Massenbach-Letter. NEWS 02.6.17

Massenbach-Letter. News

  • WSJ: China’s CIC in Advanced Talks to Buy European Warehouse Company From Blackstone –
  • Sovereign-wealth fund’s $13.49 billion deal for Logicor would underscore strength of the industrial property sector
  • World Awaits Trump Decision on U.S. Future in Paris Accord
  • WSJ: Rural America Is the New ‘Inner City’
  • Friedman: Different Visions for Europe
  • Newt Gingrich: “The president just made a titanic foreign policy shift. The media missed it.”

Massenbach*World Awaits Trump Decision on U.S. Future in Paris Accord

WASHINGTON — Momentous arguments inside the West Wing over the future of the Paris climate accord became a messy public spectacle on Wednesday, with some aides saying that President Trump had decided to abandon the landmark global warming agreement while others insisted that no decision had been made.

Three administration officials with direct knowledge of the intense White House debate said early Wednesday morning that Mr. Trump was expected to withdraw the United States from the 2015 climate change accord that committed nearly every nation to take action to curb the warming of the planet.

In addition, three other officials said later Wednesday that they expected him to withdraw from the agreement, though they said that decision could still change. Hours later, Mr. Trump said on Twitter that he had made his decision and would announce it in the Rose Garden at 3 p.m. Thursday.

The White House’s legislative affairs office has suggested another route: Sending the Paris agreement to the Senate for ratification as a treaty. Since it would require an impossible two-thirds vote, that alternative would also lead to withdrawal.


From our Russian News Desk.


Carnegie: U.S. Policy Toward the South Caucasus: Take Three

Be realistic about energy potential.

The significance of Caspian Sea energy resources for the region in the past has created unrealistic expectations, which are important to keep in check.

U.S. Policy Toward the South Caucasus: Take Three


The United States has important but not vital interests in the South Caucasus, which include preserving regional stability; preventing the resumption of frozen conflicts; and supporting democratic change and better governance as well as the international integration of Armenia, Azerbaijan, and Georgia. Recent events—the breakdown of the post–Cold War European security order, changing global energy markets, instability to the region’s south, a new U.S. administration, and the European Union’s (EU) internal challenges—call for sustained U.S. engagement to advance those interests.
Read Online
U.S. Engagement in the South Caucasus
  • Over the past twenty-five years, U.S. involvement in the South Caucasus has helped produce important positive changes in the region, particularly in Georgia. However, some U.S.-supported initiatives proved too ambitious because they underestimated the challenges facing the South Caucasus states and lacked adequate resources.
  • U.S. policy will continue to face limited resources and challenging conditions in the region. Washington should stay engaged to help the South Caucasus states tackle their internal challenges. But U.S. policy in the region cannot change its environment, and will have to contend with Russia’s dominant position and its opposition to U.S. engagement there.
  • The United States cannot retreat from the South Caucasus. But success will depend on a careful balancing of U.S. commitments and resources, as well as a clear appreciation of the limits on U.S. capacity to promote transformational change.
A Long-Term U.S. Approach
A more sustainable policy toward the region should be based on five guiding principles:

Prioritize conflict prevention. Keeping any one of the region’s frozen conflicts from escalating into hostilities should remain the top priority for U.S. policy toward the South Caucasus.

Proceed cautiously in promoting U.S. values. The United States should support democratic change; however, a single regional approach is unlikely to be effective given the different trajectories of the South Caucasus states. Tailored, country-specific approaches to achieve incremental progress offer the best prospect for success.

Keep expectations modest. The United States is at a serious geopolitical disadvantage in the region vis-à-vis Russia. Washington should not promise support to counterbalance Moscow that it cannot deliver. This is especially the case with Georgia and its aspirations for NATO membership.

Make room for the EU. Economic development, rule of law, and other domestic reforms should remain priorities for U.S. engagement, but Washington should coordinate its efforts with the EU.

Be realistic about energy potential. The significance of Caspian Sea energy resources for the region in the past has created unrealistic expectations, which are important to keep in check.

Continue reading
About the Authors
Eugene Rumer, a former national intelligence officer for Russia and Eurasia at the U.S. National Intelligence Council, is a senior fellow and the director of Carnegie’s Russia and Eurasia Program.

Richard Sokolsky is a nonresident senior fellow in Carnegie’s Russia and Eurasia Program. Prior to joining Carnegie, Sokolsky was a member of the Secretary of State’s Policy Planning Office.

Paul Stronski is a senior fellow in Carnegie’s Russia and Eurasia Program, where his research focuses on the relationship between Russia and neighboring countries in Central Asia and the South Caucasus.


Policy= res publica

Freudenberg-Pilster* Rural America Is the New ‘Inner City’

A Wall Street Journal analysis shows that since the 1990s, sparsely populated counties have replaced large cities as America’s most troubled areas by key measures of socioeconomic well-being—a decline that’s accelerating

….In November’s presidential election, rural districts voted overwhelmingly for Donald Trump, who pledged to revive forgotten towns by scaling back regulations, trade agreements and illegal immigration and encouraging manufacturing companies to hire more American workers. A promised $1 trillion infrastructure bill could give a boost to many rural communities.

Lawmakers from both parties concede they overlooked escalating small-town problems for years. “When you have a state like Florida, you campaign in the urban areas,” said former Florida Republican Sen. Mel Martinez. He recalls being surprised when he learned in the mid-2000s that rural areas, not cities, were the center of an emerging methamphetamine epidemic.

During the Bush administration, lawmakers were preoccupied with two wars, securing the homeland after the Sept. 11 terrorist attacks and rebuilding New Orleans after Hurricane Katrina. Barack Obama’s administration tried to lift rural areas by pushing expanded broadband access, but found that service providers were reluctant to enter sparsely populated towns, said former Agriculture Secretary Tom Vilsack.

Since the collapse of the housing market, real-estate appreciation in nonmetropolitan areas has lagged behind cities, eroding the primary source of wealth and savings for many families.

“We didn’t really have much of a transformation strategy for places where the world was changing,” Mr. Vilsack said…..

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

Barandat* Different Visions for Europe

by George Friedman.

Following U.S. President Donald Trump’s visit to Europe, German Chancellor Angela Merkel said Europe could no longer rely on others, by which she clearly meant that Europe could no longer rely on the United States. The statement undoubtedly arose in part from her personal friction with Trump. Part of it had to do with politics: Trump is unpopular in Germany, and the German public, particularly the left, has had doubts about the German-American relationship. The country has federal elections in September, and Merkel is under pressure. Her statement generated support from segments of the population that don’t normally support her. But underneath personality and politics, there is a geopolitical reality that has been in place since 1991 and is now emerging fully into view. This reality is that Europe is fractured and, as a whole, its interests have diverged from those of the United States.

Beneath his unusual demeanor during the trip, Trump was representing a view – a rational view – that is increasingly common in the United States. This view holds that NATO was created as a coalition of countries with identical interests: preventing the Soviet Union from invading and occupying Western Europe. NATO was successful because its purpose was clear, there was a deep consensus, and although the U.S. carried much of the burden of defense, other European countries, particularly Germany, carried a share of that burden proportionate to their ability – and would bear the brunt of a Soviet invasion. The alliance made sense.

The alliance persisted after the fall of the Soviet Union and expanded to include the countries that had been Soviet satellites. The political purpose of expansion – helping to integrate new countries into the West – was understandable, but without an obvious adversary, NATO as a primarily military alliance no longer made sense. The laser precision of the bloc’s Cold War mission was replaced by a vague mission and an uncertain vision.

The U.S.-NATO Divide

In the meantime, 9/11 launched the United States into a series of wars in the Middle East. Whether they were wise is immaterial at this point; they were the primary military focus of the United States. But though the Americans’ invocation of Article 5 (the principle of collective defense) committed NATO to the war in Afghanistan, how much individual members contributed was up to them. And in Iraq, where Article 5 was not invoked, many NATO members chose not to participate at all. Germany played no part in Iraq, and in Afghanistan, it deployed a relatively small force with tight restrictions on combat operations.

The Americans understood the technicalities. They also understood that NATO was no longer very relevant to the problems the United States was facing. Bilateral relations took precedent over relations with NATO. The U.S. moved closer to the United Kingdom and smaller countries, particularly in Eastern Europe, that were prepared to commit what they could to the wars in the Middle East. It became increasingly difficult for the Americans to think of Europe as a whole: It didn’t behave as a whole, and the Euro-American alliance didn’t extend beyond NATO’s mission – a mission that appeared to have expired.

The mission was somewhat revived by the Russo-Georgian war in 2008, and even more in 2014 with the uprising in Ukraine. The Russians appeared to be growing more aggressive. However unlikely a Russian invasion was, NATO was committed by treaty to defend the Baltics, Poland, Slovakia, Hungary, Romania and Bulgaria. It had to have forces on hand to deter or repel Russian action.

U.S. President Donald Trump (R) and German Chancellor Angela Merkel arrive for a photo during the Summit of the Heads of State and of Government of the G-7, the group of most industrialized economies, plus the European Union, on May 26, 2017, at the ancient Greek theater in Taormina, Sicily. MIGUEL MEDINA/AFP/Getty Images

The problem was that NATO couldn’t deploy enough force for the mission – the mission for which it was founded. Even the wealthiest members, like Germany, lacked a force that could protect Europe’s eastern frontier. This left the United States in a position where, if NATO were called on to defend a member, it would be the prime mover, as it had been since the alliance’s founding. Many in Europe argued that the danger was low, but those nearer to the front line – the Balts, the Poles and the Romanians – didn’t share their confidence and had a reasonable expectation for NATO to function as designed.

To this point, the Americans were disappointed but understood that many European NATO members provided the force they wanted to provide to the wars they chose. But 2014 raised the specter of a European war, and what the U.S. saw was many of its NATO allies, particularly Germany, offering ample advice and playing a role in diplomacy but lacking, by choice, the force to carry out their NATO obligation relative to the size of their economies.

It was then that the divide between the U.S. and NATO became a domestic political problem in the United States. The foreign policy technocrats in Washington accepted as a given that the European commitment to NATO would not evolve to reflect the economic equality between the continents. The rising nationalist segment of the American populace opposed fixed institutionalized relationships, particularly those that did little to meet the needs of the U.S. and that involved unequal burden sharing.

It was this group that Trump represented while he was in Brussels. Merkel’s response to him – essentially saying Europe should take care of itself – would shock the foreign policy technocrats, but the nationalists regarded it as simply the logical conclusion of Germany’s behavior. They welcome Europe’s commitment to self-reliance, and they will continue their military relationship with the United Kingdom, Eastern Europe and other countries of interest. If the Germans want to abandon NATO, the nationalists are pleased to see it happen.

Lessons of the Past

Germany’s view is that the United States is carelessly threatening the global balance and, far more important, the European balance. Germany went through two catastrophic wars in the past century, was divided in two with both halves occupied (albeit one half more benignly by the United States), and faced the possibility of being the battlefield for a disastrous war. Germany’s primary strategic interest is avoiding a repeat of the past century. In looking at the foundations of that century, it was Germany’s excessive reliance on military force that led it into wars it couldn’t win.

The NATO of the Cold War was something the Germans had to live with to recover from the material and moral catastrophe of World War II. But 1991 opened a new era for Germany in which it wished to avoid being drawn into a conflict that its geography dictated would be disastrous. Germany exists on the North European Plain, a difficult area to defend except at the river lines that run north-south. Whenever the Germans moved to the west or east, they discovered short-term victories, but in the long term they were ground into the dust, constantly in retreat until their collapse. Germany experienced this most emphatically in Russia.

It has no intention of being drawn into such a conflict again, and it does not see Russia as a strategic threat. In Germany’s view, the conflict in Ukraine could not spread beyond Ukraine because Russia’s military power is limited, and Russia doesn’t want a war anyway. Germany intervened diplomatically in Ukraine in 2014, but the Germans believed a new attempt at containment from the Baltics to Romania would not deter war and could even increase its likelihood by encouraging Russia to respond.

For Germany, a strategy of containment requiring the pre-emptive deployment of substantial forces would drain its economy and achieve nothing. Moreover, if the United States and a coalition of the willing decided on a containment policy outside the framework of NATO, Germany, at the rear of the line, would inevitably be drawn in. For Berlin, the measure of commitment to European security is not the willingness to deploy military force but the maintenance of a full appreciation of the balance of forces. In its view, the U.S. and Europe are not rationally evaluating Russian power, and it is Germany’s responsibility to act as a brake on the United States.

Behind this is another reality. Germany is a massive exporter and needs the EU for a free market for sales, a common currency that benefits it, and a system of regulations that protects its industry. Above all else, it must protect the European Union. The EU is already under terrific stress, with Brexit, political tensions between Brussels and Poland and Hungary, and the emergence of a general anti-EU faction. Marine Le Pen’s defeat in the French elections has not ended that problem.

Increased military tension that involves Eastern Europe but is looked at skeptically by countries farther west opens the door to another dimension of European fragmentation. U.S. deployments in Eastern Europe have the potential to increase the centrifugal forces that are already edging toward being out of control. Demanding increased spending from NATO at a time of economic stagnation may seem reasonable to the Americans, but it underestimates Europe’s fragility while simultaneously drawing Eastern Europe into its orbit and further fragmenting the EU.

From Germany’s point of view, the U.S. has been too powerful for Germany to influence, and until now Germany had been too weak to resist. Germany sees the U.S. wars in the Middle East as examples of America’s excessive power. The U.S. has for 15 years waged a war, even in the face of failure, that towers over anything the Europeans can field for any length of time.

Germany is a weak and scarred country living in a difficult place. The Americans tend to see war as a viable option where Germany cannot. The demand that Germany and Europe increase their spending on defense is really, in Merkel’s eyes, an attempt to draw Germany into the American mode of thought, of never seeing problems as insoluble and never hesitating to seek military solutions – only to find that the problem remains.

For Merkel, Trump is American geopolitics personified. He is enormously powerful and unreasonably confident, and he demands that an alliance of equals serve the American interest as its first responsibility. When she said that Europe must not depend on anyone, what she was saying is that Europe must stick together and not be drawn into the American understanding of the world.

This was bound to happen, Trump or not. America and Germany have utterly different imperatives and experiences. One has known only triumph and relatively minor defeats, the other has been devastated over and over by its own actions. The U.S. is far more powerful and geographically secure than Germany ever was. It is involved in wars and doesn’t understand an alliance that expects U.S. force when its allies need it but can’t offer the same in return. The Americans and Germans are no longer even participating in the same discussion.

The American view and the German view of Europe are incompatible. The future of Europe means far more to Germany than to the United States. The United States can increase fragmentation unintentionally, and this is why Germany has declared itself and Europe self-reliant. The problem is that the very idea of Europe as a political entity and not just a place is in crisis. It is necessary for Merkel to declare self-reliance, but right now, it’s unclear what the self of Europe is.

Comment by UvM: Why not replace “Germany” by “Merkel” ?


Middle East

Newt Gingrich: “The president just made a titanic foreign policy shift. The media missed it.”

By Newt Gingrich

May 24, 2017

Newt Gingrich, a Republican from Georgia, was speaker of the House of Representatives from 1995 to 1999. He served as vice chair of the Trump transition team and is the author of the book “Understanding Trump,” which is scheduled to be released in June.

This newspaper’s legendary former publisher, Philip Graham, famously described journalism as the business of writing the “first rough draft of history.” This week, as President Trump gave a historic speech in Saudi Arabia before the leaders of more than 50 Muslim-majority nations, journalism’s first draft missed the history almost entirely.

While the media focused on the ephemeral questions — whether the president would use campaign rhetoric in a diplomatic setting, or how the trip would affect the Obama legacy — they largely missed the real drama of the moment: a titanic shift in U.S. foreign policy occurring right before their eyes.

Trump stood before an unprecedented gathering of leaders to do something far more significant than utter a single phrase or undermine his predecessor’s record. He was there to rally the Muslim world, in his words, “to meet history’s great test” — defeating the forces of terrorism and extremism. He did so in a way that no American president ever had before. While extending a hand of friendship to Muslim nations, he also issued them a clear challenge: to take the lead in solving the crisis that has engulfed their region and spread across the planet. “Drive out the terrorists and extremists,” he urged them, or consign your peoples to futures of misery and squalor.

To find a comparably dramatic moment in the history of U.S. foreign policy, we have to look all the way back to 1982. That June, 35 years ago next month, President Ronald Reagan stood in the Royal Gallery at the Palace of Westminster in London and called on the West to rally in defense of freedom and against communist aggression.

In that one speech, Reagan predicted the fall of communism and reinvigorated the Western alliance. “We see totalitarian forces in the world who seek subversion and conflict around the globe to further their barbarous assault on the human spirit,” Reagan said. “What, then, is our course? Must civilization perish in a hail of fiery atoms? Must freedom wither in a quiet, deadening accommodation with totalitarian evil?”

Reagan declared his speech a turning point in history — and it was. On Sunday, Trump, too, declared that his challenge would be a turning point, one way or another. And he posed to that assembly in Riyadh an equally dramatic choice. It was, he said, “a choice between two futures” — the path of civilization, or the path of evil and death.

“America is prepared to stand with you” in the fight against terrorism, Trump pledged. “But the nations of the Middle East cannot wait for American power to crush this enemy for them. The nations of the Middle East will have to decide what kind of future they want for themselves, for their countries, and for their children.”

Trump’s first trip overseas as president

The U.S. president started his journey in Saudi Arabia and moved on to Israel and Italy.

American president tried so clearly to unite the civilized world, including the nations of the Middle East and Africa, against the forces of terrorism. Never before has an American president issued so direct a challenge to those nations to do more in the fight. And never before has an American president so plainly put the ultimate responsibility for eradicating terrorism on the nations of the region. In doing so, Trump’s speech implicitly repudiated the approaches of his two immediate predecessors and promised instead what he characterized as a “principled realism,” based on a clear-eyed view of America’s interests, security and limits.

That this decisive shift in U.S. foreign policy occurred on a foreign trip within the first four months of the administration is all the more impressive. Reagan didn’t take his first international trip until well into his second year. And unlike President Barack Obama’s early speech to the Muslim world in 2009, Trump backed up his words with action.

The United States and Saudi Arabia signed a $110 billion arms deal, the largest in U.S. history, which will bolster the kingdom’s ability to contribute to counterterrorism operations across the region. This will reduce the burden on the U.S. military and send a clear message that this administration takes the threat of Iran seriously. The agreements also included a new commitment to crack down on terrorism financing in the Persian Gulf states, as well as hundreds of billions of dollars’ worth of Saudi investment in the United States.

Journalists and Washington bureaucrats, who are so deeply embedded in the establishment that they can’t see out of it, may see Trump’s call to action as a distracting sideshow from a status quo they can’t imagine changing. And yet this week, it already has. Foreign leaders and the American people alike can see in this trip the core of a new, reality-based foreign policy.


*Massenbach’s Recommendation*

WSJ: China’s CIC in Advanced Talks to Buy European Warehouse Company From Blackstone

Sovereign-wealth fund’s $13.49 billion deal for Logicor would underscore strength of the industrial property sector

China’s sovereign-wealth fund has started talks to purchase a European warehouse company from Blackstone Group LP for about $13.5 billion. Under the terms of the deal, which could be completed within days, China Investment Corp. will get over 630 warehouse properties, the WSJ’s Peter Grant reports. Warehouses and distribution centers have become one of the hottest classes of commercial property recently as demand grows from companies eager to be able to increase the speed of deliveries to consumers. Singapore’s Global Logistic Properties, for instance, made several large warehouse acquisitions over the last few years, and has now put itself up for sale. In an interview, CIC president Tu Guangshao said the fund is also considering investments in U.S. projects such as highways, rail lines and high-tech manufacturing plants.

( )

About Logicor in Germany:

“…We have a substantial presence in Germany with ​nearly 2.3 million sqm of logistics warehouse space. As well as strong coverage across Germany we also have select assets in Austria’s logistics hubs close to Graz and Linz.

Our warehouse assets are located in some of the best logistics locations in Germany including the Rhine-Main region, Dusseldorf and Cologne in the Ruhr region, as well as Munich. We also have a strong presence in key logistics hubs including the inland ports of Duisburg and Nuremburg, along with Hamburg, the largest sea port in Germany and second busiest port in all of Europe….” ( )

China’s sovereign-wealth fund is in advanced talks to purchase a European warehouse company from Blackstone GroupLP in a €12 billion ($13.49 billion) deal that would underscore the strength of the industrial real-estate sector.

China Investment Corp. could complete the deal to buy Logicor from the private-equity giant within days, according to people familiar with the matter. Nothing has been signed and the deal could still fall apart, the people said.

Blackstone has been actively marketing Logicor this year while gearing up to sell the company in an initial public offering if it couldn’t get its price in a private deal. Other private bidders for Logicor included three Singapore institutions: Mapletree Investments, Temasek and GIC, Singapore’s sovereign-wealth fund, according to a person familiar with the matter.

The advanced talks with CIC were reported earlier by Estates Gazette, a real-estate trade publication.

Warehouses and distribution centers have become one of the hottest classes of commercial property recently thanks partly to the growth of online retail. Demand for industrial space has grown by a wide range of companies eager to be able to increase the speed of deliveries to consumers.

Blackstone made several early bets on the sector that have paid off. The firm began building a U.S. logistics property company named IndCor Properties in 2010. Four years later, Blackstone sold it to GIC for $8.1 billion.

In Europe, Blackstone began accumulating warehouses and distribution centers under the Logicor name in 2012. That company grew to operate more than 630 properties.

CIC, which was formed in 2007 as a way for China to diversify its foreign-exchange holdings, has been steadily increasing its appetite for foreign real estate and other businesses. The fund has more than $200 billion in foreign assets and, in the past, has relied heavily on outside asset managers, including Blackstone, to make many of its foreign investments.

Earlier this month, CIC opened a New York office, replacing what had been its only overseas representative office in Toronto. In an interview with The Wall Street Journal, CIC President Tu Guangshao said CIC is considering investments in U.S. projects such as highways, rail lines and high-tech manufacturing plants.

CIC often invests with a consortium of other investors. If it winds up buying Logicor, it would be a particularly large deal for the fund to do by itself.”


May 28 2017: U.S. Senator Bob Corker. Chairman of the Senate Foreign Relations Committee:

Corker Statement on President Trump’s International Trip

CHATTANOOGA, Tenn. – U.S. Senator Bob Corker (R-Tenn.), chairman of the Senate Foreign Relations Committee, today released the following statement regard President Donald J. Trump’s international trip.

“I spoke with President Trump at length this morning and told him that I could not be more pleased with his first international trip,” said Corker. “The trip was executed to near perfection and it appears the president has made great progress on the broad range of objectives his team articulated to me when I met with senior White House and State Department officials during their preparations.”

“President Trump should be commended on the success of this trip, and I look forward to continuing our work together to address numbers of important issues,” continued Corker. “The challenges we face around the world are vast, but with a strategic focus on our long-term goals, I am confident we can reassert U.S. leadership, strengthen key alliances and improve security both at home and abroad.”

“I also continue to be encouraged by the level of engagement between this White House and Congress on foreign policy matters, and I commend Secretary of State Tillerson, National Security Advisor McMaster, Senior Advisor Kushner and Deputy National Security Advisor Powell for their work to make the trip a remarkable success,” concluded Corker.

At the request of the White House, Senator Corker hosted a meeting earlier this month during which National Security Advisor H.R. McMaster, Senior Advisor Jared Kushner and Deputy National Security Advisor Dina Powell provided information to and sought input from a number of senators regarding President Trump’s first international trip.



see our letter on:

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



05-31-17 U.S. Policy Toward the South Caucasus_ Take Three – Carnegie Endowment for I.pdf

05-28-17 WSJ_Rural America Is the New ‘Inner City’ – WSJ.pdf

05-23-17 Russlands Außenhandel seit 2014, Teil 1_ Ölpreise auf d er „Achterbahn“.pdf

05-23-17 Russlands Außenhandel seit 2014, Teil 2_ Wareneinfuhr u nd Handelsbilanz.pdf