sea coast.

"North Sea oil suits the Korean diet and the Chinese can still take it if the price is right,” a Singapore-based trader said.

Other factors are also encouraging Asian consumers to seek out new suppliers. Chinese domestic oil production has been eroded because of weak oil prices, while refineries in the world’s biggest car market have been expanding.

Overall, Asian refining capacity will expand by a net 450,000 bpd in 2017, a rise of 1.5 percent over Asia’s total installed capacity now of nearly 29 million bpd, Thomson Reuters Eikon data shows.

"We expect imports to continue registering year-on-year gains as a narrow Brent-Dubai spread … encourages the purchasing of Atlantic Basin crudes in Asia," Energy Aspects said in a note, even though it said China had "clearly overbought" crude in the first quarter of the year.

For graphic on North Sea crude oil flows to Asia, click: reut.rs/2qbrHet

For graphic on biggest buyers of North Sea crude, click: reut.rs/2pp2SLb

For graphic on North Sea crude oil flows to China vs. Brent/Dubai preminum, click: reut.rs/2q9qHVm

http://www.reuters.com/article/us-oil-opec-north-sea-idUSKBN17T1HF

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WSJ: The mega-ship era is starting early at the Port of New York and Jersey—or at least earlier than the port envisioned. New Jersey Gov. Chris Christie announced the $1.6 billion project to raise the roadway of the Bayonne Bridge will be completed six months ahead of schedule, the WSJ’s Paul Berger reports. That means the biggest port on the U.S. East Coast can start hosting larger container ships as soon as June 30, capping off a major step in the changing structure of maritime operations. It’s perhaps the most visible of the billions of dollars’ worth of initiatives ports have undertaken, from the addition of massive new cranes to ambitious harbor-deepening projects, to adjust to the big ships carriers are adding to their fleets. The shipping industry isn’t expecting a massive increase in cargo headed to the port, but port officials say it will allow carriers to lower costs and deliver goods faster to consumers. Raising the roadway is the final element of a massive program to prepare the port for changes in shipping following the widening of the Panama Canal. http://www.agbc-berlin.de/content/wsj-bayonne-bridge-project-finish-six-months-early

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see our letter on: http://www.massenbach-world.de/41259.html

*Herausgegeben von Udo von Massenbach, Bärbel Freudenberg-Pilster, Joerg Barandat*

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