Massenbach-Letter. NEWS 04.11.16

Massenbach-Letter. News

· George Friedman: The Origins of American Incivility and Fear

· WSJ: Places Most Unsettled by Rapid Demographic Change Are Drawn to Donald Trump

· Vladimir Putin Meets with Members of the Valdai Discussion Club. Transcript of the Plenary Session of the 13th Annual Meeting

· Carnegie Moscow: Three Dimensions: Is the Break Between the Kremlin and the West Permanent?

· “The biggest source of instability for Moscow lies in the South. The North Caucasus has been pacified but is still simmering. The shock waves from the war in Syria and Iraq are affecting the South Caucasus. Syria is basically a failed state and only the intervention of Russia saved the Assad regime from collapse. The return of Russia to the Middle East requires a political settlement, otherwise the war will eat up valuable resources and become a second Afghanistan.”


· Augengeradeaus: Rund 5.500 afghanische Soldaten und Polizisten in diesem Jahr gefallen.

· The Deutsche Bank Downfall * How a Pillar of German Banking Lost Its Way

· UniCredit,Economics Thinking: Evaluation of the “Juncker Plan”

· Deutsche Bank Research: Die dunklen Seiten des QE: Vergemeinschaftung von Schulden durch die Hintertür, Enteignung der Sparer und Blasenbildung

Massenbach* WSJ: Places Most Unsettled by Rapid Demographic Change Are Drawn to Donald Trump

Data show immigration has made small towns in the Midwest more racially diverse in the past 15 years, shifting the political needle.

Nov. 1, 2016 10:35 a.m. ET

ARCADIA, Wis.—Small towns in the Midwest have diversified more quickly than almost any part of the U.S. since the start of an immigration wave at the beginning of this century. The resulting cultural changes appear to be moving the political needle.

A Wall Street Journal analysis of census data shows that counties in a distinct cluster of Midwestern states—Iowa, Indiana, Wisconsin, Illinois and Minnesota—saw among the fastest influxes of nonwhite residents of anywhere in the U.S. between 2000 and 2015. Hundreds of cities long dominated by white residents got a burst of Latino newcomers who migrated from Central America or uprooted from California and Texas.

That shift helps explain the emergence of Republican presidential nominee Donald Trump as a political force, and signals that tensions over immigration will likely outlive his candidacy. Among GOP voters in this year’s presidential primaries, counties that diversified rapidly were more likely to vote for the New York businessman, the Journal’s analysis shows.

Mr. Trump is emphasizing the Midwest this week, with a stop in Wisconsin scheduled for Tuesday.

In Arcadia, Wis., Don Leibl saw the dairy-farming hamlet transform from nearly all white to more than one-third Latino as Mexican immigrants streamed in for jobs. It is a main reason, he said, he is voting for Mr. Trump for president.

“If you’d seen the way things have changed in this town, you’d say, ‘Something needs to be done about it,’ ” the 51-year-old computer systems analyst said, referring to immigrants there illegally.

In this western Wisconsin enclave and other pockets of the rural Midwest, Mr. Trump’s pledge to build a wall along the Mexican border and prioritize jobs for American workers has struck a chord with some whites uneasy over rapidly changing demographics. They said they are worried illegal immigrants are crowding schools and unfairly tapping public assistance, problems they believe Mr. Trump would fix.

The Journal identified the epicenter of this shift using the diversity index, a tool often used by social scientists and economists. It measures the chance that any two people in a county will have a different race or ethnicity. In 244 counties, that diversity index at least doubled between 2000 and 2015, and more than half those counties were in the cluster of five Midwestern states. The analysis excludes tiny counties that produce numeric aberrations.

Traditional immigrant gateways like Los Angeles, Miami and Queens, N.Y., draw a far greater number of Latino and other minority residents, but because they have long been melting pots, their diversity has barely changed over the past 15 years.

America’s Heartland Becomes More Diverse

Rural counties in the Great Plains and Appalachia have become more racially and ethnically diverse in the past 15 years. The rapidly diversifying counties tend to have lower joblessness, faster wage growth and less education than the country as a whole.

In 88% of the rapidly diversifying counties, Latino population growth was the main driver. In about two-thirds of counties, newcomers helped expand the overall population. In the remaining third, the population fell despite an influx of new arrivals, which magnified the shift for locals as their peers died or moved away.

Mr. Trump won about 71% of sizable counties nationwide during the Republican presidential primaries. He took 73% of those where diversity at least doubled since 2000, and 80% of those where the diversity index rose at least 150%, the Journal’s analysis found.

“You’re talking about counties that are predominantly white, but they’re seeing a glimmer of change,” said William Frey, a demographer at the Brookings Institution. “It connects with the message of Trump.”

Diversity has risen in Carroll County, Iowa, where meatpacking jobs have drawn Latino immigrants, and Hendricks County, Ind., where minorities are moving for cheaper housing and logistics work at the Indianapolis airport. Mr. Trump won these counties in this year’s primaries, as he did in Arcadia’s Trempealeau County, in Wisconsin.

An influx of minority residents in a town over time favors Democrats because Latinos and blacks especially are more likely to vote Democratic. In many of these rapidly diversifying counties, the fact that many of the new Latino residents presumably aren’t eligible to vote significantly mutes their impact on the electorate.

In Carroll County, the ranks of active registered Democrats have shrunk 0.2% in the past year, while the ranks of active Republicans have grown 8%, according to data from the state elections division. The same pattern shows across 39 sizable Iowa counties where the diversity index at least doubled: Democratic registration has risen 3%, Republican registration, 7%.

Unemployment is actually lower in rapidly diversifying counties than in the country on the whole, a sign that concerns over lost jobs are weighing less on voters in these areas. In counties where diversity at least doubled, unemployment averages 4.5%, compared with 4.9% nationally.

Craig Williams, chairman of the Carroll County Republican Party, said it is the lawlessness of illegal immigration that bothers residents. “People talk about immigration as if we’re a bunch of racists,” he said. “Do we have laws, or do we not have laws? If we’re just going to ignore them, then what’s the point?”

Few U.S. locales have changed as rapidly in recent years as Arcadia, a onetime railroad town nestled in the hills and built by German, Polish and Norwegian immigrants. As recently as the late 1990s, its population of about 2,400 was almost entirely white and aging as young residents left and fewer people had children.

That all changed at the turn of this century. Dairy farmers who wanted their cows milked around the clock began calling contacts in Texas to connect them with Mexican workers. Ashley Furniture Industries Inc., now the country’s largest furniture maker, hired hundreds of Hispanic workers to build chairs, beds and entertainment consoles at its sprawling headquarters here. Chicken producer GNP Co. tapped the labor pool, too.

The area’s unusually strong job market made it a magnet for Mexican, Guatemalan, Honduran and Salvadoran workers. Between 2000 and 2014, Hispanics went from being 3% of the population to 35% in Arcadia, census figures show. Its population rose to around 3,000.

In Arcadia, Hispanics went from being 3% of the population to 35% between 2000 and 2014. The dairy-farming town’s population rose from around 2,400 to 3,000.

Holy Family Parish brought in Rev. Sebastian Kolodziejczyk, a bilingual priest, and added a Spanish Mass because “everybody wants to pray in their own language,” he said. Landlords watched as some Hispanic tenants took in cousins and uncles arriving for their first jobs. A Latino bakery and other shops popped up along Main Street.

“We were hit like a tsunami,” said Arcadia Elementary School Principal Paul Halverson, whose school went from almost all white at the turn of the century to 73% Hispanic as of this year.

The share of students in the school district qualifying for free and reduced-price lunch rose to 65% this year from 20% in the late 1990s. Administrators expanded the summer-school program to bolster students’ English and math, and pared homework assignments because Latino parents working long hours struggled to help their children complete it, Superintendent Louie Ferguson said. This year the district opened a new middle school to handle the enrollment surge.

There is no official measure of how many immigrants in the town are there illegally, and interviews with more than two dozen local officials, employers, longtime residents and immigrants suggest the numbers today are off their peak. Social services workers and others in the town said they saw many people come there without legal status and use false identification to get jobs when the migration wave began. But employers have become stricter in recent years about verifying workers, and some of those initially here without documentation have since gained legal status.

Ashley Furniture Senior Executive Bill Koslo said, “We exert a tremendous effort” to make sure people are working legally. Bill Petz, director of live operations at GNP, said the company doesn’t want to put its business at risk by hiring workers illegally.

The food pantry had to scrap a queue it created for Spanish speakers after some locals complained immigrants were getting their food before them. Some newcomers opened their garages and played music, and gathered for big picnics at parks. “Families from Arcadia would call and say, ‘I can’t stand it. They’re so noisy,’ ” said Cynthia Jacoby, a former family-living educator who runs a church-sponsored thrift shop.

In 2006, then-mayor John Kimmel proposed making English the official language for directional signage, requiring an American flag to accompany any foreign flag and capping housing occupancy for rental properties. The idea caused such an uproar among some locals and newcomers that he eventually shelved all but the last proposal.

Melting Pots

Southern and coastal areas have higher levels of overall diversity than the Great Plains and Appalachia.

“As you live by each other and your kids become friends, a lot of that goes by the wayside,” he said recently, while eating fish sticks at the bowling alley. He said he plans to vote for Mr. Trump but that his decision “has nothing to do with his immigration stance.”

Longtime residents said most people were happy to have a growing population and embraced the newcomers, who were necessary to absorb the abundance of jobs. Ashley Furniture built soccer fields and basketball courts. Rev. Kolodziejczyk invited a mariachi band to a fall heritage festival that traditionally showcased Polish and German food. Local officials translated signs and pamphlets into Spanish.

“This is a place where if tomorrow every worker of Latino descent up and left, we’d be in a heap load of trouble,” said Patricia Malone, a community development educator.

Yesenia Gama Cortez, a 32-year-old Mexican native, said she feels at home selling empanadas, cold Modelo beer and other groceries in the shop she opened along Main Street. “The Arcadia people are very welcoming,” she said from behind the counter.

Trempealeau County has voted Democratic in presidential elections since 1988, and Democratic presidential nominee Hillary Clinton is favored to win the state of Wisconsin. Among GOP voters in the county, Mr. Trump took half the votes to win this year’s crowded primary, even though Texas Sen. Ted Cruz won the state.

Republican voters said they are deeply distrustful of Mrs. Clinton in part because they believe she sold government access through her family foundation and has profited too much off her political career. In addition to his immigration plans, they like Mr. Trump’s outsider status and support for gun owners.

Mark VanAcker, a 66-year-old farm animal veterinarian, said he is worried that illegal immigrants are straining school finances and increasing crime here. He no longer leaves his truck unlocked with the keys in it.

“There is a high suspicion that people coming into our country without citizenship status are entitled to things that we have to work for,” he said. “When a politician says that needs to be addressed, we listen.”

Carmen Lisowski, a 47-year-old Mexican-born resident, is turned off by how Mr. Trump’s harsh talk about immigrants “cuts everybody with the same scissors.” She came to this town from Northern California so she could earn money making chairs at Ashley Furniture to support her two daughters. Now she works at the preschool, volunteers at the church, cleans houses and helps friends with translation. “I come here for work, not to steal stuff,” Ms. Lisowski said. She married a local man almost nine years ago.


From our Russian news desk:

Are Videos a New Counter-Terrorism Mechanism?

From Authoritarianism to Democracy? The Future of Political Regimes

Lebanese People Awaiting Breakthrough Solutions

Electoral Battles in Moldova

U.S. Diplomacy in the Shackles of Election Politics ( comments former Russian Foreign Minister and RIAC President Igor Ivanov in a recent interview to RIA Novosti News Agency)

Iran’s Tel Afar op is in sync with Russia in Syria

The pro-Iranian Iraqi Shiite drive to capture Tel Afar, 55 km from Mosul in western Iraq, was designed less to complete the encirclement of the Islamists in Mosul – in support of the US-led coalition – and more to forge a link in the land bridge Tehran aspires to build to give its Revolutionary Guards free passage to Hizballah and the Shiite groups fighting for Bashar Assad in Syria. This is reported by debkafile’s military and intelligence sources.

The Iraqi Shiite battle for Afar is led by Iran’s Al Qods chief, Gen. Qassem Soliemani from the front lines.

US and Iraqi commanders of Operation Inherent for expelling ISIS from Mosul welcomed the Iran-led Iraqi Shiites’ initiative to take Tal Afar in order to sever ISIS’ supply lines from Syria to Mosul.
But Iran’s overriding motive in initiating this operation was laid bare by Ahmad al-Asadi, spokesman of the pro-Iranian Iraqi Hashid Shaabi Shiite groups, when he spoke to reporters Saturday, Oct. 29 in Baghdad.

After “clearing” these “terrorist gangs,” from 14,000 sq. km of Iraq including Tal Afar and the regions bordering on Syria, he said, “We are fully ready to cross the border into Syria and fight alongside President Bashar al-Assad.

According to our sources, this plan was not coordinated directly with the US-Iraqi command of the Mosul operation, but with the Russian military command center in the Syrian province of Latakia.
It is important enough for the Russian command to have just established a new center for military and intelligence interchanges. It is staffed by Russian, Turkish, Syrian, Iraqi Shiite and Iranian officers. This mechanism has been put in charge of coordinating Shiite military operations both in Syria and Iraq.

It was decided that when US military assistance or air support is deemed necessary, requests will be piped through the bureau of Iraq’s Shiite Prime Minister Haider al-Abadi and passed on to the US-Iraqi command of Operation Inherent.

Russian, Iranian and Turkish officers have thus effectively hitched on to the decision-making process for the Mosul offensive alongside American officers.
The irony of this arrangement is that, the US armed the Iraqi army, and indirectly the Shiite militias, for this offensive with top-notch Abrams M1 tanks, M1-198 Howitzers and M88 Recovery vehicles for tanks. All this s valuable hardware looks like ending up away another battlefield away from Mosul in Syria, and under a different command, Russia..’s-Tel-Afar-op-is-in-sync-with-Russia-in-Syria


Policy= res publica

Freudenberg-Pilster* Deutsche Bank Research:
Die dunklen Seiten des QE: Vergemeinschaftung von Schulden durch die Hintertür, Enteignung der Sparer und Blasenbildung

Das Eigenlob der Europäischen Zentralbank für Ausmaß und Kreativität ihrer Geldpolitik seit 2012 ist zunehmend unangebracht. Tatsache ist vielmehr, dass der Euroraum seit der berühmten „Whatever it takes“-Rede von Herrn Draghi im Jahr 2012 kaum Wachstum, dafür aber die schlechteste Arbeitsmarktentwicklung aller wichtigen Industrienationen, nicht tragfähige Verschuldungsquoten sowie eine weit hinter dem eigenen Ziel zurückbleibende Inflation verzeichnet. Die Argumente für die Intervention der EZB werden zunehmend schwächer, mittlerweile dominieren die negativen Folgen. Dieser Artikel befasst sich mit fünf Schattenseiten der aktuellen Geldpolitik.

The dark sides of QE: Backdoor socialisation, expropriated savers and asset bubbles

While European central bankers commend themselves for the scale and originality of monetary policy since 2012, this self-praise is increasingly unwarranted. The reality is that since Mr Draghi’s infamous “whatever it takes” speech in 2012, the eurozone has delivered barely any growth, the worst labour market performance among industrial countries, unsustainable debt levels, and inflation far below the central bank’s own target. While the positive case for European Central Bank intervention is weak at best, the negative repercussions are becoming overwhelming. This paper outlines the five darker sides to current monetary policy.

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

Barandat* Rund 5.500 afghanische Soldaten und Polizisten in diesem Jahr gefallen.

T.Wiegold 30. Oktober 2016

Der Sonderbeauftragte der US-Regierung für den Wiederaufbau Afghanistans hat am (heutigen) Sonntag seinen routinemäßigen Quartalsbericht für den U.S. Congress vorgelegt. Zusammen mit dem 280 Seiten umfassenden Bericht hob das Büro des Special Inspector General for Afghanistan Reconstruction (SIGAR) einige sehr ernüchternde Fakten heraus, eine kurze düstere Übersicht (nein, ich habe nicht nur die negativen Punkte herausgesucht, es gab keine positiven):

• Past gains are eroding: poverty, unemployment, underemployment, violence, outmigration, internal displacement, and the education gender gap have all increased, while services and private investment have decreased.
• Fifteen years after the United States ousted the Taliban regime, Afghanistan remains one of the worst places in the world to be a woman.
• USFOR-A reported that approximately 63.4% of the country’s districts are under Afghan government control or influence as of August 28, 2016, a decrease from the 65.6% reported as of May 28, 2016. Of Afghanistan’s 407 districts, 258 districts were under government control (88 districts) or influence (170), 33 districts were under insurgent control (8) or influence (25), and 116 districts were „contested.“

• According to USFOR-A, from January 1, 2016, through August 19, 2016, 5,523 ANDSF service members were killed and an additional 9,665 members were wounded.
• From January 1, 2015, through August 19, 2016, there were 101 insider attacks in which ANDSF personnel turned on fellow ANDSF security forces, killing 257 and wounding 125.
• The ANDSF lacks a risk-management system and therefore relies heavily on U.S. forces to prevent strategic failure.
• Nearly 23% of Afghanistan’s labor force was unemployed in 2013-2014, almost triple the level of the 2011-2012 surge years.
• 85,075 Afghans sought asylum for the first time in the EU in the first six months of 2016. The number of asylum applications from April to June was 83% higher compared to the same period in 2015.

Der gesamte Bericht zum Nachlesen hier.

Nachtrag: Die Washington Post hat den Bericht unter einem anderen Aspekt ausgewertet:

The U.S. spent billions building roads in Afghanistan. Now many of them are beyond repair.

(Archivbild: Der Kommandeur der Resolute Support Mission, US-General Jochn Nicholson, mit Afghanen – Foto Resolute Support)


Vladimir Putin Meets with Members of the Valdai Discussion Club. Transcript of the Plenary Session of the 13th Annual Meeting


President of Russia Vladimir Putin: Tarja, Heinz, Thabo, colleagues, ladies and gentlemen,

It is a great pleasure to see you again. I want to start by thanking all of the participants in the Valdai International Discussion Club, from Russia and abroad, for your constructive part in this work, and I want to thank our distinguished guests for their readiness to take part in this open discussion.

Our esteemed moderator just wished me a good departure into retirement, and I wish myself the same when the time comes. This is the right approach and the thing to do. But I am not retired yet and am for now the leader of this big country. As such, it is fitting to show restraint and avoid displays of excessive aggressiveness. I do not think that this is my style in any case.

But I do think that we should be frank with each other, particularly here in this gathering. I think we should hold candid, open discussions, otherwise our dialogue makes no sense and would be insipid and without the slightest interest.

I think that this style of discussion is extremely needed today given the great changes taking place in the world. The theme for our meeting this year, The Future in Progress: Shaping the World of Tomorrow, is very topical.

Last year, the Valdai forum participants discussed the problems with the current world order. Unfortunately, little has changed for the better over these last months. Indeed, it would be more honest to say that nothing has changed.

The tensions engendered by shifts in distribution of economic and political influence continue to grow. Mutual distrust creates a burden that narrows our possibilities for finding effective responses to the real threats and challenges facing the world today. Essentially, the entire globalisation project is in crisis today and in Europe, as we know well, we hear voices now saying that multiculturalism has failed.

I think this situation is in many respects the result of mistaken, hasty and to some extent over-confident choices made by some countries’ elites a quarter-of-a-century ago. Back then, in the late 1980s-early 1990s, there was a chance not just to accelerate the globalisation process but also to give it a different quality and make it more harmonious and sustainable in nature.

But some countries that saw themselves as victors in the Cold War, not just saw themselves this way but said it openly, took the course of simply reshaping the global political and economic order to fit their own interests.

In their euphoria, they essentially abandoned substantive and equal dialogue with other actors in international life, chose not to improve or create universal institutions, and attempted instead to bring the entire world under the spread of their own organisations, norms and rules. They chose the road of globalisation and security for their own beloved selves, for the select few, and not for all. But far from everyone was ready to agree with this.

We may as well be frank here, as we know full well that many did not agree with what was happening, but some were unable by then to respond, and others were not yet ready to respond. The result though is that the system of international relations is in a feverish state and the global economy cannot extricate itself from systemic crisis. At the same time, rules and principles, in the economy and in politics, are constantly being distorted and we often see what only yesterday was taken as a truth and raised to dogma status reversed completely.

If the powers that be today find some standard or norm to their advantage, they force everyone else to comply. But if tomorrow these same standards get in their way, they are swift to throw them in the bin, declare them obsolete, and set or try to set new rules.

Thus, we saw the decisions to launch airstrikes in the centre of Europe, against Belgrade, and then came Iraq, and then Libya. The operations in Afghanistan also started without the corresponding decision from the United Nations Security Council. In their desire to shift the strategic balance in their favour these countries broke apart the international legal framework that prohibited deployment of new missile defence systems. They created and armed terrorist groups, whose cruel actions have sent millions of civilians into flight, made millions of displaced persons and immigrants, and plunged entire regions into chaos.

We see how free trade is being sacrificed and countries use sanctions as a means of political pressure, bypass the World Trade Organisation and attempt to establish closed economic alliances with strict rules and barriers, in which the main beneficiaries are their own transnational corporations. And we know this is happening. They see that they cannot resolve all of the problems within the WTO framework and so think, why not throw the rules and the organisation itself aside and build a new one instead. This illustrates what I just said.

At the same time, some of our partners demonstrate no desire to resolve the real international problems in the world today. In organisations such as NATO, for example, established during the Cold War and clearly out of date today, despite all the talk about the need to adapt to the new reality, no real adaptation takes place. We see constant attempts to turn the OSCE, a crucial mechanism for ensuring common European and also trans-Atlantic security, into an instrument in the service of someone’s foreign policy interests. The result is that this very important organisation has been hollowed out.

But they continue to churn out threats, imaginary and mythical threats such as the ‘Russian military threat’. This is a profitable business that can be used to pump new money into defence budgets at home, get allies to bend to a single superpower’s interests, expand NATO and bring its infrastructure, military units and arms closer to our borders.

Of course, it can be a pleasing and even profitable task to portray oneself as the defender of civilisation against the new barbarians. The only thing is that Russia has no intention of attacking anyone. This is all quite absurd. I also read analytical materials, those written by you here today, and by your colleagues in the USA and Europe.

It is unthinkable, foolish and completely unrealistic. Europe alone has 300 million people. All of the NATO members together with the USA have a total population of 600 million, probably. But Russia has only 146 million. It is simply absurd to even conceive such thoughts. And yet they use these ideas in pursuit of their political aims.

Another mythical and imaginary problem is what I can only call the hysteria the USA has whipped up over supposed Russian meddling in the American presidential election. The United States has plenty of genuinely urgent problems, it would seem, from the colossal public debt to the increase in firearms violence and cases of arbitrary action by the police.

You would think that the election debates would concentrate on these and other unresolved problems, but the elite has nothing with which to reassure society, it seems, and therefore attempt to distract public attention by pointing instead to supposed Russian hackers, spies, agents of influence and so forth.

I have to ask myself and ask you too: Does anyone seriously imagine that Russia can somehow influence the American people’s choice? America is not some kind of ‘banana republic’, after all, but is a great power. Do correct me if I am wrong.

The question is, if things continue in this vein, what awaits the world? What kind of world will we have tomorrow? Do we have answers to the questions of how to ensure stability, security and sustainable economic growth? Do we know how we will make a more prosperous world?

Sad as it is to say, there is no consensus on these issues in the world today. Maybe you have come to some common conclusions through your discussions, and I would, of course, be interested to hear them. But it is very clear that there is a lack of strategy and ideas for the future. This creates a climate of uncertainty that has a direct impact on the public mood.

Sociological studies conducted around the world show that people in different countries and on different continents tend to see the future as murky and bleak. This is sad. The future does not entice them, but frightens them. At the same time, people see no real opportunities or means for changing anything, influencing events and shaping policy.

Yes, formally speaking, modern countries have all the attributes of democracy: Elections, freedom of speech, access to information, freedom of expression. But even in the most advanced democracies the majority of citizens have no real influence on the political process and no direct and real influence on power.

People sense an ever-growing gap between their interests and the elite’s vision of the only correct course, a course the elite itself chooses. The result is that referendums and elections increasingly often create surprises for the authorities. People do not at all vote as the official and respectable media outlets advised them to, nor as the mainstream parties advised them to. Public movements that only recently were too far left or too far right are taking centre stage and pushing the political heavyweights aside.

At first, these inconvenient results were hastily declared anomaly or chance. But when they became more frequent, people started saying that society does not understand those at the summit of power and has not yet matured sufficiently to be able to assess the authorities’ labour for the public good. Or they sink into hysteria and declare it the result of foreign, usually Russian, propaganda.

Friends and colleagues, I would like to have such a propaganda machine here in Russia, but regrettably, this is not the case. We have not even global mass media outlets of the likes of CNN, BBC and others. We simply do not have this kind of capability yet.

As for the claim that the fringe and populists have defeated the sensible, sober and responsible minority – we are not talking about populists or anything like that but about ordinary people, ordinary citizens who are losing trust in the ruling class. That is the problem.

By the way, with the political agenda already eviscerated as it is, and with elections ceasing to be an instrument for change but consisting instead of nothing but scandals and digging up dirt – who gave someone a pinch, who sleeps with whom, if you’ll excuse me. This just goes beyond all boundaries. And honestly, a look at various candidates’ platforms gives the impression that they were made from the same mould – the difference is slight, if there is any.

It seems as if the elites do not see the deepening stratification in society and the erosion of the middle class, while at the same time, they implant ideological ideas that, in my opinion, are destructive to cultural and national identity. And in certain cases, in some countries they subvert national interests and renounce sovereignty in exchange for the favour of the suzerain.

This begs the question: who is actually the fringe? The expanding class of the supranational oligarchy and bureaucracy, which is in fact often not elected and not controlled by society, or the majority of citizens, who want simple and plain things – stability, free development of their countries, prospects for their lives and the lives of their children, preserving their cultural identity, and, finally, basic security for themselves and their loved ones.

People are clearly scared to see how terrorism is evolving from a distant threat to an everyday one, how a terrorist attack could occur right near them, on the next street, if not on their own street, while any makeshift item – from a home-made explosive to an ordinary truck – can be used to carry out a mass killing.

Moreover, the terrorist attacks that have taken place in the past few years in Boston and other US cities, Paris, Brussels, Nice and German cities, as well as, sadly, in our own country, show that terrorists do not need units or organised structures – they can act independently, on their own, they just need the ideological motivation against their enemies, that is, against you and us.

The terrorist threat is a clear example of how people fail to adequately evaluate the nature and causes of the growing threats. We see this in the way events in Syria are developing. No one has succeeded in stopping the bloodshed and launching a political settlement process. One would think that we would have begun to put together a common front against terrorism now, after such lengthy negotiations, enormous effort and difficult compromises.

But this has not happened and this common front has not emerged. My personal agreements with the President of the United States have not produced results either. There were people in Washington ready to do everything possible to prevent these agreements from being implemented in practice. This all demonstrates an unexplainable and I would say irrational desire on the part of the Western countries to keep making the same mistakes or, as we say here in Russia, keep stepping on the same rake.

We all see what is happening in Afghanistan, Iraq, Libya and a number of other countries. I have to ask, where are the results of the fight against terrorism and extremism? Overall, looking at the world as a whole, there are some results in particular regions and locations, but there is no global result and the terrorist threat continues to grow.

We all remember the euphoria in some capitals over the Arab Spring. Where are these fanfares today? Russia’s calls for a joint fight against terrorism go ignored. What’s more, they continue to arm, supply and train terrorist groups in the hope of using them to achieve their own political aims. This is a very dangerous game and I address the players once again: The extremists in this case are more cunning, clever and stronger than you, and if you play these games with them, you will always lose.

Colleagues, it is clear that the international community should concentrate on the real problems facing humanity today, the resolution of which will make our world a safer and more stable place and make the system of international relations fairer and more equal. As I said, it is essential to transform globalisation from something for a select few into something for all. It is my firm belief that we can overcome these threats and challenges only by working together on the solid foundation of international law and the United Nations Charter.

Today it is the United Nations that continues to remain an agency that is unparalleled in representativeness and universality, a unique venue for equitable dialogue. Its universal rules are necessary for including as many countries as possible in economic and humanitarian integration, guaranteeing their political responsibility and working to coordinate their actions while also preserving their sovereignty and development models.

We have no doubt that sovereignty is the central notion of the entire system of international relations. Respect for it and its consolidation will help underwrite peace and stability both at the national and international levels. There are many countries that can rely on a history stretching back a thousand years, like Russia, and we have come to appreciate our identity, freedom and independence. But we do not seek global domination, expansion or confrontation with anyone.

In our mind, real leadership lies in seeing real problems rather than attempting to invent mythical threats and use them to steamroll others. This is exactly how Russia understands its role in global affairs today.

There are priorities without which a prosperous future for our shared planet is unthinkable and they are absolutely obvious. I won’t be saying anything new here. First of all, there is equal and indivisible security for all states. Only after ending armed conflicts and ensuring the peaceful development of all countries will we be able to talk about economic progress and the resolution of social, humanitarian and other key problems. It is important to fight terrorism and extremism in actuality. It has been said more than once that this evil can only be overcome by a concerted effort of all states of the world. Russia continues to offer this to all interested partners.

It is necessary to add to the international agenda the issue of restoring the Middle Eastern countries’ lasting statehood, economy and social sphere. The mammoth scale of destruction demands drawing up a long-term comprehensive programme, a kind of Marshall Plan, to revive the war- and conflict-ridden area. Russia is certainly willing to join actively in these team efforts.

We cannot achieve global stability unless we guarantee global economic progress. It is essential to provide conditions for creative labour and economic growth at a pace that would put an end to the division of the world into permanent winners and permanent losers. The rules of the game should give the developing economies at least a chance to catch up with those we know as developed economies. We should work to level out the pace of economic development, and brace up backward countries and regions so as to make the fruit of economic growth and technological progress accessible to all. Particularly, this would help to put an end to poverty, one of the worst contemporary problems.

It is also absolutely evident that economic cooperation should be mutually lucrative and rest on universal principles to enable every country to become an equal partner in global economic activities. True, the regionalising trend in the world economy is likely to persist in the medium term. However, regional trade agreements should complement and expand not replace the universal norms and regulations.

Russia advocates the harmonisation of regional economic formats based on the principles of transparency and respect for each other’s interests. That is how we arrange the work of the Eurasian Economic Union and conduct negotiations with our partners, particularly on coordination with the Silk Road Economic Belt project, which China is implementing. We expect it to promote an extensive Eurasian partnership, which promises to evolve into one of the formative centres of a vast Eurasian integration area. To implement this idea, 5+1 talks have begun already for an agreement on trade and economic cooperation between all participants in the process.

An important task of ours is to develop human potential. Only a world with ample opportunities for all, with highly skilled workers, access to knowledge and a great variety of ways to realise their potential can be considered truly free. Only a world where people from different countries do not struggle to survive but lead full lives can be stable.

A decent future is impossible without environment protection and addressing climate problems. That is why the conservation of the natural world and its diversity and reducing the human impact on the environment will be a priority for the coming decades.

Another priority is global healthcare. Of course, there are many problems, such as large-scale epidemics, decreasing the mortality rate in some regions and the like. So there is enormous room for advancement. All people in the world, not only the elite, should have the right to healthy, long and full lives. This is a noble goal. In short, we should build the foundation for the future world today by investing in all priority areas of human development. And of course, it is necessary to continue a broad-based discussion of our common future so that all sensible and promising initiatives are heard.

Colleagues, ladies and gentlemen, I am confident that you, as members of the Valdai Club, will actively take part in this work. Your expertise enables you to understand all angles of the processes underway both in Russia and in the world, forecast and evaluate long-term trends, and put forward new initiatives and recommendations that will help us find the way to the more prosperous and sustainable future that we all badly need.

Thank you very much for your attention.

Carnegie Moscow: Three Dimensions: Is the Break Between the Kremlin and the West Permanent?

As the U.S. presidential election approaches on November 8, asked three experts, one in Russia, one in the United States, and one in Europe, to comment on the question: “Is the break between the Putin administration and the West permanent?”

“The biggest source of instability for Moscow lies in the South. The North Caucasus has been pacified but is still simmering. The shock waves from the war in Syria and Iraq are affecting the South Caucasus. Syria is basically a failed state and only the intervention of Russia saved the Assad regime from collapse. The return of Russia to the Middle East requires a political settlement, otherwise the war will eat up valuable resources and become a second Afghanistan.”

Fyodor Lukyanov

Editor-in-Chief of Russia in Global Affairs

The New Emerging World Order will Decide

There is a central paradox in Russian-U.S. relations. On the one hand, they have become extremely personalized. On the other hand, their trajectory depends less on personalities than on repeating cyclical patterns.

The current conflict between Russia and the West is a logical result of the effort made after the end of the Cold War to forge a historically unprecedented deep rapprochement. As that effort did not work out, the pendulum has swung back to the other extreme.

We can now expect another swing toward the middle, though probably one with lesser force. But there is a difference this time. In the previous phase of rapprochement, Russia was supposed to adapt to a certain unipolar world order. Now, the future relationship depends on what influence and capabilities each side has at its disposal.

In other words, future Russian-U.S. relations will be defined less by bilateral issues than by the dynamic of the whole world order. The role of China, what happens in the Asia-Pacific region, events in the European Union, the situation in the Middle East—all these are not the context but the key determinants of the Russian-U.S. relationship.

Mutual antipathy between Moscow and Washington may end up reproducing a new kind of Cold War. But if that happens, it will be from mere inertia or because the two sides camouflage their inability to find answers to real problems by name-calling a familiar enemy.

The outcome of the November 8 presidential elections in the United States won’t significantly change things. If Hillary Clinton wins, the only positive thing is that she is considered so anti-Russian that any sign of moderation will be a big surprise. If Donald Trump becomes president, it will quickly become obvious that the problem’s systemic nature will render him incapable of improving relations with the Kremlin.

We must wish either eventual U.S. president to stay cool and restrained in their rhetoric– something which has become a rarity in America.

Rene Nyberg

Former Finnish Ambassador to Russia

Economics Defers to Politics

What is permanent in this world or in international politics? The break in Russo-Turkish relations, which lasted just six months, is a striking example. So a change of administration in the United States offers a possibility for a fresh start or to try to find new openings. Despite the deep disparities in the current relations between Russia and the West, history is full of examples of how conflicts have been defused.

Ballistic Missile Defense (BMD) is one of the hardest nuts to crack. But, even though a legally binding treaty is unrealistic, I have witnessed Track Two talks on BMD that prove that certain crucial aspects can be agreed upon.

On Ukraine, the solutions are on the table. The option of keeping Donbas in the long run is corrosive, untenable and too costly for Moscow. At the same time, the region has become permanently estranged from Kiev. A clean separation from Ukraine seems more and more the only realistic solution. As for Crimea, a border change is possible, but acceptable only if agreed upon in a treaty. The hardest part for the Kremlin remains accepting Ukraine as the other heir of the medieval kingdom of Kievan Rus.

The biggest source of instability for Moscow lies in the South. The North Caucasus has been pacified but is still simmering. The shock waves from the war in Syria and Iraq are affecting the South Caucasus. Syria is basically a failed state and only the intervention of Russia saved the Assad regime from collapse. The return of Russia to the Middle East requires a political settlement, otherwise the war will eat up valuable resources and become a second Afghanistan.

There are plenty of reasons for the Kremlin to look for a settlement with the West, the most compelling ones being economic. But the record of the Putin administration shows that in the end, economics always defers to politics.

Angela Stent

Director of Center for Eurasian, Russian and East European Studies at Georgetown University

Cooperation and Disagreement Can Coexist

Addressing the Valdai Club meeting on October 27, President Vladimir Putin criticized the United States and Europe for their policies toward Ukraine and Syria and for unlawfully imposing sanctions on Russia. But he pronounced himself ready to deal with the next U.S. president to resolve all difficult issues.

Relations between Russia and the West are worse than at any time since before Mikhail Gorbachev came to power. Recently, a Russian official claimed that the U.S. was committed to regime change in Moscow, and both Europe and the United States believe that Russia is interfering in their domestic politics.

Rhetoric about the possibility of nuclear war emanates from Moscow. While this is not the Cold War that existed prior to the Soviet collapse, the harsh, adversarial rhetoric and military posturing certainly feel like the Cold War without the channels of communication that operated then.

The experience of the past sixteen years suggests that Putin is a pragmatic leader willing to make deals if he believes they are in Russia’s interest. Hillary Clinton, while criticizing Russia, has not ruled out re-establishing high-level contacts if it is in the U.S. interest.

But what might the nature of the deal be? Putin set out three conditions recently: cutting back NATO troop levels to those before NATO enlargement; repealing the Magnitsky Act; repealing Western sanctions, and paying Russia compensation for its economic losses. These would probably be a non-starter for Washington.

But resuming talks over a U.S-Russian cyber agreement and restoring high-level military channels might be possible. Western relations with Russia have always been compartmented with elements of cooperation and disagreement coexisting. What is less clear is the Kremlin’s interest in improving ties prior to Russia’s own presidential election and beyond.


George Friedman: The Origins of American Incivility and Fear

One of the more striking things about the United States is the sense that it is in decline. Donald Trump’s main theme is that he would make America great again and that it has been in severe decline over the last decades. It was an effective campaign theme because it touched on a deep American dread. In Europe you will find a different sensibility, which is that while Europe has problems, they are nothing compared to the problems in the past – the Soviet threat, Nazi Germany, the mass slaughter of World War I. Europeans look at their past and are grateful to be living when they are. Many Americans feel a sense of a lost greatness and a looming catastrophe.

This sensibility is not new. During the 1970s, there was a deep and oft stated sense that America was in decline. At the end of the Vietnam War the enemy’s flag flew over a capital we had been defending. During the same time, there was a massive social and cultural divide. The culture of the lower-middle class and that of the graduates of the best universities were in sharp contrast. On the whole, it was the lower middle class that fought the war and supported it.

The universities were the center of antiwar sentiment and contempt for those who supported the war. The contempt was mutual. The economic situation was catastrophic for many. Unemployment and inflation were both around 10 percent for a good deal of the decade. Interest rates were in the high teens, and buying a house was out of reach for many. At the end of the decade came the Iranian Revolution, with Iranians taking American diplomats hostage and the United States helpless to protect them. The disaster at Desert One followed – a task force sent to rescue the hostages collapsed, with planes destroyed and men dying before the rescue attempt began.

The sense of decline was rampant. It could be seen in crime and decay in the cities, the surge in Japanese exports to the United States, and the sense that the Baby Boomer generation, unable to settle into family or career, was destroying the fabric of society. The feeling was that the Japanese were surging ahead of the United States economically, the Soviets were surging ahead militarily and we were held in contempt by the world.

That was some 40 years ago and clearly the sensibility was wrong. What followed was the Japanese economic crisis, the collapse of the Soviet Union, recovery of the hostages from Iran and the United States emerging as the only global power. Interest rates plunged, as did inflation, and we came into a period of intense innovation and economic growth.

Having passed through the 1970s, as we did, it would seem reasonable that it would serve as a benchmark. A lost war, an extended economic crisis and social stress had not led to catastrophe. Yet, there are few lessons taken from the 1970s to provide some perspective. Similar circumstances are expected to yield the same dreaded disaster.

The sense of dread is more than a response to a particular time. It is also not that Americans lack the ability to use history to frame our concerns – although that may be the case. It has deeper roots, particularly in the 20th century. Two events, about 12 years apart, have left a permanent scar on the American psyche. One was the collapse of the stock markets in October 1929 and the following depression. The other was the attack on Pearl Harbor on Dec. 7, 1941 and the following war.

U.S.S. Arizona survivor Louis Conter salutes the remembrance wall of the U.S.S. Arizona during a memorial service for the 73rd anniversary of the attack on the U.S. naval base at Pearl Harbor on Dec. 07, 2014.

There was a common link between the two. Neither was expected by the public. Both were a shock that transformed everyday life for the worse. An argument can be made that both should have been expected. But they weren’t. These two events engraved a single principle on the American soul: that lurking beneath the surface of peace and prosperity are forces that break through and destroy both. In the more extreme formulation, both 1929 and 1941 were known to the elite, who not only protected themselves from the consequences, but also profited from them.

The 1920s were a time of prosperity in the United States (outside of the regions that experienced the Dust Bowl). As with all times of prosperity, the seeds of its own destruction were there from the beginning; people began to believe that it was the new, permanent normal. 1929 stunned people because it was unexpected, but it was the brutal grinding of the Great Depression that scarred the American soul. It created a national memory of hardship emerging without warning. At least some of us approach the best of times with a bitter certainty that hidden behind the false screen of prosperity, disaster is lurking, whether rooted in impersonal economic forces or the hidden hand of the powerful.

Pearl Harbor drove home to Americans that an enemy might strike the United States at any time, without being detected, and decimate the country. Most Americans suspected that the United States would enter World War II at some point, but they believed that it would be at the time and place of our choosing. The idea that the Japanese, whom many Americans held in contempt, could strike without warning and destroy the Pacific Fleet changed the world. The change was not simply that the U.S. was at war, it was deeper. It was the sense that war would come without warning and perhaps destroy us.

These two events changed the American sense of the world. It is overstated to say that before these events, the United States was innocent and carefree. The 600,000 dead in the Civil War would prove otherwise. But the Civil War did not strike out of nowhere, nor did the previous economic crises last for a decade. Combining the surprise at the events with how long and deeply they cut into the United States, a new sensibility was born. It was a sensibility of deep suspicion, not so much of people (although a fear of conspiracy was implanted), but simply of the fragility of American life and power.

The fear of the hidden disaster lurking to destroy us is not necessarily delusional. I happen to think that the 1970s provide a framework to think about our current decade and discount the worst fears we have. But there are reasonable fears and fears that will turn out to be reasonable regardless of my view. These fears serve as an engine for intensifying emotions and going to extremes.

Take two examples from opposite sides of the political spectrum. The concern that massive immigration from Mexico will transform American society and cause crime and disorder is not an unreasonable fear. Most immigrant movements to the United States resulted in some criminal activities and social instability. That is in the nature of immigration. However, when you attach the underlying engine of dread to an argument that may be wrong in this case, but isn’t absurd, you reshape the argument to a level of fear that means anyone who disagrees is a fool or a monster.

There is the concern that human activity is changing the climate and that that change poses a threat to humanity. The argument is not irrational, as we have seen increased temperatures that might well cause serious harm. When the argument on global warming is linked to the culture of dread, then the argument becomes a certainty and the only outcome is catastrophe. And those who take issue with it are fools or monsters. If things are as bad as those who want to stop Mexican immigration or those alarmed by climate change claim, then anyone who rejects the argument is like someone who refuses to see that the house is on fire.

Pearl Harbor defined the Cold War. If an attack can come at any time, then the United States must be ready for war 24/7. We drilled out a mountain in Colorado Springs to house the North American Air Defense Command. We had B-52s constantly airborne, submarines on constant patrol and crews in missile silos standing by ready to fire. I am not sure there was another course, but I do know that having raised the possibility of another course would have encountered rage.

When people write to me talking about the trillions of dollars of debt that will crush the American economy, they do so out of fear of the lurking force that will destroy everything. If you say, “It’s a problem, but we can probably manage it,” you might be called a fool or perhaps part of a conspiracy to destroy the economy.

Mexican immigration, climate change, mutual assured destruction and the national debt are all topics worth serious discussion among serious people, each holding open the possibility that the other is right. But when it is declared that the debate is over, that means that there can be no debate and no changing of minds. If it is a matter of the apocalypse, that is a reasonable thing to say. But if everything is apocalyptic, then no conversation on anything is possible.

In retrospect, we were all fools not to expect the Great Depression or Pearl Harbor. If we missed those, then what else are we missing? Someone will be happy to show you what else you are missing and with utter sincerity, he will try to convince you that you are not two reasonable people disagreeing, but that he is trying to save the country, and you are trying to destroy it.

We wonder at the growing incivility of American culture. Going back to the 1960s and 1970s, I remember the chant “hey, hey, LBJ, how many kids did you kill today?” Even in this election, I have heard nothing that uncivil. Nor have I heard that someone has a list of 100 communists in the State Department. Nor have I seen the dead of Antietam. So no, I don’t believe this is the most uncivil time in America. Not even close. But given the deep anxiety bequeathed us by 1929 and Pearl Harbor, we can see the fear of unexpected disaster can fuel spectacular incivility.

A belief has emerged in America that we are surrounded by hidden dangers that will strike when we least expect it and with a terrible fury. We are enraged when others don’t see it, for the same reason someone being ignored when he says there is a fire will be justly enraged. But everything is not on fire. Our time is no worse than the 1970s and that time was not nearly as bad as the 1930s. But then we think of the Depression and Pearl Harbor and we wonder if we are being lulled into a false sense of security. We are not uncivil. We are afraid. Our fears have serious origins. But reality does not always lead to the apocalypse.


*Massenbach’s Recommendation*

UniCredit,Economics Thinking: The European Council will soon decide whether or not to boost the scale of the “Juncker Plan” – a plan to boost investment in the EU.

■ We evaluate what the “Juncker Plan” has achieved since its inception in November 2014. We find that it has already delivered some results in terms of facilitating and mobilizing investment across Europe. The countries that have taken most advantage of it tend to be those undergoing austerity and/or suffering from less abundant banking credit (for riskier SME lending).

■ Given chronic underinvestment in Europe (both public and private) over many years, the EU should approve the boost in financing for the “Juncker Plan”, and it should discuss ways it can commit more than the additional few billion euros it has proposed so far. ( see more att.)

Die Autoren unseres UniCredit Economics Thinking sind unsere Economics & FI/FX Research-Abteilung.

The Deutsche Bank Downfall * How a Pillar of German Banking Lost Its Way

For most of its 146 years, Deutsche Bank was the embodiment of German values: reliable and safe. Now, the once-proud institution is facing the abyss. SPIEGEL tells the story of how Deutsche’s 1990s rush to join the world banking elite paved the way for its own downfall.

Greed, provincialism, cowardice, unfocused aggression, mania, egoism, immaturity, mendacity, incompetence, weakness, pride, blundering, decadence, arrogance, a need for admiration, naiveté: If you are looking for words that explain the fall of Deutsche Bank, you can choose freely and justifiably from among the above list.

The bank, 146 years after its founding, has become the target for all manner of pejoratives, and not just from outside observers. All of the above terms were used in interviews held during months of reporting into the causes of the downfall of Germany’s largest financial institution. They popped up over the course of several hours of interviews with four Deutsche Bank CEOs, three former and one current. And they were uttered in interviews with eight additional senior bank managers and board members conducted over the course of several years, from the 1990s until today, and in meetings with captains of industry who know the bank well and during encounters with major stakeholders. More than anything, the disparaging words come up frequently in interviews with those who have worked or still work at the bank as customer service advisors, as branch managers or in positions lower down on the food chain.

What we have found in the course of these myriad interviews — combined with the hours spent analyzing bank balance sheets, thousands of pages of files, committee meeting minutes and archive material — is that the collapse of Deutsche Bank is the result of years, decades, of failed leadership, culminating in the complete loss of control of the company by top managers during the period between 1994 and 2012.

It is a story about how Hilmar Kopper, Rolf E. Breuer and Josef Ackermann, the leaders of Deutsche Bank during those fateful years, essentially turned over the bank to a hastily assembled group of Anglo-American investment bankers before Anshu Jain, the prince of these traders, rose to the top and spent three more years sailing the bank full-speed-ahead into the shoals.

It is also a story of how these bank heads, along with numerous other members of the management and supervisory boards, stood aside as Jain and the many other new investment banking heroes modified the staid German financial institution to serve their own purposes — essentially looting it and robbing it of its very soul — without leaving behind a better, stronger bank. (ctd / see att.)



see our letter on:

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



10-27-16 UniCredit_What has the “Juncker Plan” achieved.pdf

10-28-16 – The Deutsche Bank Downfall_ How a Pillar of German Banking Lost Its Way_spiegel_online.pdf

11-01-16 Are Videos a New Counter-Terrorism Mechanism.docx

11-01-16 WSJ_Places Most Unsettled by Rapid Demographic Change Are Drawn to Donald Trump.pdf

11-01-16 Vergemeinschaftung von Schulden durch die Hintertür_PRO D0425577.pdf