Escobar: What Sanctions On Russia And China Really Mean

Authored by Pepe Escobar via The Asia Times,

The Pentagon may not be advocating total war against both Russia and China – as it has been interpreted in some quarters …

A crucial Pentagon report on the US defense industrial base and “supply chain resiliency” bluntly accuses China of “military expansion” and “a strategy of economic aggression,” mostly because Beijing is the only source for “a number of chemical products used in munitions and missiles.”

Russia is mentioned only once, but in a crucial paragraph: as a – what else – “threat,” alongside China, for the US defense industry.

The Pentagon, in this report, may not be advocating total war against both Russia and China – as it was interpreted in some quarters. What it does is configure the trade war against China as even more incandescent, while laying bare the true motivations behind the sanctioning of Russia.

The US Department of Commerce has imposed restrictions on 12 Russian corporations that are deemed to be acting contrary to the national security or foreign policy interests of the US.” In practice, this means that American corporations cannot export dual-use products to any of the sanctioned Russian companies.

There are very clear reasons behind these sanctions – and they are not related to national security. It’s all about “free market” competition.

At the heart of the storm is the Irkut MC-21 narrow-body passenger jet – the first in the world with a capacity of more than 130 passengers to have composite-based wings.

AeroComposit is responsible for the development of these composite wings. The estimated share of composites in the overall design is 40%.

The MC-21’s PD-14 engine – which is unable to power combat jets – will be manufactured by Aviadvigatel. Until now MC-21s had Pratt & Whitney engines. The PD-14 is the first new engine 100% made in Russia since the break up of the USSR.

Aviation experts are sure that an MC-21 equipped with a PD-14 easily beats the competition; the Airbus A320 and the Boeing-737.

Then there’s the PD-35 engine – which Aviadvigatel is developing specifically to equip an already announced Russia-China wide-body twinjet airliner to be built by the joint venture China-Russia Commercial Aircraft International Corp Ltd (CRAIC), launched in May 2017 in Shanghai.

Aviation experts are convinced this is the only project anywhere in the world capable of challenging the decades-long monopoly of Boeing and Airbus.

Will these sanctions prevent Russia from perfecting the MC-21 and investing in the new airliner? Hardly. Top military analyst Andrei Martyanov convincingly makes the case that these sanctions are at best “laughable,” considering how “makers of avionics and aggregates” for the ultra-sophisticated Su-35 and Su-57 fighter jets would have no problem replacing Western parts on commercial jets.

Oh China, you’re so ‘malign’

Even before the Pentagon report, it was clear that the Trump administration’s number one goal in relation to China was to ultimately cut off extended US corporate supply chains and re-implant them – along with tens of thousands of jobs – back into the US.

This radical reorganization of global capitalism may not be exactly appealing for US multinationals because they would lose all the cost-benefit advantages that seduced them to delocalize to China in the first place. And the lost advantages won’t be offset by more corporate tax breaks.

It gets worse – from the point to view of global trade: for Trump administration hawks, the re-industrialization of the US presupposes Chinese industrial stagnation. That explains to a large extent the all-out demonization of the high-tech Made in China 2025 drive in all its aspects.

And this flows in parallel to demonizing Russia. Thus we have US Interior Secretary Ryan Zinke threatening no less than a blockade of Russian energy flows: “The United States has that ability, with our Navy, to make sure the sea lanes are open, and, if necessary, to blockade … to make sure that their energy does not go to market.”

The commercial and industrial demonization of China reached a paroxysm with Vice-President Mike Pence accusing China of “reckless harassment,” trying to “malign” Trump’s credibility and even being the top US election meddler, displacing Russia. That’s hardly attuned to a commercial strategy whose main goal should be to create US jobs.

President Xi Jinping and his advisers are not necessarily averse to making a few trade concessions. But that becomes impossible, from Beijing’s point of view, when China is sanctioned because it is buying Russian weapons systems.

Beijing also can read some extra writing on the trade wall, an inevitable consequence of Pence’s accusations; Magnitsky-style sanctioning of Russian individuals and businesses may soon be extended to the Chinese.

After all, Pence said Russia’s alleged interference in US affairs paled in comparison with China’s “malign” actions.

China’s ambassador to the US, Cui Tiankai, in his interview with Fox News, strove for his diplomatic best: “It would be hard to imagine that one-fifth of the global population could develop and prosper, not by relying mainly on their own efforts, but by stealing or forcing some transfer of technology from others … That’s impossible. The Chinese people are as hard-working and diligent as anybody on earth.”

That is something that will be validated once again in Brussels this week at the biennial ASEM – Asia Europe – summit, first held in 1996. The theme of this year’s summit is “Europe and Asia: global partners and global challenges.” At the top of the agenda is trade, investment and connectivity – at least between Europe and Asia.

Washington’s offensive on China should not be interpreted under the optics of “fair trade,” but rather as a strategy for containing China technologically, which touches upon the absolutely crucial theme: to prevent China from developing the connectivity supporting the extended supply chains which are at the heart of the Belt and Road Initiative (BRI).

We don’t need no peer competitors

A glaring giveaway that these overlapping sanctions on Russia and China are all about the good old Brzezinski fear of Eurasia being dominated by the emergence of “peer competitors” was recently offered by Wess Mitchell, the US State Department Assistant Secretary at the Bureau of European and Eurasian Affairs – the same post previously held by Victoria “F*ck the EU” Nuland.

This is the original Mitchell testimony to the Senate Foreign Relations Committee. And this is the redacted, sanitized State Department version.

A crucial phrase in the middle of the second paragraph simply disappeared: “It continues to be among the foremost national security interests of the United States to prevent the domination of the Eurasian landmass by hostile powers.”

That’s all the geopolitics Beijing and Moscow need to know. Not that they didn’t know it already.

Swiss Banks Curb China Travel After UBS Banker Arrested

Two major Swiss banks imposed restrictions on staff travel to China after a UBS employee was detained in the country, underscoring the challenges of doing business in a country which is a mecca for banks eager to capture and manage (for a generous fee) the fastest growing fortunes in the world, yet are challenged by a regime that tramples over civil rights.

According to Bloomberg, UBS asked some bankers not to travel to China after the incident, with fellow Swiss bank Julius Baer also imposing a travel ban while Credit Suisse said that so far there was no travel ban in place. The travel restrictions have only affected those bankers who help manage money for clients and haven’t been imposed on the securities unit.

It was unclear under what circumstances the Singapore-based employee was detained and whether the person has been released.

As part of Beijing’s ongoing anti-corruption campaign, government clampdowns and unexplained absences have unsettled executives with operations in China, where even the president Interpol recently disappeared abruptly as a result of a bizarre detention. As reported previously, Meng Hongwei was reported missing this month after being taken into custody upon his arrival from France.

“China’s deep into an anti-corruption drive as well as effort to deleverage the economy,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies. “

China has been a major new market for financial firms such as UBS as the share of world’s wealthy has soared in the region. UBS estimates a new billionaire is minted in China every two days and Credit Suisse this week said China’s total wealth has risen 1,300 percent this century to $51.9 trillion, more than double the rate of any other nation. The number of High Net Worth individuals in Asia-Pac recently surpassed that of North America, and at 6.2 million was the highest of any geographic region in the world.

Taking advantage of foreign interest in its capital, China has thrown open its financial markets to foreign firms, a move that has given global companies unprecedented access to the world’s second-biggest economy, even as crackdowns on foreign professionals have been on the rise.

As for UBS, the world’s largest wealth manager has a long history in China and, according to Bloomberg, claims to have been the first Swiss-based bank to establish a presence in the Asia Pacific region in 1964. The Swiss lender is in talks to acquire a majority stake in its Chinese securities joint venture. UBS is also the largest wealth manager in Asia, with total assets under management of $383 billion at the end of last year.

It now remains to be seen if the detained UBS banker was actually guilty of a crime, and if not, whether the Zurich-based bank will forget all about the incident in hopes of further profit upside, or if it will demand fair treatment for its employees at the risk of angering local authorities and having its charter removed for making a big fuss. Considering that UBS has yet to officially confirm this incident ever took place – a UBS spokesman declined to comment on the ban and detention – and Bloomberg had to report about it using “anonymous sources”, it is pretty clear which way the bank is leaning.

“Mohammad bin Salman Must Go,” But US-Saudi Ties Are Here To Stay

Authored by Federico Pieraccini via The Strategic Culture Foundation,

Mohammad bin Salman is fully aware of the Western elite’s understanding of its own values. While he may be given a pass to bomb Yemen and kill thousands of innocent civilians, he should know better than to dare touch a Washington Post columnist – “one of ours”, as one MSNBC host said. Did he not realize there would be consequences?

As more information came out, many analysts began to confront the most obvious question. Was it possible that Mohammed bin Salman (MBS) was so arrogant that he could not imagine the consequences of such a heinous crime? How could MBS betray Trump this way, not anticipating that the Democrats and the mainstream media would jump all over Trump’s friendship with him? Could he be so foolish as to place in jeopardy foreign investments planned at the Davos in the Desert conference on October 23? The answer to that question is apparently: yes, he could.

The only rational explanation for this behavior is that MBS thought he could get away with it. Remember that we are talking about someone who had Saad Hariri, the prime minister of Lebanon, kidnapped and carried off to the Kingdom, with his whereabouts unknown for days but with very little reaction from the mainstream media or Western politicians. It is possible that in this instance, MBS simply misjudged the level of Khashoggi’s popularity amongst neoliberals of the Washington establishment, provoking an unexpected response. Furthermore, the thesis that the Saudis understood that they had some kind of green light from Trump is not to be totally dismissed. Such a backlash is what you get from having a big mouthpraise your friends too much, and tweet all the time.

The rapidity with which the US media, and especially dozens of Republican and Democratic senators, attacked Saudi Arabia, blaming it for the atrocious crime, is rather unusual. After all, the Saudi elites have been inclined to behave in such a manner over the last 40 years. But it also highlights the ongoing inconsistency and double standards: nothing is said about Yemen, but the Kingdom is currently under the strongest censure for allegedly offing a journalist.

As I had already pointed out in my previous article, Khashoggi was clearly part of a faction opposed to the current ruling royal family in Saudi Arabia, headed by MBS. To understand this Saudi golden boy of the US mainstream media as well as military-industrial-spying complex, we have to go back to Mohammed bin Nayef. Bin Nayef has been under house arrest for almost two years, immediately purged by MBS as soon as he assumed power as crown prince. Bin Nayef has for decades been the CIA’s go-to man in Riyadh, helping the CIA & Co. pretend to “fight” al Qaeda in the Kingdom while using al Qaeda as a tool to inflict damage on US geopolitical adversaries.

The removal of bin Nayef by MBS was greeted with anger by a part of the US establishment close to Washington think tanks and the CIA and was never fully digested. MBS and his father, King Salman, needed to consolidate power around the throne at the time, and bin Nayef was certainly part of the faction opposing MBS, as was Khashoggi.

Naturally, these antipathies were set aside by the CIA, think tanks and neoliberals in the media due to to the importance of the relationship between Saudi Arabia and the US, especially vis-a-vis the US Petrodollar. MBS even undertook a tour in the US to help smooth the relationship with the West, being hailed as a new reformer, if you can believe that.

Nowadays,the relationship between Riyadh, Tel Aviv and Washington is based on the strong friendship between Trump and MBS and Trump and Netanyahu. Furthermore, the strengthened link between Trump and MBS, facilitated by son-in-law Jared Kushner, who is close to Israel, served to create a new alliance, perhaps even hinting at the possibility of an Arab NATO. Israel is eager to see more Saudi and US engagement against Iran in the region, and the Saudis similarly praise Israel and the US for being engaged in a fight against Iranian influence in the region. In this way, Trump can please his Israeli friends and see Saudi money pour in as investments.

These agreements have led to a series of disasters in the Middle East that go against the interests of Israel, Saudi Arabia and the US. Israel’s recklessness has led to the deployment of a wide range of Russian state-of-the-art weapons to Syria, preventing Israel and the US from acting as freely as before. The disastrous Saudi war in Yemen, the almost diplomatic break with Canada, the kidnapping of the prime minister of Lebanon, and now the Khashoggi affair, have further weakened and isolated Saudi Arabia, MBS, and therefore Trump. The US is no longer able to influence events on the ground in Syria, and so the initial plans of Israel and Saudi Arabia have foundered, after having devoted hundreds of millions of dollars to arm and train terrorists to overthrow Assad.

The Khashoggi affair plays into this situation, exacerbating the war between elites in the US as their strategies in the Middle East continue to fail. The neoliberal mainstream media immediately used the Khashoggi story to pressure Trump into taking a firm stance against one of his last friends and financiers, trying to further isolate him as the midterms approach. Many in the US deep state are convinced – as they were convinced that Clinton would win the presidency – that the House and Senate will end up in Democratic hands in the November elections, paving the way for Trump’s impeachment and for Mike Pence to become president. Pence, a prominent figure of the evangelical right, would be the perfect president for Israel, placing Tel Aviv in the driving seat of US foreign policy as never before. In this scenario, it would certainly be preferable for certain parts of the elite to have a different figure at the helm in Saudi Arabia, seeing as MBS appears to be an unstable leader. Possibly they would prefer someone tied to the US secret services – someone like Mohammed bin Nayef. For these reasons, Democrats, some Republicans and the mainstream media have gone all out against MBS and Trump.

Turkey seems to be using the situation to further widen the fracture between Saudi Arabia and the rest of the world. Since Doha is paying the bills for Erdogan these days, with the Turkish lira at a low, it is essentially the Al Thani family running the PR show in the Turkish media. It looks like the Qatari media are paying back with interests all the negative media they received from the Saudis over the past year. Despite this, neither Ankara nor Riyadh is intent on any kind escalation, both knowing that any suffering on their part is a boon for their enemies.

An interesting aspect related to the Khashoggi affair concerns the sources of the news about the investigation, all anonymous and coming from Turkish police or from people linked to the top echelons of the Turkish state. Knowing the odd state of relations between Ankara and Riyadh, and especially between Turkish ally Qatar and Saudi Arabia, all this news coming from one source should at least be taken with a grain of salt. What is certain is that the Turks had immediate knowledge of the matter regarding who, what, where, when and why. This means that they must have bugged the Saudi consulate in Istanbul, allowing the MIT, Turkey’s intelligence service, to know in real time what was happening to Khashoggi. The story concerning the Apple watch appears to be an attempt by the Turks to thrown off the scent Saudis who may be scratching their heads wondering how the Turks came to have such intimate knowledge of what transpired in their consulate.

For Turkey, the Khashoggi affair could be the occasion for a rapprochement with the US, following a deterioration in relations in the last two years. Turkey has few friends left, and after being cornered by Russia and Iran in Astana with regards to Syria,  it also has to deal with the tensions between Riyadh and Qatar as well as balance its relations with Iran and Israel. Erdogan would like to exploit this event as much as possible, and the release of Pastor Brunson seems to indicate Ankara’s willingness to extend an olive branch to Washington.

Russia, Syria and Iran have everything to benefit from this ongoing internal quarrel between elements within Saudi Arabia, Israel, Turkey, Qatar and the US. Whatever the outcome of the Khashoggi affair, Moscow, Tehran and Damascus can only benefit from any deterioration of relations between these countries.

Sotheby’s Burned For $5 Million In Art Auction Fraud

A fine art consultant in New York and and an interior designer in Florida stole an elderly woman’s identity and used it to bid millions of dollars on famous paintings and defraud the renowned Sotheby’s auction house, federal prosecutors in Florida alleged in court filings. Both men involved have been charged with wire fraud conspiracy and aggravated identity theft, according to the Associated Press.

Interior designer Antonio DiMarco from Hallandale, Florida, used the identity of a wealthy, 80-year-old retiree to bid at a Sotheby’s contemporary art auction in the fall of 2017. The woman was under the impression that the signature would only be used to allow him access to the auction, not to bid on items.

Antonio DiMarco/AP

After obtaining the woman’s signature, DiMarco and art advisor Joakim von Ditmar bought an untitled Mark Rothko painting dated 1968 for $6.4 million. In addition, they bought Ad Reinhardt’s “No. 12”, dated 1950, for $1.16 million. The fraud was foiled when the auction house phoned the woman in order to follow up on the purchases, and she denied any knowledge of bidding for them.

“No. 12″/Sotheby’s

Sotheby’s told AP that its discussions with the purchasers “raised significant suspicion and concern for the elderly client they purported to represent and we felt it was necessary to contact the FBI. We are pleased that the appropriate action has been taken and the victim has been protected.”

Discovery of the fraud didn’t stop Sotheby’s from being on the hook for $5 million, however, as it had committed to pay the works’ consignors regardless of what happened after the paintings were auctioned off. Sotheby’s then commented to the Associated Press that they had recovered much of the money they lost by reselling one painting and putting the other one back on the auction block.

The retiree also told the FBI that she had brought on DiMarco to decorate her home in 2014, but that instead he took more than $400,000 from her without doing much of the work.

Meanwhile, pointing out the obvious, a former FBI agent who founded the bureau’s Art Crime team, Robert Wittman, told AP that “this really was not a good fraud. They clearly did not think this all the way through.”