tw 20140315

March 14, 20141

the tRUMPet WeeKLYThe TRUMPeT WeeKLYM a r c h 1 4 , 2 0 1 4

Ignoring the murderer next door 2

Guttenberg’s take on what to do about Russia 4

World debt reaches $100 trillion 8

U.S. owes over half of world debt 8

Stock market heading for collapse? 11

By Jeremiah Jacques

having the approval of the international community is about as important to Vladimir Putin as ensuring freedom in the Russian presses. Nevertheless, the

Russian president prefers not to have to stand alone facing the West’s criticism over his invasion and occupation of Crimea, Ukraine.

And now, thanks to the support of some of the most populous and powerful countries on the planet, Mr. Putin can stand up to the West with over a third of the world’s population at his back.

First there’s China. “Backing Russia is in China’s in-terests,” said the Global Times, a mouthpiece for China’s

Communist Party, on March 5. “Russia’s resistance against the West has global significance. Supporting Russia con-solidates China’s major strategy. … We shouldn’t disap-point Russia when it finds itself in a time of need.”

So far, Beijing has restrained itself from intensive cheerlead-ing for Putin, and has instead presented its support for him somewhat softly. That’s because, although the Chinese cel-ebrate Putin’s willingness to defy the West, they don’t want to damage economic relations with their largest trade partner—the European Union. The Chinese have managed to walk a somewhat fine line on the issue, but there is no mistaking the

Don’t Worry, Putin, Asia Has Your Back

see ASIA page 12

russian President Vladimir Putin shakes hands with his chinese counterpart, Xi Jinping.

March 14, 20142 The TrumpeT weekly

middle east

JACK GUEZ/AFP/GEtty ImAGEs

But the spat threatens to poison re-lations between two of Africa’s biggest countries. …

Egypt has sought to get the United Nations to intervene, and reportedly asked Ethiopia to halt construction on the dam until the two sides can work out an agreement, which Ethiopian officials rebuffed. …

A former Egyptian irrigation min-ister said March 5 that Egypt is doing too little to forestall the dam, and highlighted the risks to the country’s water supply. …

The protests in Egypt, the collapse of the Mubarak regime, and Egypt’s three years of domestic turmoil pro-vided a key opening for Ethiopia. It laid the first stone on the construction

egypt and ethiopia at Loggerheads FoReIGn PolIcY | March 6

Egypt’s musical-chairs govern-ment faces enough challenges. So

why is a construction project almost 1,800 miles from Cairo provoking fears over Egypt’s national survival?

Egypt and Ethiopia are butting heads over the Great Ethiopian Renais-sance Dam, a $4 billion hydroelectric project that Ethiopia is building on the headwaters of the Blue Nile, near the border between Ethiopia and Sudan.

Cairo worries that the megapro-ject, which began construction in 2011 and is scheduled to be finished

by 2017, could choke the downstream flow of the Nile River right at a time when it expects its needs for fresh water to increase. Brandishing a pair of colonial-era treaties, Egypt argues that the Nile’s waters largely belong to it and that it has veto power over dams and other upstream projects.

Ethiopia, for its part, sees a chance to finally take advantage of the world’s longest river, and says that the 6,000 megawatts of electricity the dam will produce will be a key spur to main-taining Africa’s highest economic growth rate and for growth in energy-starved neighbors. The hydroelectric plant will provide triple the amount of electricity generating capacity in all of Ethiopia today.

Imagine for a moment that the person who lives next door to you is planning a murder, and you know about

it. For months, you have watched him with suspicion. You videotape him bringing in guns, ammunition and vast quantities of fertilizer and gasoline. Yet when you tell the police, you get nothing more than a shoulder shrug: Who cares? Seem a bit unrealistic? Perhaps, but the nation of Israel experienced something similar last week.

It all began when Israel spied a shipment of M-302 weapons coming out of Syria, en route to Iran. It was odd because weapon shipments usually travel the other direc-tion. So Operation Full Disclosure was born.

The name says it all. Israel intended to use the operation to not only capture the weapons, but also to show that Iran is not the friendly, smiling neighbor the world believes it to be. Israel took the time to map out the journey in detail to show Iran’s involvement. The bizarre route reveals the effort Iran took to ensure its involvement in the smuggling remained concealed. When Israel released the gag order for media coverage of the operation, it undoubtedly expected far more than the mere shrug that the story received. Barely a response came from the international commu-nity. And not even a shrug from America, supposedly the world’s policeman.

Israel has repeatedly tried to expose Iran’s weapons smuggling with numerous weapons shipments seized over the years. Unfortunately, the efforts have gone relatively unnoticed. Right now, the world is preoccupied try-ing to stop Iran from building nuclear missiles. Nobody wants to speak ill of Iran. No one wants to risk causing

the country to leave the nuclear negotiations. Everyone would prefer to pretend Iran is just an eccentric neighbor next door. But beyond the smiles lies a far more sinister personality!

“I’ve heard a few faint condemnations of Iran from the international community after we intercepted this murder-ous shipment,” Israeli Prime Minister Benjamin Netanyahu said. “We even saw representatives of the world powers shaking hands with the heads of Iran’s regime, while we unloaded these missiles in Eilat.” The world refuses to recognize the danger of Iran, and a compliant media downplays Iranian action that doesn’t gel with the current

“moderate” image it projects. Israel will keep trying to warn the world to the dangers

of thinking Iran is a friendly neighbor. And the world will keep shrugging its shoulders—until exploding bombs forces it to face reality.

Ignoring the Murderer Next Doorcallum Wood | March 12

Some of the M-302 rockets captured by

Israel en route to Gaza


project in the spring of 2011 and says the dam is now about one third com-plete. …

The dispute over the Blue Nile dam is hardly the only case of water-driven tensions. …

But Egypt sees the Ethiopian project as an existential threat. A government study concluded, “Water security is the gravest threat fac-ing post-revolution Egypt.” Former Egyptian President Mohamed Morsi vowed last summer that Egypt would not lose “one drop” of Nile water to the Ethiopian dam, proclaim-ing, “Our blood is the alternative.” Egyptian politicians were caught on camera last June urging Morsi to back armed rebels to sabotage the dam’s construction. Abdel Fattah al-Sisi, Egypt’s putative next president, warned Ethiopia last summer the country might resort to military ac-tion to stop the dam, and earlier this month he discussed the dam’s threats in a visit with Russian President Vladimir Putin.

Egypt’s fears stem from the dam’s possible impacts on the Nile as it flows downstream through Sudan and even-tually to the Mediterranean. The Nile provides both water for Egyptian ag-riculture, and also electricity through Egypt’s own Aswan Dam. …

An international panel of experts, including representatives from Egypt, Sudan, and Ethiopia, presented a re-port last summer to the three govern-ments, but it has not been made public.

“There’s a suggestion (in the panel report) that the electricity generation at the Aswan Dam could be affected quite significantly,” Michael Ham-mond, a water engineer at the Univer-sity of Exeter, told FP.

“However, it’s inherently uncertain because we don’t know whether we’ll have 10 wet years or 10 dry years dur-ing the filling process,” he said. …

Canadian Military in Afghanistan endscBc neWS | March 12

canadian troops capped a deadly and dangerous 12-year mission in

Afghanistan on Wednesday, hauling down the Canadian flag at nato head-quarters in Kabul during a ceremony that was held under heavy guard.

“We were quite explicitly told today in Kabul that we could not even report on this ceremony until after it was done because of security concerns,” cbc correspondent Paul Hunter said from Kabul on Wednesday. …

The war cost the lives of 158 soldiers, one diplomat, one journalist and two civilian contractors. …

Canadian commandos, hunting al Qaeda, were the first troops to hit the ground in late 2001 and they were followed by as many as 40,000 more rotating through different campaigns, including the five-year combat mis-sion in Kandahar.

Hunter reported that despite ram-pant violence, high levels of corrup-tion and a strong drug trade, officials feel Afghanistan is a much different place from what it was in 2001, with a much stronger Afghan Army. …

The last Canadian commander, Maj. Gen. Dean Milner, said the prog-ress made is not irreversible and the West needs to continue nurturing both military and civilian institutions. …

Massive Rocket Barrage Into IsraelTImeS oF ISRAel | March 12

at least 20 rockets as well as mortar rounds were fired from the

Gaza Strip Wednesday at the southern Israeli towns of Sderot and Netivot.

No Israeli casualties were initially reported in the largest attack from the Strip since Operation Pillar of Defense in late 2012.

Most of the rockets were reported to have fallen in open areas, though at least one rocket landed in a residential neighborhood. …

Some of the rockets were reported to have been launched from the east Gaza City neighborhood of Shuja’iyya. …

Analysts speculated that the rockets were fired in response to the killing of three Islamic Jihad operatives in the Gaza Strip by the Israel Defense Forces on Tuesday.

The three were members of the or-ganization’s armed wing, the Al-Quds Brigades, a statement from the group said. …

TW i n b r i e f

n Radicalizing middle east foreign policy He’s back. It has been over five years since Robert Malley officially served under Barack Obama. But after laying low for half a decade, the unashamed terrorist-supporting Middle East

“expert” has found himself exalted into the extremely powerful position of president of the National Security Council. Malley’s checkered past makes this one of the boldest anti-Israeli appointments in the Obama administration. In 2008, in the midst of Senator Obama’s presidential campaign, Malley served as a foreign policy adviser with a focus on the Middle East. However, Malley was quietly dropped from the campaign after news came to light that he had been speaking to and working closely with Hamas—the Islamic group operating out of Gaza—which is classified as a terrorist organization by the State Department. Malley has a long history of dealing with terror-ists in the Middle East, and shares a similar mindset with many of them when it comes to the nation of Israel. For President Obama to bestow a position of great power and authority on a man with such radical ideals on the Middle East—a man sacked for engaging in talks with terrorists—is as blatant an act of anti-Semitism as the papers Malley wrote that justi-fied terrorism against Israel. Presi-dent Obama rejected Malley once for fear of such a radical damaging his campaign. However, the president has nothing to fear now that he is in his second term. President Obama’s first term was marred with failure upon failure in the Middle East, primarily surrounding the Arab Spring. The policies of supporting traditional enemies and rejecting long-time allies such as Israel looks only set to in-crease as the president hands Mideast policy-making to a man who would turn it on its head.


europe

With Crimea’s referendum a few days away, the crisis in Ukraine is reaching a critical inflection point after

which it is quite conceivable that Russia and the West will be at loggerheads for decades to come. The reckless aban-don with which Russia has been pursuing maximalist goals in Crimea means that much of the burden for what comes after the crisis will rest on Vladimir Putin’s shoulders. …

But whereas Russia has acted aggressively and pointedly, Europe now struggles to get its footing. This is tragic, as Eu-rope has a historic responsibility to get this crisis right. The EU has more leverage over the situation than many policy-makers seem to think they do. The sooner European leaders wake up to this reality, the better for all concerned. …

President Yanukovych’s decision to walk away from the EU Association Agreement undoubtedly triggered the up-rising—yet this was not the only, nor even the most impor-tant factor at play. The real story is that Ukraine has been miserably managed and betrayed by its leaders over the past 23 years. … Ukraine’s crisis has more to do with popular dissatisfaction than any sort of simplistic ethnic cleavage. …

But one has to be paranoid to believe that the U.S. was willing or the EU was capable of orchestrating the events of the last several months in Ukraine. In other words: this revolution was agony-driven, not agency-driven. …

[W]hile the latest events in Crimea stand a good chance of turning into another unresolved frozen conflict, the scenario in Crimea might also lead to a hot war in the short term or even result in a Russia-takes-all endgame.

The worst of all possible outcomes in this crisis is if Ukraine comes apart as a state. However, the idea that cer-tain developments are not in the interest of any of the par-ties involved—internal or external—has not prevented the great tragedies in history from coming to pass. The World War i centenary should stand as a reminder. …

My fellow countrymen will not be happy to hear this, but Germany will have to play a core role in this process. After all, Germany has more experience with Europe’s transition countries than probably anyone else ….

Currently all efforts should be directed at preventing an escalation of events and thus at taming Russia. This does not mean letting the Kremlin get away with interfering in its neighbors’ internal affairs or taking Putin’s feigned paranoia about the West plotting against him at face value. What it does mean is that we must demonstrate unity when it comes to a sanctions regime, but also the willingness to reestablish ties with Russia in case of compliance. …

Diplomatic efforts and economic pressure are the priori-ty, and nato should surely avoid direct military confronta-tion. However, our military alliance has to include contin-gency plans for all options and thus nato should continue working on preparations for the (hopefully unlikely) case

of Russian aggression towards allies.Germany’s role in handling Russia is once again para-

mount. Germany has a special, though complex relationship with Russia. In Germany, strong voices from the private sector (and subsequently within the government and parlia-ment) have been grumbling about sanctions. Nonetheless, it would be shortsighted and damaging to demand no or only weak sanctions: Germany’s trade volume with Russia (3.5 per-cent of its exports) is smaller than that with Poland. It should be clear to any noisy lobby group from the German business community that the undoubtedly negative consequences of sanctions could be dwarfed by the consequences of further Russian aggression towards other neighboring countries.

Fortunately, the latest language coming from Angela Merkel’s office seems to indicate that the chancellor is taming the voices that would like to arrive at a separate ar-rangement with Putin. Separate opinions within Germany and Europe would only dilute the European position, and thus run against our shared long-term interests.

Moscow very well knows that its economy would falter without European investments. With up to 75 percent of Foreign Direct Investment stocks in Russia, the EU is its most important investor. Still, Europe and Russia are mutually dependent on each other, especially in the energy trade arena. But energy dependence does not mean Europe is the weak partner in the dynamic. …

Brussels and the member states should get back to highly disciplined coordination very quickly. The European Union lacks established mechanisms to deal with situations like the near-outbreak of a war on its borders. Instead, it is largely up to the ability of its political leaders of the day if the EU is to be capable of doing anything beyond issuing stern reprimands. With the European elections in May, we might see an even greater-than-usual leadership vacuum in the EU as the whole bureaucracy prepares for a changing of the guard. The seemingly endless carpet-dealer rounds for EU and nato leadership positions must not become too big of a distraction among the potential top candidates, who also tend to be the most important figures involved in handling the Ukraine crisis. Here again, Chancellor Angela Merkel’s influence and Germany’s strategy are going to be key factors. …

[Putin’s] unwarranted saber-rattling can set a whole cascade of events in motion that has the potential to lead to a much wider and completely out-of-control conflict very soon.

Europe and the U.S. have an enormous responsibility to steer the events towards a positive outcome in Ukraine. But however frustrating this reality is, we need to keep in mind that here it will take three to tango: the world desperately needs responsible leaders in Ukraine, an honest broker in Russia, and a potent EU-U.S. alliance.

It Takes Three to Tango Karl-Theodor zu Guttenberg, THe AmeRIcAn InTeReST | March 12


Putin Plays for Keeps in CrimeaJohn Browne, eURoPAcIFIc cAPITAl | March 12

For those investors who have grown used to the relatively minor

geopolitical crises of the past few years, the developing situation in Ukraine and Crimea must come as an unexpected communiqué from the early 20th century. There can be little doubt that the drama will impact financial markets.

While President Obama is do-ing his best to invert Teddy Roos-evelt’s “speak softly and carry a big

stick” approach to foreign policy, the real issue is how Crimea’s proposed secession from Ukraine will lay bare the opacity of international law with respect to issues of sovereignty.

Recently, President Obama said, “Under international law, force can only be used in self-defense or by a de-cision of the UN Security Council ….” But Obama considered using preemp-tive force in Syria without UN approv-al. Laying aside U.S. adventurism in the Middle East over the past 20 years, in 1998 President Clinton intervened militarily when Kosovo attempted to separate from Serbia. …

[I]n many ways the current situ-ation on the Black Sea parallels the

Cuban Missile Crisis of 1962. Only this time, the roles of each player are reversed.

The threat posed by Russian mis-siles in Cuba was acute and targeted at America’s vital interests. President Kennedy simply could not accept a Russian victory, even at the cost of all-out war. Popular and military support for a tough line against the Soviets, both at home and abroad, allowed Kennedy to go “all-in” to force the Russians to ultimately back down.

This time, it is Russia that has by far the most at stake. The threat to Russia’s key warm water naval base in Crimea, and the potential for an expansion of nato into its traditional

a moment of crisis can reveal a lot about the world. Subtle and gradual changes that developed over years

become obvious. The biggest revelation from the Ukraine crisis is that we are now living in a post-American world. Nobody is scared of America’s might anymore, so they do exactly what they want. It was the subject of the Janu-ary issue of the Trumpet magazine, but now it is discussed throughout the news media.

However, another major shift revealed in the crisis is that Germany, not America, is now the leader of the free world, at least when it comes to dealing with Russia.

“Angela Merkel Plays Central Role in Russia Diplomacy Over Crimea,” a Spiegel Online headline proclaimed.

“Ukraine Crisis: Keep Your Eyes on Angela Merkel,” de-clared another, this time on the New Yorker’s website.

“Germany is now the pivotal player in the Ukraine crisis,” Foreign Policy wrote. “And the world is watching.” The article continues: “Not so long ago, of course, it would have been the United States calling the shots, with Germany fol-lowing along like the humble, reliable ally it had been. But the tables are turned. Washington is paying the price for having neglected Europe for years, tapping the phones of the Continent’s leaders rather than engaging them in seri-ous consultation and policy making.”

As for the European Union, its foreign-policy-making apparatus is still not up to the task of diffusing such a high-level crisis involving the transgression of state sover-eignty in Europe itself. So it falls to Germany, the de facto leader of the European Union today—another role it never wanted.

As many of these articles point out, just a few weeks ago Germany proclaimed that it was adopting an aggressive new foreign policy. The world is waiting to see what that looks like.

Peter Oborne, one of the Telegraph’s star columnists,

captured the drama and importance of what has happened. “The German chancellor has put an end to talk of economic sanctions, and become the main interlocutor with Presi-dent Putin,” he wrote. “This marks a vital turning point in the post-war world. Germany has long been the dominant economic power in the European Union. With Mrs. Merkel in charge, it is now turning that economic power into diplo-matic power” (emphasis added throughout).

Part of Germany’s clout is unique to Russia. As one of Russia’s top trading partners and a key source of the foreign technology and know-how that Russia needs, it has a unique leverage with Vladimir Putin. Mrs. Merkel is believed to be a world leader that Putin takes seriously.

But, as Oborne points out, Germany’s position also stems from Germany “turning that economic power into diplomatic power”—a more general shift that applies far beyond Russia. If something big happens in Europe or Eu-rope’s neighborhood, it is no longer America’s reaction that matters most. It’s Germany’s.

This doesn’t mean that Germany has necessarily handled this particular crisis any better than America, or that Ger-many will make the right decisions in the days and weeks ahead. It merely reveals a shift that has already happened.

As Oborne also points out, this is a shift that British foreign policy has tried to stop for centuries. It presented a clear danger to Britain over the last few hundred years and, as Brad Macdonald wrote earlier this week, human nature and geography have not changed—it is still a dangerous development today.

The rise of Germany and fall of America show that we have already entered a new world. Some believe this is a good thing, but consider the danger a German-dominated Europe poses. For more information, read “The World’s Next Superpower.”

Follow Richard Palmer: Twitter

The World Waits on GermanyRichard Palmer | March 8


sphere of influence is acute. President Putin cannot accept defeat, even at the risk of war. And like Kennedy, he en-joys the support of his military and his people. Despite the relatively weaker economic hand being played by Mr. Putin, do not expect him to fold.

From my perspective, Putin may see six major geopolitical weaknesses in the U.S. position. First, he recogniz-es that the U.S. military and the U.S. public have grown weary of ill-advised foreign interventions.

Second, Russia’s close trade and en-ergy connections to Western Europe are causing dissension among nato allies at the prospect of a Continental conflict. …

Third, Putin is acutely aware that a “victory” of Ukrainian interests at the expense of Moscow will further weaken Russia’s ability to maintain the allegiance of the remaining scraps of its old Soviet empire.

Fourth, Putin knows that Obama needs Russian support over key U.S. initiatives in Iran, Syria and North Korea. …

Fifth, Putin knows that the United States does not wish to see Russia revert to a closer relationship with China, just as China expands her

maritime and territorial interests in the Pacific. It is no accident that Bei-jing has been eerily silent with respect to Russian policy in Europe. Putin knows that oil rich Middle Eastern rulers feel deserted by the U.S. over its proposed nuclear deal with Iran and are looking for new “protective” allies. It is a power vacuum that China and Russia would be glad to fill.

For its part, Washington must be conscious of the possibility of Russia striking back at the U.S. economically through disruptive sales of its $138 bil-lion war chest of Treasury bonds. Such a move could trigger a financial panic in the West, especially if the moves could be coordinated with Russian allies. …

No Plans of Further InvasionASSocIATeD PReSS | March 14

European and U.S. leaders have repeatedly urged Moscow to pull

back its troops in Crimea and stop en-couraging local militias there who are hyping the vote as a choice between reestablishing generations of ties with

Disrupting Putin’s Game PlanTHe TRUmPeT DAIlY | March 12

STePHen FlURRY Vladimir Putin isn’t the world’s only strongman.

Russia or returning to echoes of fas-cism from Ukraine’s World War ii era, when some residents cooperated with Nazi occupiers.

The showdown between Russia and the West has been cast as a struggle for the future of Ukraine, a country with a size and population similar to France. …

While the Russian Foreign Min-istry engaged in more sabre-rattling Friday by warning that it reserves the right to intervene in Eastern Ukraine in defense of ethnic Russians who it claims are under threat, Lavrov denied any plans to send troops into Eastern Ukraine.

“Russia doesn’t and can’t have any plans to invade southeastern regions of Ukraine,” he said.

The Russian Foreign Ministry said clashes overnight Thursday in the eastern city of Donetsk showed that Ukrainian authorities had lost control of the country and could not provide basic security. … Ukraine responded by calling the Russian statement “im-pressive in its cynicism.”

“(The Donetsk clashes had) a direct connection to deliberate, destructive actions of certain citizens of Russia and some Russian social organiza-tions, representatives of which are present in our country to destabilize the situation and escalate tensions,” Ukrainian Foreign Ministry spokes-man Evgeny Perebiynis said, accord-ing to the Interfax news agency. …

Russia has also sent thousands of troops to its long border with Ukraine, a move that U.S. officials have called an intimidation tactic cloaked as military exercises. The Russian drills announced Thursday included large artillery exercises involving 8,500 sol-diers in the Rostov border region alone.

Western officials have asked Russia to start diplomatic talks with Kiev to de-escalate tensions but Russia says that government illegally drove Ukraine’s pro-Russian president from power. …

TW i n b r i e f

n Former occupied Soviet nations look to Germany for protectionPolish Foreign Minister Radoslaw


Related: “Is Vladimir Putin the Prophesied ‘Prince of Rosh’?”

Sikorski told Der Spiegel on March 10 that it was essential that Europe take a stronger stand and unite to face the Russian threat. “The Americans have done even more—by relocating F-15 and F-16 jets to Eastern Europe,” he said. “In contrast to Europe, the U.S. has a centralized government. We should learn from the current crisis that European integration must also

continue when it comes to security policy.” Russia’s action in Ukraine has also altered Poland’s stance on the euro. Poland previously argued that the euro was unstable. Those calls have virtually ceased. Now some leaders see adopting the euro as a way to further integrate into Europe and add another layer of protection against Russia. Germany responded

to this hoped-for leadership by send-ing Foreign Minister Frank-Walter Steinmeier on a tour of Estonia, Latvia and Lithuania, where he tried to make Europe’s threat of sanctions sound tough. For more on how the Ukrainian crisis is pushing Eastern Europe closer to Europe, see our recent article “Ukraine Crisis Reveals Europe’s Eastern Leg.”

Russia May Force U.S. Rebalancing StrategyWAnT cHInA TImeS | March 11

The Ukraine issue has created the most serious crisis in relations be-

tween the U.S. and Russia in the post-Cold War era. The pro-Russian parlia-ment of Crimea has resolved to hold a referendum on its incorporation into Russia, which may trigger a domino effect in other parts of Ukraine. Rus-sia has staged a military exercise and fired intercontinental ballistic missiles, making a show of its military might, while the U.S. has countered the threat

Russia and China Unite (Crimea)china has announced to the world that it agrees with russia’s decision to invade crimea in Ukraine.GeRAlD FlURRY

asia

by dispatching a fleet of warships to the Black Sea and stepping up its mili-tary deployments in Lithuania.

The U.S. and Europe charge that Russia has encroached on the sov-ereignty and territorial integrity of Ukraine. … As the U.S. needs Russia’s cooperation in handling affairs in Afghanistan, Syria and Iran, mis-handling the Ukraine crisis may lead to U.S. isolation in the international arena.

Although a military conflict between the U.S. and Russia over Ukraine is not likely, it may lead to a losing game for both parties should the confrontation persist. …

The confrontation between the U.S. and Russia over Ukraine will in-evitably affect Washington’s strategic deployment in the Asia-Pacific region. Constrained by its tight military bud-get, the U.S. may not be able to carry out its rebalancing strategy in the region if it has to step up its military deployment to Eastern Europe.

In a recent article, John J. Mear-shiemer, a U.S. political scholar, pointed out that with China increas-ingly sharing dominance with the U.S. in the Asia-Pacific region, time is not on the side of Taiwan as the U.S., while intending to maintain the status quo in the Taiwan Strait, will not be able to engage in a war with China over Taiwan.

Responsibility for Missing AirlineWAnT cHInA TImeS | March 10

a group that calls itself the Chi-nese Martyrs’ Brigade has claimed

responsibility for crashing Malaysia Airlines flight MH370, which remains missing after losing contact with ground control at 1:20 a.m. on Satur-day en route from Kuala Lumpur to Beijing.

The previously unheard-of group sent a pdf statement to various jour-nalists in China on March 9, saying,

“You kill one of our clan, we will kill


Related: “could the Venezuelan Protests Be Good news for the Vatican?”

Related: “Islamist Tremors continue to Shake ethiopia” and “ethiopia in the crosshairs”

100 of you as payback.” The group asserts two motives for

the alleged terrorist attack. The first is to retaliate against the Malaysian government for “cruel persecution,” though no further details were pro-vided. The second is to respond to the Chinese government for its persecu-tion of the Uyghur ethnic minority,

after the other if the Chinese gov-ernment does not reflect on its own national policy and human rights is-sues and stop its suppression of ethnic minorities. …

Analysts say the credibility of the statement is dubious as the group did not divulge any details as to how it crashed the plane. …

which has been blamed by Beijing for a slate of terror attacks in the last few years. … [T]he group also expressed regret over having killed all 239 people on the Boeing 777-200 commercial jet as its primary target was the 153 Chinese nationals on board. …

The group further warned that similar attacks will be carried out one

latin america/africa

anglo-america

Fresh Clashes on Venezuela StreetseURoneWS | March 9

There have been more scenes of ur-ban conflict in Caracas as Venezu-

ela’s worst unrest in a decade contin-ues to pit anti-government protesters against police.

In the latest violence, security forces fired tear gas as student dem-onstrators tried to set up barricades in the streets. …

At least 20 people have died in nearly a month of protests demanding the res-ignation of President Nicolas Maduro. He says it is a Washington-backed plot to overthrow his government.

“They are not protests, this is not a struggle. It is destruction, pure van-dalism carried out by mercenaries,” he told supporters.

Riot police were out in force to prevent peaceful protesters taking their grievances to the Food Min-istry. Shortages of basic products like bread and milk are among

demonstrators’ chief complaints. Thousands banged pots and pans

and blew whistles and horns in the capital. Similar rallies were held in several other Venezuelan cities.

Al Shabaab Urges Somalis to Battle ethiopiaReUTeRS | March 10

The leader of the al Qaeda-aligned Islamist group al Shabaab has urged

Somalis to wage holy war against Ethiopia, Somalia’s Horn of Africa neighbor whose forces are preparing to lead an African Union offensive against the militants. …

Ethiopian forces have in the past two weeks pushed al Shabaab out of several towns, including Hudur, the capital of the Bakool region in

south-central Somalia. Analysts say these advances could presage a planned countrywide offensive. …

“Ethiopia will fail as it has failed in the past and the Muslims will be much stronger,” [al Shabaab leader Ahmed] Godane said.

His last public statement came in September when al Shabaab claimed responsibility for a deadly raid on a luxury shopping mall in the Kenyan capital Nairobi.

Somali gunmen tossed grenades into busy restaurants and executed well-heeled shoppers as punishment for Kenya’s military involvement in Somalia. At least 67 people died.

“The aim of the (foreign) invasion is to divide the remaining Somalia be-tween Kenya and Ethiopia under the cover of the establishment of Somali states,” Godane added, a reference to the creation of a federal Somalia. …

World Debt Reaches $100 Trillion, U.S. Share 58 PercentRobert Romano, neT RIGHT DAIlY | March 11

Global debt outstanding, that is, all debts public and private,

reached $100 trillion in mid-2013, the Bank for International Settlements (bis) quarterly review revealed.

Credit outstanding has grown by more than $30 trillion since the finan-cial crisis began in 2007.

When compared to data com-piled by the Federal Reserve, the U.S. share of the $100 trillion is almost

three-fifths—with about $58 trillion credit outstanding nationwide at the end of the second quarter in 2013.

In contrast, the $17 trillion U.S. gross domestic product only makes up a little less than one quarter the world’s total economic capacity, cur-rently at about $74 trillion.

Consider that: The U.S. makes up


about 23 percent of the global econ-omy but owes upwards of 58 percent of worldwide debt. Believe it or not, that is actually down from 2007 when it owed almost 73 percent of debt worldwide.

Despite the drop, as a result, the U.S. still has an eye-popping debt-to-gdp ratio of 345 percent compared with the rest of the world’s 74 percent.

How can this be? What makes the U.S. so special?

Likely its unique position as being the world’s caretaker of the dollar as the reserve currency, which histori-cally has led to a collapse in interest rates over the past 30 years. As a result the U.S. has been able to gulp up most of the world’s debt.

Although that might be starting to change. …

Putting the lie to the Keynesian-monetarist paradigm that if you

simply print, lend and borrow enough, you can create prosperity, the bis adds, “there is a point after which further growth in financial activity no longer contributes to growth but may even slow it down.” …

Some financial analysts like Forbes.com’s Jesse Colombo have been at the forefront of warning of emerging markets credit bubbles.

“The powerful emerging market credit expansions have been propel-ling economic growth in those nations, but like all low interest rate-driven credit booms, they will come to an end when interest rates eventually normalize. Interest rates are already beginning to rise now that EM central banks are hiking their benchmark interest rates to shore up their curren-cies after their sharp recent declines,” Colombo wrote in February.

Meaning, overseas markets may

be in for their own rounds of finan-cial chaos sooner or later. Colombo concluded, “Despite this past year’s volatility, I do not believe that the emerging markets bubble has truly popped yet. I view currency weakness as a precursor to the ending of the overall EM bubble, but the actual pop-ping will entail disastrous credit and property busts.”

Obamacare’s Secret Mandate exemptionWeeKlY STAnDARD | March 12

Obamacare’s implementers continue to roam the battlefield

and shoot their own wounded, and the latest casualty is the core of the Affordable Care Act—the indi-vidual mandate. To wit, last week the

In a speech the other day to state attorneys general, the U.S. attorney general, Eric Holder, offered an ideal job

description for himself and his state counterparts: “not merely to use our legal system to settle disputes and punish those who have done wrong, but to answer the kinds of fundamental questions—about fairness and equality—that have always determined who we are and who we aspire to be.”

This is what “all justice professionals are called” to do, said Holder, leaving us to wonder what we, the mere people, are supposed to do.

Diving into one aspect of our legal system, Holder observed that, as with the U.S. federal attorney general (himself), so it is with state attorneys general: They are not obligated to defend laws that they deem unconstitutional. Even so, he added, decisions not to defend a law “must be exceedingly rare.” Yet he noted with approval that five state attorneys general (all Democrats) had recently made such a decision, each concluding that his state’s ban on so-called same-sex marriage is unconstitutional and therefore inde-fensible.

Holder’s speech, a mini-version of which he shared the day before with the New York Times, was a not-so-subtle preachment that attorneys general still defending such bans should declare them unconstitutional and abandon their defense—in other words, disavow laws they are sworn to enforce. The Republican state attorneys general, some 24 in all, demurred, with the South Carolina attorney general, Alan Wilson, issuing a statement saying the administration was “ignoring the rule of law.”

In case you wonder why our primo justice professional was giving this speech, the answer is that he wants a coun-try that, as a matter of constitutional law, has redefined marriage to include “same-sex marriage.” That was not exactly the position of Holder’s boss, President Obama, during the 2008 election, when Candidate Obama said marriage is “between a man and a woman.” But Obama evolved, announcing in 2012, as he bid for a second term, that he personally was in favor of same-sex marriage. His goal is now that of Holder, his appointee.

And Holder would like to see the Supreme Court issue a decision that state laws prohibiting same-sex marriage vio-late the equal protection clause of the Constitution. Holder reckons, or so it seems, that the sight of more and more state attorneys general refusing to defend such laws might influence the Supreme Court in a case challenging a state ban on same-sex marriage, expected to be taken up within the next year or two. …

But it is a dubious labor, bad for the legal system and bad, too, for the country—quite apart from what you might think about same-sex marriage.

Consider that under longstanding practices an attorney general, the nation’s chief law enforcement officer, must carry out even those laws he disagrees with as a matter of policy. He must also defend laws against constitutional attack so long as there are reasonable, or nonfrivolous, grounds for doing so, a very low bar. Further, he must see to it that the arguments in behalf of a constitutionally chal-lenged law are advanced vigorously, even if he doesn’t agree with those arguments. …

Holder’s speech invites some obvious questions: Why must laws that an attorney general disagrees with on grounds of policy nonetheless be executed and defended? …

IndefensibleTHe WeeKlY STAnDARD | March 2014


administration quietly excused mil-lions of people from the requirement to purchase health insurance or else pay a tax penalty.

This latest political reconstruc-tion has received zero media notice, and the Health and Human Services Department didn’t think the details were worth discussing in a confer-ence call, press materials or fact sheet. Instead, the mandate suspension was buried in an unrelated rule that was meant to preserve some health plans that don’t comply with Obamacare benefit and redistribution mandates. Our sources only noticed the change this week.

That seven-page technical bulletin includes a paragraph and footnote that casually mention that a rule in a sepa-rate December 2013 bulletin would be extended for two more years, until 2016. Lo and behold, it turns out this second rule, which was supposed to last for only a year, allows Americans whose coverage was canceled to opt out of the mandate altogether.

In 2013, hhs decided that Obama- care’s wave of policy terminations qualified as a “hardship” that entitled people to a special type of coverage designed for people under age 30 or a mandate exemption. hhs originally defined and reserved hardship exemp-tions for the truly down and out such as battered women, the evicted and bankrupts.

But amid the post-rollout political backlash, last week the agency created a new category: Now all you need to do is fill out a form attesting that your plan was canceled and that you “be-lieve that the plan options available in the [Obamacare] Marketplace in your area are more expensive than your canceled health insurance policy” or

“you consider other available policies unaffordable.” …

But people can also qualify for hardships for the unspecified non-reason that “you experienced an-other hardship in obtaining health insurance,” which only requires

“documentation if possible.” And yet

another waiver is available to those who say they are merely unable to afford coverage, regardless of their prior insurance. In a word, these shifting legal benchmarks offer an exemption to everyone who conceiv-ably wants one. …

The answers are the implementa-tion fiasco and politics. hhs revealed Tuesday that only 940,000 people signed up for an Obamacare plan in February, bringing the total to about 4.2 million, well below the original 5.7 million projection. The predicted “surge” of young beneficiaries isn’t ma-terializing even as the end-of-March deadline approaches, and enrollment decelerated in February.

Meanwhile … a mere 27 percent of people joining the exchanges were previously uninsured through Febru-ary. The survey also found that about half of people who shopped for a plan but did not enroll said premiums were too expensive, even though 80 percent of this group qualify for subsidies. Some substantial share of the people

homeland Security Secretary Jeh Johnson acknowledged Tuesday that his department’s deportation numbers are

now mostly made up of illegal immigrants caught at the bor-der, not just those from the interior, which means they can’t be compared one-to-one with deportations under President Bush or other prior administrations.

The administration has argued it is tougher on illegal immigration than previous presidents, and immigrant-rights groups have excoriated President Obama, calling him the “deporter-in-chief” for having kicked out nearly 2 million immigrants during his five-year tenure.

But Republican critics have argued those deportation numbers are artificially inflated because more than half of those being deported were new arrivals, caught at the border by the U.S. Border Patrol. Previous administrations primarily counted only those caught in the interior of the U.S. by U.S. Immigration and Customs Enforcement.

“Under the Obama administration, more than half of those removals that were attributed to ice are actually a result of Border Patrol arrests that wouldn’t have been counted in prior administrations,” said Rep. John Culber-son, Texas Republican.

“Correct,” Mr. Johnson confirmed.That would mean that in a one-to-one comparison with

the final years of the Bush administration, deportations of those same people under Mr. Obama had actually fallen,

according to immigration analysts who have studied the data.

In 2013, ice was responsible for about 133,000 of the 368,000 immigrants removed. The Washington Times cal-culated that meant a less than 1 percent risk of an illegal im-migrant living in the interior of the U.S. being deported. …

“We are enforcing the law. We are enforcing the law vigorously and effectively, which results in the removal of over 300,000 people a year over the last several years,” Mr. Johnson said. …

The Senate last year passed a broad immigration bill le-galizing most illegal immigrants, boosting border security spending by tens of billions of dollars and rewriting the legal immigration system.

But House Republicans have balked, arguing they don’t trust Mr. Obama to enforce the laws—and they point to his carving up of deportation policy as one example.

Mr. Johnson, though, countered that passing a legaliza-tion bill would actually enhance security because it would get illegal immigrants to come forward and report, and would allow the department to more narrowly focus its resources.

In one key step, the Obama administration this year is calling for a cut in detention beds that hold immigrants awaiting deportation, from the 34,000 level mandated by law to slightly more than 30,500. …

DhS Cooking the BooksWASHInGTon TImeS | March 12


Obamacare is supposed to help say it is a bad financial value. You might even call it a hardship.

hhs is also trying to preempt the inevitable political blowback from the nasty 2015 tax surprise of fining the uninsured for being uninsured, which could help reopen Obamacare if voters elect a Republican Senate this November. …

The larger point is that there have been so many unilateral executive waivers and delays that Obamacare must be unrecognizable to its drafters, to the extent they ever knew what the law contained.

Margin Debt Levels hit New highs mARKeTWATcH | March 9

a number of warning signals are flashing in the stock market, and

while not indicative of an imminent crash, they’re telling investors to exer-cise caution, say market strategists. …

Among the warnings signs: The indexes’ string of record highs; high levels of margin debt, or borrowings to finance stock buys; the slim number of prior bull markets that have lasted past this point; and valuations that are close to levels when stocks last peaked.

Margin debt, which tends to spike alongside stock rallies and pullbacks, has been rattling investors for months.

“As that debt goes up, the market’s foundation gets shakier and shakier,” said Brad McMillan, chief investment officer for Commonwealth Financial.

“The correction could be deeper.” Also of concern is the bull market’s

fifth birthday on Monday. The average bull market only lasts about 4.5 years, putting the current one in rarefied territory. Of the 12 bull markets since World War ii, only half have lasted five years, and only three have made it to their sixth birthday.

Speculation about bubbles returned last week. Technical analysts pointed to a possible bubble formation in biotech stocks. Dallas Federal Re-serve President Richard Fisher raised concern about “eye-popping levels” of some stock metrics like margin debt.

Valuations, or the prices of stocks compared to the companies’ underly-ing earnings, have passed levels last reached in 2007, or the top of the last bull market. …

What is troubling is that much of the buying is being fueled by cheap debt, McMillan said. While no formal definition of a “bubble” exists, McMil-lan said he sees a bubble as a price jump in an asset given the availability of cheap financing.

Margin debt hit record levels at the end of January, according to New York Stock Exchange data. Margin debt at the end of January reached $451.3 billion, its fifth record month in a row. Margin debt returned and surpassed record levels set in July 2007 back in April when it topped $384.37 billion. …

The Great U.S. Retail Apocalypse InVeSTmenT WATcH | March 9

If the U.S. economy is getting better, then why are major retail chains

closing thousands of stores? … With-out a doubt, the rise of Internet retail-ing giants such as Amazon.com have had a huge impact. … But … retail experts estimate that the Internet has accounted for only about 20 percent of the decline that we are seeing. Most of the rest of it can be accounted for by the slow, steady death of the middle class U.S. consumer.

Median household income has declined for five years in a row, but all of our bills just keep going up. That means that the amount of disposable income that average Americans have continues to shrink, and that is really bad news for retailers.

And sadly, this is just the begin-ning. …

As you read this article, approxi-mately a billion square feet of retail space is sitting vacant in the United States.

Last week, Radio Shack announced that it was going to close more than a thousand stores.

Last week, Staples announced that it was going to close 225 stores.

Same-store sales at Office Depot

have declined for 13 quarters in a row.J.C. Penney has been dying for

years, and it recently announced plans to close 33 more stores. …

Sears has closed about 300 stores since 2010, and cnn is reporting that Sears is “expected to shutter another 500 Sears and Kmart locations soon.” …

Macy’s has announced that it is going to be closing five stores and eliminating 2,500 jobs.

It is being projected that sales at U.S. supermarkets will decline by 1.7 percent this year even as the overall population continues to grow.

McDonald’s has reported that sales … were down 3.3 percent in January. …

Even Walmart is struggling right now. … David Cheesewright, ceo of Walmart International … pointed out that … most of the growth would have to come from its units outside the U.S. …

Alas, outside the U.S. too, econo-mies were limping along at best, and consumers were struggling and the operating environment was tough.

“We’re seeing economies under stress pretty much everywhere we operate,” Cheesewright admitted. …

Retail consultant Howard David-owitz is projecting that up to half of all shopping malls in America may shut down within the next 15 to 20 years ….

Due to the fact that there are not enough middle class jobs to go around, the middle class has been steadily shrinking.

In 2008, 53 percent of all Ameri-cans considered themselves to be

“middle class.” Today, only 44 percent of all Americans consider themselves to be “middle class.”

That is a pretty significant shift in just six years, don’t you think? …

Despite what the politicians and the mainstream media are telling you, the truth is that something is fundamen-tally wrong with our economy.

On a gut level, most people realize this.

The frightening thing is that this is about as good as things are go-ing to get. The next great wave of the economic collapse is approaching, and when it strikes the plight of the middle class is going to get a whole lot worse.


fact that the anti-Western ideology China shares with Russia trumps Beijing’s short-term economic interests.

China’s leaders harbor expansionist ambitions of their own, which are growing bolder by the month. By siding with Putin, China can expect Russia to back Beijing as it pushes to “do a Ukraine” of its own in the South China Sea and elsewhere.

China could suffer some short-term economic setbacks by refusing to side with the West, but the Chinese esteem it a small price to pay in exchange for diminishing U.S. power and simultaneously making the invasion of a sover-eign nation less of a 21st-century taboo.

Then there is India. The day after China cleared the path with that Global Times piece, its neighbor to the south followed down it. “There are legitimate Russian and other interests involved [in Ukraine]” a senior Indian official said. “We hope … there is a satisfactory resolution to them.”

The statement represented a sharp break between India and the West, which took many analysts off guard. But Moscow and Delhi have been comrades for decades, especially since 1974 when India conducted nuclear tests and the Soviet Union emerged as the only major nation to support its right of “self-defense.”

India is now returning the favor by supporting Russia. India also feels the increasing threat of China’s expanding power since many of Beijing’s recent incursions have been into Indian territory. India also sees, with greater clarity every week, that the U.S. cannot be counted on to counter China’s rise. So, Indian leaders are taking steps to ensure that they have friends in the neighborhood.

India also has interests in some of its autonomous neigh-bor states, and has interfered in some instances to defend societal factions with close links to India. India might calculate that it benefits from the establishment of an inter-national precedent that sees a major power intervening in a neighboring nation.

Finally let’s consider Japan. Japan has sided with the West in condemning Putin’s conquest of Crimea. Yet To-kyo refused to join Western powers in imposing economic sanctions on Russia, and decided to proceed with Japan-Russia military talks underway this week.

Why the two-faced behavior? Because, in between Rus-sia and the U.S., Tokyo feels caught between a rock and a hard—or actually a soft—place.

Cognizant of how soft and militarily anemic the U.S. has become, Japanese Prime Minister Shinzo Abe has spearheaded a historic turn toward Russia. Since coming to power in 2012, Abe has held five meetings with Mr. Putin—more than he’s had with any other head of state.

Japan sided with the West rhetorically because Tokyo is still officially dependent on America for security, and because Japan doesn’t want to let Putin set a precedent that could allow China to invade islands claimed by both Tokyo and Beijing without Western retribution. But Japan refused take action against Putin—such as economic sanctions or canceling the military talks—because Tokyo sees that the American security blanket Tokyo has been reliant on is

now like a moth-eaten coat. Prime Minister Abe apparently wants to knit a Japan-Russia alliance before someone ap-plies a little pressure on that U.S. blanket and fully exposes its tattered condition to the world.

When the Ukraine crisis first erupted, some top-notch analysts, such as Ambrose Evans-Pritchard, were con-vinced that China would side with the West. A revived Russian empire, such analysts said, would pose too great a danger to Beijing for the Chinese not to rally against it.

But this perspective fails to recognize that to China, the West is a far greater enemy. Decades ago, Chinese Marxist revolutionary Mao Tse Tung promised his people, “All that the West has, China will have.” China’s decision to sup-port a revived Russian empire despite the danger such an empire poses to Beijing is evidence that Mao’s words still resonate clearly in the Chinese mindset.

Russia, India and Japan are driven, to varying degrees, by the same overriding worldview that drives China: Ulti-mately, despite any near-term risks we may have to endure, despite any economic injuries we may have to sustain, the world order that the West created must be overthrown. The system that says invading a sovereign nation is taboo must be toppled.

We can leave the question mark over Japan for now, but China and India have made their pro-Putin stances quite clear. This means that rallied behind Putin and Russia’s 144 million people, potentially stand China’s 1.36 billion and In-dia’s 1.24 billion. Backing Moscow’s second-most powerful military in the world—potentially stand China and India with the third- and fourth-most powerful military forces.

Of course, the statements from China and India in sup-port of Putin’s invasion don’t equate to solidified military unity between the three powers, but they do provide strong indication of where Beijing and Delhi would throw their weight in the event of escalation.

It all adds up to mean Russia has won its Ukraine gamble.

Before the statements from China and India, U.S. President Obama said Putin’s invasion of Ukraine violates “basic principles that are recognized around the world.” He said the world was “largely united” in believing Putin had violated Ukraine’s territory. He said it shows that “Russia is on the wrong side of history.”

But it’s now clear that the world is anything but united on the issue, and that it is Mr. Obama who is on the wrong side of reality.

The Trumpet has never made the mistake that Mr. Ev-ans-Pritchard, President Obama and others routinely make regarding the goals of the Eastern powerhouses. In fact, we have specifically forecast, for over 50 years, that Asian na-tions would band together against the West. This is because the Trumpet’s analysis is built upon a source of intelligence altogether different from those most analysts use.

To learn more about this intelligence source and the direction Russia and other Asian powers are marching in, read “The Kings of the East,” and watch editor in chief Ger-ald Flurry’s video “Russia and China Unite (Crimea).”

Follow Jeremiah Jacques: Twitter

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