June 25, 2011

The Week in Review (theTrumpet.com)

June 24, 2011 | From theTrumpet.com
The Syrian puppeteer, the Iranian space program, two more economic inpatients in Europe, showdown on the South China Sea, Moscow divests dollars, and the U.S. withdraws toward isolationism.

Middle East

According to what appears to be a leaked Syrian state document, Syria’s government orchestrated the Nakba raids that occurred on the Israeli border on May 15. The internal memorandum outlines how the regime ordered security officials on the Syrian side of the Golan Heights to grant passage to 20 buses containing Palestinians to the border, where the crowds attempted to climb the fence and enter Israel. The document states: “It is essential to ensure that no one carries military identification or a weapon as they enter, with a strict emphasis on the peaceful and spontaneous nature of the protest.” At least 27 people were killed in the ensuing demonstrations on May 15 and June 5. This is another example of Palestinians being used to further Arab ambition—this time around, to divert attention away from President Bashar Assad’s brutal onslaught against internal dissenters.

German Foreign Minister Guido Westerwelle visited Israel June 14, meeting with Palestinian President Mahmud Abbas and Prime Minister Salam Fayyad, and also Israeli Prime Minister Benjamin Netanyahu and Foreign Minister Avigdor Lieberman. Westerwelle reiterated that Berlin supported “the Palestinian people in having an independent state,” but said such a state should come about through negotiation, not unilaterally. German Development Minister Dirk Niebel accompanied Westerwelle on the visit, intending to travel to the Gaza Strip to gather information on German-Palestinian development cooperation. Israel denied Niebel access to Gaza, however, in accordance with its general policy toward Hamas. Though a deputy spokesman for German Chancellor Angela Merkel said the move wasn’t taken as a political affront, it received a bad reaction from some other German politicians. The foreign policy spokesman of the Free Democrats, for example, said Israel was “turning off its closest friends.” A week later, Israel announced that it would allow more goods into the Gaza Strip, including materials to build 1,200 homes and 18 schools. Watch for German pressure on Israel to increase and for Germany to seek to get more involved in the peace process.

On June 15, Iran launched its second satellite into orbit, two years after its first one was launched in February 2009. The Rasad-1 (Observation-1) is reportedly a small imaging satellite built by Iran. Since the size and accuracy of the satellite are not sufficient to produce high-resolution maps, according to All Things Nuclear, the goal of the satellite appears to be to give Iran experience with developing and operating satellite technology. The technology needed for launching satellites is the same needed for firing conventional or nuclear warheads. “People wondered after the first time if they just got lucky,” Brian Weeden of the Secure World Foundation think tank says. “Now that they’ve put two satellites up there, that indicates perhaps it wasn’t a fluke the first time. It demonstrates that their rocket technology is pretty good.”

A leading member of Saudi Arabia’s royal family said in closed-door comments earlier this month that Riyadh could seek to supplant Iran’s oil exports to put pressure on Tehran over its nuclear program, the Wall Street Journal reported June 22. Speaking to a private gathering of American and British servicemen at the raf Molesworth airbase outside London, Prince Turki al-Faisal also said that if Iran developed nuclear weapons, Saudi Arabia would be forced to follow suit. He said Riyadh is preparing to employ all of its economic, diplomatic and security assets to confront Tehran’s regional ambitions. Saudi officials said the prince was only speaking in a private capacity. However, the Wall Street Journal points out that “U.S. and Arab diplomats said Saudi Arabia’s monarchy often uses Prince Turki to float ideas concerning the country’s future policies.” “The Arab Spring uprisings are intensifying the rivalry between Saudi Arabia and Iran,” the Journal writes, “who face off across the Persian Gulf and jostle for influence with neighbors from Syria to Yemen.” This increasing hostility between Saudi Arabia and Iran reflects the prophesied split of the region into two alliances in the end time, which are destined to clash.

Europe

The eurozone must integrate even further for the Economic Monetary Union (emu) to be a success, the International Monetary Fund (imf) wrote on June 20. “More economic and financial integration is essential for a dynamic and stable emu,” states one of the main headings in the “Concluding Statement of the imf Mission on Euro-Area Policies.” The key to the eurozone’s success is “the strength of the economic union,” the report states. Europe’s markets must become more integrated, allowing labor, goods, services and, most importantly, capital to flow freely across national borders, the report states. One eurozone nation should not stop another buying its industries, it says, and the eurozone should continue toward a common regulatory system. “Progress toward an integrated framework for crisis prevention, management, depositor insurance, and resolution needs to be accelerated,” it writes. Certain economic governance tools “will need to be made more binding and relevant for national decision-making.” The imf’s statements confirm something the Trumpet has been saying for a long time—an economic union like the eurozone cannot last without a political union. Its designers knew this, foreseeing that a crisis would force the eurozone to become more united in order to survive. Already the EU is talking about directly taxing EU nations through the Tobin tax. Once the EU grants itself the power to directly tax the people, it will not stop with just one tax. An EU-wide Tobin tax would be a major step toward a unified superstate.

Credit rating agency Moody’s warned on June 18 that it was thinking about lowering Italy’s Aa2 credit rating within the next 90 days, citing Greece’s continuing crisis as well as Italy’s internal problems as reasons for the downgrade. Last month, Standard and Poor’s also warned that it may cut Italy’s rating. Head of the Eurogroup—the eurozone’s finance ministers—Jean-Claude Juncker warned on June 19 that the Greece crisis could affect Italy and Belgium, saying that “We are playing with fire.” The crisis, Juncker said, could hurt, “due to their high levels of debt, Belgium and Italy, even before Spain.” Neither of these nations is one of the troubled so-called “pigs” nations—Portugal, Ireland, Greece and Spain. The crisis could now be spreading beyond Europe’s most vulnerable nations. If it continues, even France’s credit worthiness could be in danger. Share prices across the European Union came close to their lowest level for three months on June 20 as no solution to Greece’s problems emerged last weekend. The main index for Milan’s stock exchange fell over 2 percent during midday trading the same day. Eurozone finance ministers insist that Greece must take more austerity measures before they make their final decision on whether to loan the nation another €12 billion. Italy lacks some of the problems of other vulnerable nations—it doesn’t have the high unemployment of Spain, or the housing bubble. At 4 percent, its budget deficit is lower than France’s. But, as the Economist wrote in its latest cover article, “Italy’s economic illness is not the acute sort, but a chronic disease that slowly gnaws away at vitality.” Its economy is growing more slowly than any other nation on the planet except Zimbabwe and Haiti. It may not be running a large budget deficit, but the government’s debt is 120 percent of gross domestic product. The worries about Italy and Belgium show that the euro crisis is far from over.

Just last month the EU gained speaking rights in the United Nations General Assembly. Now news has emerged that it has expanded its role in the UN to have the same speaking rights on 35 committees, five councils or panels, seven commissions and 14 working groups. The British foreign secretary promised Parliament that this would not happen, saying the EU’s speaking rights would be “strictly limited” to the General Assembly and “does not imply agreement to seek additional rights in any other fora.” The situation is “quite clearly a humiliation,” said chairman of the House of Commons European scrutiny committee Bill Cash. “Extending the EU’s status to all these other UN bodies is in flagrant breach of the assurances made to us,” he said. “It is a very severe reverse and has profound implications for the Foreign Office.” When the EU first began to seek speaking rights in the General Assembly, we predicted it wouldn’t stop there. In just over a month it has already expanded its presence in the UN. Expect Europe to continue to expand its role in foreign policy and even push for a seat on the UN Security Council.

EU governments as well as the European Parliament and Commission agreed to give more power to the EU’s border agency, Frontex, on June 22. The agreement, due to be formally approved by the European Parliament in September, allows Frontex to buy or rent its own equipment, rather than simply use vehicles lent to it by member states. It will also give the agency more power to force member states to send the number of border agents that they have promised to send. They will also be allowed to pass on personal data to Europol or other EU enforcement agencies involved in cross-border issues. This may be a small increase in its powers, but the EU increases its power gradually.

Dutch politician Geert Wilders was acquitted of charges of inciting hatred against Muslims on June 23. Judge Marcel van Oosten ruled that while Wilders’s comments were “rude and condescending,” they were “acceptable within the context of the public debate.” Wilders could have been sent to jail for a year or fined up to €7,600 (us$10,865) for his comments criticizing Islam. Expect more popular politicians in Europe to speak out against Islam in the future.

German MPs said on June 22 that Serbia must recognize Kosovo as an independent state or they will block Serbia’s entrance into the EU. They said: “A factual recognition of Kosovo must be on the table, and if that fails to be the case, the German parliament will not support Serbia’s EU membership.” Germany brought about the breakup of Yugoslavia for its own ends. Expect it to continue to consolidate its power over the region by pushing for the recognition of Kosovo’s independence.

Russian Prime Minister Vladimir Putin, Deputy Prime Minister Sergei Ivanov and Defense Minister Anatoly Serdyukov met with French President Nicolas Sarkozy along with other officials in Paris on June 20-21 shortly after France agreed to sell Russia two Mistral-class amphibious assault ships. “The Mistral deal is only the beginning of increased cooperation between Russia and France in the areas of energy, military modernization and cooperation in space,” writes Stratfor. The deal is “the most significant transfer of Western military technology to Russia since the end of World War ii,” it says (June 21). Watch for Western Europe, especially France and Germany, to cooperate more with Russia in the short term.

The United Arab Emirates is negotiating with the EU’s Schengen visa-free area and the UK over ending the need for uae citizens to get advance visas to travel there, the uae’s Ministry of Foreign Affairs said on June 21. This is just part of a trend where the EU and certain Middle Eastern nations are working more closely together. For more information on this, see our May 31 article “The Battle for Bahrain and the Future of the Middle East.”

France has just endured its warmest and driest spring on record, according the government’s weather agency, Météo France. The weather came close to causing a disastrous crop failure, but wetter, cooler weather during June has improved the prospect of a reasonable harvest. The drought means that this year’s harvest will still probably be smaller than last year’s, however. “West Europe is moving well away from the disaster that was facing us at the beginning of this month because of the drought,” said one German trader. “Crop size and quality will be better than feared but it is too late for a full recovery in many areas.”
Asia

Beijing warned Washington on Wednesday not to allow Southeast Asian nations to drag it into the escalating territorial disputes in the South China Sea, saying the United States should instead advise its Asian allies to show restraint. “I believe the individual countries are playing with fire,” said Cui Tiankai, China’s vice foreign minister. “I hope the fire doesn’t reach the United States.” The Philippines, one of several nations claiming parts of the disputed territories, rejected Beijing’s warning Thursday and appealed to the U.S. to clarify the details of the mutual defense treaty that exists between Manila and Washington. Manila also asked the U.S. to provide it with patrol ships to assist the Philippines in monitoring the area and warding off Chinese encroachments. Tensions in the South China Sea have been escalating in recent weeks since a Chinese boat severed the research cable of a Vietnamese ship. Since then, both sides have conducted live-fire military exercises to demonstrate their irritation with the other. Anti-Chinese demonstrations have also taken place in Vietnam. China’s increasing aggression does not bode well for any of China’s neighbors that resist its ascension.

An eight-member Indian military delegation arrived in China Sunday to begin a six-day visit with Chinese military officials, marking a return to defense cooperation between the two Asian behemoths that was at a stalemate for a year. India had frozen military cooperation with China after Beijing started to issue stapled visas to residents of Indian Kashmir. The two sides made the decision to resume military ties during the most recent brics summit, last month.

On Sunday, Chinese President Hu Jintao met with Ukrainian President Viktor Yanukovich to discuss boosting bilateral ties between the two nations. Hu and Yanukovich are expected to sign a joint statement on improving China-Ukraine relations in the weeks ahead. Expect China’s cooperation with other Asian powers to continue to increase whether it is the result of Beijing’s soft power or by its force.

Moscow is likely to continue lowering its holdings of U.S. debt as Washington scrambles to improve its anemic economic recovery and to control its budget deficit, a top aide to President Dmitry Medvedev said on Saturday. “The share of our portfolio in U.S. instruments has gone down and probably will go down further,” said Arkady Dvorkovich, head economic aide to Medvedev. U.S. Treasury Department figures show that Russia’s holdings of American debt fell from $176.3 billion in October 2010 to $125.4 billion in April 2011. Russia’s financial reserves, which totaled $528 billion on June 10, are the third largest in the world, after those of China and Japan. Watch for more nations to edge away from the dollar as the U.S.’s economic fissures continue to grow deeper.

Africa

Firebrand African National Congress youth leader Julius Malema said on Monday that South Africa is likely to attract investment into its mining industry from India and China if it goes ahead with a policy of nationalizing mines. South Africa has the world’s largest reserves of platinum, chrome ore and manganese, and Malema has long advocated the nationalization of these reserves as a way to spread the wealth of the country to the black majority. He has pointed to Venezuela as an example of a country that has successfully nationalized its mining industry—but forgot to mention that Chavez’s nationalization of key industries has led to massive food shortages and double-digit inflation. Expect South Africa’s slide toward socialism to produce only more crime, poverty and racial violence.

Anglo-America

U.S. President Barack Obama announced on Wednesday that he will bring home 10,000 U.S. troops by the end of the year and 23,000 more by next summer, a withdrawal window that will conclude two months before voters decide whether to give him a second term. “Tonight,” the president said from the East Room, “we take comfort in knowing that the tide of war is receding.” Earlier this month, Obama emphasized that America would be working closely with Germany and other nato allies in empowering Afghans in their political and economic efforts to forge a lasting peace. Watch for Germany and the European Union to step up efforts to stabilize the Middle East region as America withdraws into geopolitical isolation.

The planned relocation of an American military air base off the southern Japanese island of Okinawa will be postponed for another two years, according to statements made last Monday by a senior U.S. administration official. The relocation of Marine Corps Air Station Futenma is a politically charged issue that has troubled relations between America and Japan for years. Many Okinawa citizens resent the presence of American forces because of the noise, pollution and crime associated with the military base. Former Japanese Prime Minister Yukio Hatoyama was even forced to resign last year after promising and failing to get Marines off the island altogether. As American power in the Orient declines, expect the Japanese to ditch their alliance with America in favor of new alliances with their East Asian neighbors.
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