America’s Technology & Sanctions War Will Bifurcate The Global Economy

Authored by Alastair Crooke via The Strategic Culture Foundation,

The true reason behind the US-China ‘trade’ war has little to do with actual trade … What is really at the basis of the ongoing civilizational conflict between the US and China … are China’s ambitions to be a leader in next-generation technology, such as artificial intelligence (AI), which rest on whether or not it can design and manufacture cutting-edge chips, and is why Xi has pledged at least $150 billion to build up the sector”, Zerohedge writes.

Nothing new here: yet behind that ambition, lies another, further ambition and a little mentioned ‘elephant in the room’: that the ‘trade war’ is also the first stage to a new arms race between the US & China – albeit of a different genre of arms race.

This ‘new generation’ arms-race is all about reaching national superiority in technology over the longer-term, via Quantum Computing, Big Data, Artificial Intelligence (AI), Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.

The blueprint for it, in China, is in the public domain. It is ‘Made in China 2025’ (now downplayed, but far from forgotten). And the Chinese expenditure commitment ($ 150 billion) to take the tech lead – will be met ‘head on’ (as Zerohedge puts it), “by a [counterpart] ‘America First’ strategy: Hence the ‘arms race’ in tech spending … is intimately linked with defence spending. Note: military spending by the US and China is forecast by the IMF to rise substantially in coming decades, but the stunner is: that by 2050, China is set to overtake the US, spending $4tn on its military, while the US is $1 trillion less, or $3tn … This means that sometime around 2038, roughly two decades from now, China will surpass the US in military spending.”

This close intimacy between tech and defence in US future defence thinking is plain: It is all about data, big data and AI: Defense One article makes this very clear,

“The battle domains of space and cyber are divorced, largely, from the raw physical reality of war. To Hyten [Gen. John E. Hyten, who leads US Air Force Space Command], these two uninhabited spaces mirror one another in another way: They are fields of data and information and that’s what modern war runs on. “What are the missions we do in space today? Provide information; provide pathways for information; in conflict, we deny adversaries access to that information,” he told an audience on Wednesday at the Air Force Association’s annual conference outside Washington, D.C.. The same is true of cyber.

The US wages war with tools that require a lot of information… Inevitably, more adversaries will eventually employ data-connected drones and gunships of their own. The heavy information component of modern-day weapons, particularly that those wielded by air forces, also creates vulnerabilities. Air Force leaders this week discussed how they are looking to reduce the vulnerability for the United States while increasing it for adversaries”.

So, the ‘front line’ to this trade/tech/defence war, effectively pivots about who can design – and manufacture – cutting-edge, semi-conductors (since China already has the lead in Big Data, Quantum computing, and AI). And, in this context, General Hyten’s comment about reducing US vulnerability, whilst increasing it for adversaries takes on major significance: For Washington, the plan is to ramp up export controls (i.e. ban the export) of so-called ‘foundational technologies’ — those that can enable development in a broad range of sectors. 

And the equipment for manufacturing chips, or semi-conductors – not surprisingly – is one of the key ‘target areas’ under discussion.

Export controls though, are just one part of this ‘war’ strategy of ‘data denial’ to adversaries. But semi-conductors is one field in which China is indeed vulnerable: since the global semiconductor industry rests on the shoulders of just six equipment companies, of which three are based in the US. Together, these six companies make nearly all of the crucial hardware and software tools needed to manufacture chips. This implies that an American export ban would choke off China’s access to the basic tools needed to manufacture their latest chip designs (though China can retaliate by choking-off the supply of Raw Earth, upon which sophisticated tech, is reliant).

“You cannot build a semiconductor facility without using the big major equipment companies, none of which are Chinese,” said Brett Simpson, the founder of Arete Research, an equity research group. And, as the FT, notes, the real difficulty is not [so much] designing the chips, but in the making of very cutting-edge chips.”

So here is the point: the US is attempting to clasp to itself both the ‘pure’ technology-knowledge, plus additionally, the practical tech supply-chain experience and knowhow, in order to repulse China out from the western tech sphere.

At the same time, another strand to the US strategy – as we have witnessed with Huawei, a global leader in 5G infrastructure technology (in which the US is falling behind) – is to scare everyone off incorporating Chinese 5G in to their national infrastructures – through such devices as the arrest of Meng Wanzhou (for breach of US sanctions). 

Even before her ‘arrest’, America has been systematically cutting Huawei out of the global 5G rollout, by quoting the magical words: ‘security concerns’ (Just as it is attempting to cut Russia out of weapons sales in the Middle East, on similar, tech-protective, grounds: i.e. that states should not buy Russian air defence, since this would give Russia a ‘window’ into NATO tech capabilities).

And, as General Hyten made clear, this not just about increasing tech and area denial, and promoting vulnerability for adversaries in terms of chips – but the US also plans to extend tech and area info-denial to space, cyber, avionics and military equipment.

It’s another Cold War – but this time it is about technology and ‘data denial’.

Well, China, with its centralized economy, will throw money and brainpower, into creating its own, ‘non-dollar sphere’, supply lines: for semi-conductors; for components – both for civil and military use. It will take time, but the solution will come.

Clearly, one consequence of this new arms race between the US – and China and Russia – is that specialized, and thinly-populated supply lines will have to be disentangled, and made anew, each in its own separate sphere: that is, on one hand, within the NATO-dollar sphere, and on the other, in the non-dollar sphere, led by China and Russia.

And not only will there be this physical supply-line disentanglement and separation, but should the US persist with its Huawei leverage tactic of ‘War on Terror’-style ‘rendition’ of foreign businessmen, or business women, alleged to have breached any US broad spectrum tech sanctions, there will have to be a disentangling of mixed boardrooms to avoid exposing company officials to individual arrest and prosecution. Limitations on company officers’ travel, where their business spans spheres, is already happening (as a result of the attempted rendition of Meng Wahzhou – and in order to avoid being caught up in tit-for-tat, retribution).

The bifurcation of the global economy was already in process. This stemmed firstly from America’s geo-political financial sanctions regime (i.e. Treasury Wars) – and the consequent attempts by targeted states to de-couple from the dollar sphere. The ‘war hawks’ surrounding the President are now inventing a whole new swathe of ‘tech crimes’ for sanctioning – ostensibly to give Trump oven more of his much-desired negotiating ‘leverage’. Clearly the hawks are using the ‘leverage’ pretext, to up-the-ante against China, Russia and its allies – for far wider ambitions than just giving the President more ‘cards in his hand’: Perhaps rather, to re-set the entire power-balance between America versus China and Russia.

The obvious and inevitable consequence has been an accelerating financial separation from the dollar sphere; and the development of a non-dollar architecture. De-dollarisation in a word.

Effectively, the US seems prepared to burn-down its reserve-currency status, to ‘save’ itself – to ‘Make America Rich Again’ (MARA), and to hobble China’s rise. And while burning down dollar-hegemony, the Administration is burning its own ‘global order’ too: attenuating it from the ‘global’ – down to a reduced sphere of US tech and security allies, facing China and the non-West. The domestic consequences for America will be felt in the new (for Americans) frustration of finding it harder to finance itself, in the manner in which it has grown accustomed, over the last 70 years, or so.

Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, says that:

 “The dollar – [the US] having the reserve currency, [is placing that] status … in jeopardy. And I don’t think the world likes giving America this kind of power that we can impose our own rules and demand that the entire world live by it. So, I think this has a much bigger and broader ramifications other than what’s going on in the stock market today. I think long-term, this is going to undermine the dollar, and its role as a reserve currency. And when that goes, so does the American standard of living: because it’s going to collapse.”

“People think we have the upper hand because we have this huge trade deficit with China. But I think it’s the other way. I think the fact that they supply us with all this merchandise that our economy needs, and the fact that they hold a lot of our bonds [debt], and continue to lend us a lot of money so we can live beyond our means – they’re the ones, I think, that call the tunes, and we have to dance to it.”

This tech and data new Cold War will polarise the global economy into spheres, and already it is polarising it politically, into a new ‘with us, or against us’ American paradigm. Politico notes:

“The Trump administration’s global campaign against telecom giant Huawei is pitting Europe against itself – over China. In the midst of a ballooning US-China trade conflict, Washington has spent the past few months pressing its EU allies via its ambassadors to take a stronger stance against Chinese telecom vendors such as Huawei and ZTE.

The American push…is exposing fault-lines between US allies in Europe as well as [between] the so-called “Five Eyes” intelligence community — which have largely followed the US lead — and others that resist the American pressure, by stopping short of calling out Chinese tech.

On the other side there is Germany, which wants proof from the United States that Huawei poses a security risk, as well as France, Portugal and a slew of central and eastern EU nations.

The increasingly divergent attitudes show how Donald Trump is forcing allies to take sides in a global dispute and measure their economic interests — often deeply embedded with the Chinese vendors — against the value of a security alliance with Washington.”

The potential for accelerated de-dollarisation is one aspect, but there is another potential flaw inherent to the wholesale repatriation of supply-lines. US corporate earnings have ballooned over the last two decades. Part of this earnings hike stemmed from ‘easy’ liquidity, and ‘easy’ credit; but a major element owed to cost-cutting – that is to say, off-shoring elements of higher-cost US production (because of wage levels, regulatory costs and employee entitlements) to lower wage, less regulated states. The coming bifurcation of the global economy has therefore, as its inevitable consequence, the repatriation of lower-cost production (in China and elsewhere) to a now higher-cost, and more highly regulated, US and European environment.

Perhaps this is a good thing – but for sure it means costs and prices will rise in the US and America, and it means that corporate business models will be impaired as they de- off-shore. Americans’ standards of living will decline further (as Peter Schiff foretells).

The alienation and disgruntlement of America’s ‘deplorables’ and Europe’s ‘Yellow Vests’ is evidently a profound problem – and one that will not be solved by a new Cold War. The roots to our present discontents lie precisely with the ‘easy’ liquidity, and the ‘easy’ credit paradigm, which centrifuged-out societies into the asset owning 10% and into the non-asset holding 90% of society, and which degraded so the sense of societal well-being and security.

Of course this discontent can really only be resolved by addressing the question of our hyper-financialised economic paradigm – which is not something the élites will, or want, to ‘touch’.

Sierra Nevada Snowpack On Track To Collapse 79%, New Study Warns

A new report by the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) examined the headwater regions of California’s ten major reservoirs, representing half of the state’s surface storage, discovered each could experience a 79% decline in peak snowpack water volume by 2100.

Berkeley Lab used supercomputers to investigate current warming trends and carbon emissions.

Scientists analyzed how a future warmer world would affect “snowpack upstream of 10 major reservoirs — three in Northern California, three in Central California, and four in Southern California. The reservoirs are Shasta, Oroville, Folsom, New Melones, Don Pedro, Exchequer, Pine Flat, Terminus, Success, and Isabella,” said The Mercury News.

By 2039 to 2059, the snowpack runoff could drop by 54%, the study determined, and then 79% from 2079 to 2099. The study noted that three northernmost reservoirs, Shasta, Oroville and Folsom, could see an 83% reduction, by 2100.

Alan Rhoades, a postdoctoral fellow at Berkeley Lab and lead author of the study, said his team of researchers found that peak runoff could come four weeks earlier by 2100, at the beginning of March rather than April 01. 

Mountain snowpack is a significant source of water for California: “Our precipitation is really intermittent and extremes-driven,” Rhoades said. “We get 50% of our annual precipitation in five to 15 days, or one to two weeks. Our water demand is highest during the summer months when we don’t get a lot of precipitation, so we really rely on mountain snowpack as a stopgap for our water supply.”

“So as the world continues to warm, these storms will get even warmer and won’t readily get to freezing, whereby you could have snowfall or snow accumulation and the persistence of snow on the surface,” he said.

As a result of warmer weather, the amount of snow is projected to decrease while rain could increase. The study noted that it did not look at rainfall, only mountain snowpack. 

The study also found that snowmelt rates will decrease. The snow season which includes both the accumulation and melt portion of the season will fall by 20 days by 2050 and 39 days by 2100. This is primarily due to future weather systems will produce less snow but also because with the peak timing shifting to earlier in the year, the days are shorter and less energy from the sun is available to melt the snow.

Ellen Hanak, director of the Water Policy Center at the Public Policy Institute of California, has already begun to address the future water crisis in the state. 

“Voters passed Proposition 1 in 2014, a water bond with $2.7 billion for new storage projects. This summer, state officials earmarked that money for eight projects, including raising the dam at Los Vaqueros Reservoir in Contra Costa County, building a new reservoir at Pacheco Pass in Southern Santa Clara County, building the massive Sites Reservoir in Colusa County, and several large groundwater storage projects in Southern California,” said The Mercury News.

Gov. Jerry Brown also signed a groundwater law that requires farmers and municipalities to better track groundwater usage. 

Hanak said, “more projects are needed, such as efforts to pay farmers to flood their fields and orchards in wet years, recharging groundwater tables, along with far more recycled water projects, conservation efforts and other initiatives.”

“We have surface reservoirs, groundwater basins, and we have rivers and canals and aqueducts to connect them,” she said. “We’re going to have to manage them together more consistently.”

…And now it makes perfect sense: WSJ recently exposed Harvard University’s endowment (valued at $39 billion as of 2018), the largest academic endowment in the world, for quietly snapping up farmland and related water rights to properties located in the California region. 

It seems like Harvard is establishing itself in the water brokering business, as the endowment’s money managers know they will make a killing when California runs out of the water.

Is The US Preparing For A War Between LatAm States?

Authored by Thierry Meyssan via The Voltaire Network,

Little by little, the partisans of the Cebrowski doctrine are advancing their pawns. If they must cease creating wars in the Greater Middle East, they’ll just turn around and inflame the Caribbean Basin. Above all, the Pentagon is planning to assassinate an elected head of state, ruin his country, and undermine the unity of Latin-America.

John Bolton, the new US National Security Advisor, has relaunched the Pentagon’s project for the destruction of the State structures in the Caribbean Basin.

We remember that in the aftermath of the 9/11 attacks, the Secretary for Defense at that time, Donald Rumsfeld, created the Office of Force Transformation and nominated Admiral Arthur Cebrowski as its Director. Its mission was to train the US army for its new role in the era of financial globalisation. It was designed to change military culture in order to destroy the State structures of the regions which were not connected to the global economy. The first chapter of this plan consisted of dislocating the « Greater Middle East ». The second stage was intended to perform the same task in the « Caribbean Basin ». The plan was designed to destroy some twenty coastal and insular States, with the exception of Colombia, Mexico and as far as possible, territories belonging to the United Kingdom, the United States, France and Holland.

When he arrived at the White House, President Donald Trump opposed the Cebrowski plan. However, two years later, he has so far only been able to prevent the Pentagon and NATO from handing over States to the terrorist groups they employ (the « Caliphate »), but not to stop manipulating terrorism. Concerning the Greater Middle East, he has managed to diminish the tension, but the wars still continue there at lower intensity. Concerning the Caribbean Basin, he restrained the Pentagon, forbidding them to launch direct military operations.

Last May, Stella Calloni revealed a note from Admiral Kurt Tidd, Commander in Chief of SouthCom, exposing the operations aimed at Venezuela. A second penetration was simultaneously implemented in Nicaragua, and a third, running for the last half century, against Cuba.

Working from several previous analyses, we concluded that the destabilisation of Venezuela – beginning with the guarimbas movement, continued by the attempted coup d’etat of February 2015 (Operation Jericho), then by attacks on the national currency and the organisation of emigration – would end with military operations led from Brazil, Colombia and Guyana. Multinational manoeuvres of troop transport were organised by the United States and their allies in August 2017. This was made possible by the election of pro-Israëli President Jair Bolsonaro, who will come to power in Brasilia on 1 January 2019.

Brazilian Vice-President Hamilton Mourão with President Jair Bolsonaro.

The next Vice-President of Brazil will be General Hamilton Mourão, whose father played an important role in the pro-US military coup d’etat of 1964. He has made himself famous by his declarations against Presidents Lula and Rousseff. In 2017, he declared – on behalf of the Grand Orient of Brazil – that the time for a new military coup d’etat had arrived. Finally, he was re-elected with President Bolsonaro. In an interview with the magazine Piaui, he announced an impending overthrow of the Venezuelan President, Nicolás Maduro, and the deployment of a Brazilian « peace » force (sic). Faced with the gravity of these statements, which constitute a violation of the United Nations Charter, elected President Bolsonaro declared that no-one had any intention of going to war with anyone, and that his Vice-President talked too much.

In any case, during a Press conference on 12 December 2018, President Maduro revealed that US National Security Advisor John Bolton was handling the coordination between the teams of Colombian President Iván Duque and those of the Brazilian Vice-President. A group of 734 mercenaries is currently being trained in Tona (Colombia) in order to perpetrate a false flag attack, allegedly by Venezuela, against Colombia – thereby justifying a Colombian war against Venezuela. The war would be under the command of Colonel Oswaldo Valentín García Palomo, who is today in hiding after the attempted assassination by drone of President Maduro during the anniversary of the National Guard on 4 August 2018. These mercenaries are supported by Special Forces stationed on US military bases in Tolemaida (Colombia) and Eglin (Florida). The US plan is to take over, from the beginning of the conflict, the three Venezuelan Libertador military bases of Palo Negro, Puerto Cabello and Barcelona.

Wanted notice for Colonel Oswaldo Valentín García Palomo of the Venezuelan National Guard, after he had commanded an attempted assassination of the President of the Bolivarian Republic.

The US National Security Council is attempting to convince various states not to recognise Nicolás Maduro’s second mandate (he was re-elected last May, but will assume power with the New Year). This is why the states of the Lima Group contested the Presidential ballot even before it took place, and illegally forbade Venezuelan consulates from organising it. Furthermore, the migration crisis turns out to be just one more manipulation – many of the Venezuelans who fled the monetary crisis believing that they would easily find work in another Latin-American country are today trying to return home. But the Lima Group prevents them from doing so, forbidding Venezuelan planes who are attempting to repatriate them to use their air space, as well as interdicting the buses which have come to help them cross the borders.

Everything is therefore happening as if we were watching a remake of the events which bloodied the Greater Middle East after the attacks of 11 September 2001. The main point is not the military actions, but the appearance of disorder that the events present. First of all, it’s intended to confuse people into making a silk purse out of a sow’s ear. In the space of five years, Venezuela and Nicaragua, which used to enjoy a positive image abroad, are now being wrongly described as « failed states ». While the history of the Sandinistas and their struggle against the Somoza dictatorship has not yet been re-written, it is taken for granted that Hugo Chávez Frías was a « Communist dictator » (sic), despite the fact that his country experienced a massive economical and political leap forward during his Presidency. It will soon become possible to destroy these states without anyone complaining.

Time is passing more and more rapidly. When, in 1823, US President James Monroe decided to close the Americas to European colonisation, he could not have imagined that 50 years later his decision would morph into an affirmation of US imperialism. Just as today, when President Donald Trump declared, on the day of his investiture, that the time for régime change was over, he did not imagine that he would be betrayed by his own people. Nonetheless, on 1 November 2018, his Security Advisor John Bolton declared in Miami that Cuba, Nicaragua and Venezuela formed a « troïka of tyranny ». Then his Secretary of Defense, General James Mattis, affirmed on 1 December, before the Reagan National Defense Forum, that elected President Maduro is an « irresponsible despot » who « has to go »