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For The Record  

FTR #919 The Trumpenkampfverbande, Part 2: German Ostpolitik, Part 2

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MeinKampf

Waffen SS-clad World War II reenactors, in original photo used by Trump

Waf­fen SS-clad World War II reen­ac­tors, in orig­i­nal pho­to used by Trump

Intro­duc­tion: This pro­gram con­tin­ues analy­sis from FTR #918.

Where­as GOP Pres­i­den­tial nom­i­nee Don­ald Trump’s pro­nounce­ments about Rus­sia and Ukraine, in com­bi­na­tion with his for­mer cam­paign man­ag­er Paul Man­afort’s work for the Russ­ian-allied Yanukovich gov­ern­ment, have fed talk of Trump as a “Russian/Kremlin/Putin” dupe/agent, avail­able evi­dence sug­gests that “The Don­ald” is a cat’s paw for pow­er­ful German/Underground Reich ele­ments, who are man­i­fest­ing tra­di­tion­al Ger­man Ost­poli­tik.

Begin­ning with dis­cus­sion of Man­afort, the evi­dence weighs over­whelm­ing­ly against the pre­vail­ing the­o­ry that Man­afort is a Russ­ian pup­pet, there­fore Trump is a Russ­ian pup­pet, etc.

Man­afort worked for Fer­di­nand Mar­cos when Mar­cos was help­ing him­self to a large amount of  Gold­en Lily loot in the Philip­pines. The U.S. want­ed to use more of the gold for their own pur­pos­es, and Mar­cos was ulti­mate­ly removed in the “peo­ple pow­er” coup/covert oper­a­tion. Ulti­mate­ly, Cora­zon Aquino, the wid­ow of Benig­no Aquino, a long-time CIA agent and pro­tege of Edward Lans­dale replaced him. (Lans­dale was one of the main U.S. agents involved with the Gold­en Lily recov­ery pro­gram.) Inter­est­ing­ly and sig­nif­i­cant­ly, Aquino’s vice-pres­i­den­tial can­di­date was Sal­vador Lau­rel, the son of Jose Lau­rel, the pup­pet ruler of the Philip­pines for the Japan­ese occu­pa­tion gov­ern­ment dur­ing World War II.

Man­afort appears to be some­thing of an advance agent/fixer. In all prob­a­bil­i­ty he was help­ing to pave the way for the Maid­an coup. Remem­ber: the car­di­nal rule for a good dou­ble agent–“make your­self indis­pens­able to the effort.”

IlDuceIlDoucheBy the twist­ed ratio­nale pre­sent­ed by our media estab­lish­ment, we could come up with this: Petro Poroshenko, the cur­rent head of state of Ukraine, was Yanukovich’s finance min­is­ter, pre­sid­ing over the for­mer’s inef­fec­tive and cor­rupt gov­ern­ment. The West, includ­ing the U.S., backs Poroshenko. There­fore, the West, includ­ing the U.S.

Martin Bormann (right) with Himmler

Mar­tin Bor­mann (right) with Himm­ler

Fun­da­men­tal to the analy­sis pre­sent­ed here is cor­po­rate Ger­many, its rela­tion­ship to the Bor­mann cap­i­tal net­work and, in turn, Don­ald Trump and peo­ple con­nect­ed with him. The Bor­mann net­work dom­i­nates cor­po­rate Ger­many: ” . . . Atop an orga­ni­za­tion­al pyra­mid that dom­i­nates the indus­try of West Ger­many through banks, vot­ing rights enjoyed by major­i­ty share­hold­ers in sig­nif­i­cant car­tels, and the pro­fes­sion­al input of a rel­a­tive­ly young lead­er­ship group of lawyers, invest­ment spe­cial­ists, bankers, and indus­tri­al­ists, he [Bor­mann] is sat­is­fied that he achieved his aim of help­ing the Father­land back on its feet. To ensure con­ti­nu­ity of pur­pose and direc­tion, a close watch is main­tained on the prof­it state­ments and man­age­ment reports of cor­po­ra­tions under its con­trol else­where. This lead­er­ship group of twen­ty, which is in fact a board of direc­tors, is chaired by Bor­mann, but pow­er has shift­ed to the younger men who will car­ry on the ini­tia­tive that grew from that his­toric meet­ing in Stras­bourg on August 10, 1944. Old Hein­rich Mueller, chief of secu­ri­ty for the NSDAP in South Amer­i­ca, is the most feared of all, hav­ing the pow­er of life and death over those deemed not to be act­ing in the best inter­ests of the orga­ni­za­tion. Some still envi­sion a Fourth Reich. . . What will not pass is the eco­nom­ic influ­ences of the Bor­mann orga­ni­za­tion, whose com­mer­cial direc­tives are obeyed almost with­out ques­tion by the high­est ech­e­lons of West Ger­man finance and indus­try. ‘All orders come from the share­hold­ers in South Amer­i­ca,’ I have been told by a spokesman for Mar­tin Bor­mann. . . .

Before return­ing to the sub­ject of Joseph E. Schmitz and high­light­ing the com­plex, opaque Trump real estate deal­ings with promi­nent Ger­mans and cor­po­rate inter­ests, the pro­gram reviews some of the essen­tial ele­ments of analy­sis from FTR #918.

In our pre­vi­ous pro­gram, we pre­sent­ed a 1949  “Open Let­ter to Stal­in” pub­lished in the Buerg­er Zeitung, a lead­ing Ger­man-lan­guage paper in the Unit­ed States. Note­wor­thy for our pur­pos­es here is the fact that the paper is the de-fac­to out­let for the Steuben Soci­ety, the top pan-Ger­man orga­ni­za­tion in the Unit­ed States. As will be seen below, the Steuben Soci­ety was part of the Nazi Fifth Col­umn in the U.S. before World War II and part of the Under­ground Reich infra­struc­ture in this coun­try after the war. In the lat­ter capac­i­ty, it advo­cat­ed for the release and reha­bil­i­ta­tion of Nazis, includ­ing war crim­i­nals.

Also of sig­nif­i­cance is the fact that the author, Bruno Fricke, was an asso­ciate of Otto Strass­er. Strass­er, along with his broth­er Gre­gor, was part of Ernst Rohm’s SA. Rohm was liq­ui­dat­ed in the Night of the Long Knives, along with Gre­gor Strass­er. Otto escaped to Czechoslavakia.

Tthe Buerg­er Zeitung was very anti-Com­mu­nist and strong­ly sup­port­ive of Joseph McCarthy’s witch hunts. Don­ald Trump’s lawyer for years was Roy Cohn, McCarthy’s top aide.

Waffen SS-clad World War II reenactors, in original photo used by Trump

Waf­fen SS-clad World War II reen­ac­tors, in orig­i­nal pho­to used by Trump

Three years after that let­ter was pub­lished in the Buerg­er Zeitung, the Sovi­et Union respond­ed with its Sovi­et Note of 3/10/1952. One of the most impor­tant aspect of the analy­sis of this event is the Ger­man plan to achieve a unit­ed Europe under Ger­man dom­i­na­tion, which has, of course, been achieved. ” . . . In the pro-Ade­nauer press, includ­ing the The Frank­furter All­ge­meine Zeitung, Christ und Welt, The Deutsche Zeitung of Stuttgart, edi­to­ri­als have been writ­ten assur­ing the Rus­sians that Dr. Adenauer’s pol­i­cy aims to cre­ate the secu­ri­ty nec­es­sary for both the Ger­mans and the Rus­sians, and that this can only be brought about after Ger­many had become a third pow­er fac­tor which could employ its influ­ence in such a way as to deter the Unit­ed States “from start­ing a pre­ven­tive war.” [The aggres­sive U.S./NATO stance toward Ukraine and Rus­sia are impress­ing many around the world in a fash­ion that would be famil­iar to those in the ear­ly 1950’s–D.E.] Thus, while, in the short run, the Bonn Gov­ern­ment aims to cre­ate a Unit­ed Europe, it hopes ulti­mate­ly to reach a sol­id under­stand­ing with the Sovi­ets at the expense of the Unit­ed States. . . .”

This “Europa Germanica”–the EU in the event–was, in turn, to become a Third Force. In exchange for mov­ing away from the push for a Third World War and pulling Europe out of NATO, this Third Force would gain con­ces­sions from the Sovi­ets. Also of note is the fact that a major fea­ture of this Unit­ed Europe would be an all-Euro­pean army, also under Ger­man dom­i­na­tion.

” . . . The Ger­man Chancellor’s plan is that the U.S.A. is now so deeply com­mit­ted to her Euro­pean defense pledge that she will read­i­ly sac­ri­fice dozens of bil­lions of dol­lars in the strength­en­ing and the rearm­ing of a Ger­man-dom­i­nat­ed Europe. After is this accom­plished, Dr. Adenauer’s grandiose con­cept envi­sions nego­ti­a­tions with Rus­sia with the prospect of get­ting sub­stan­tial ter­ri­to­r­i­al con­ces­sions from the Krem­lin in East­ern Europe for which Ger­many in return will break away, with the whole of West­ern Europe, from the North Atlantic Treaty Orga­ni­za­tion. . . .” Trump’s pro­nounce­ments about NATO are to be seen in this con­text.

As we shall see in this broad­cast, a major push is under­way to estab­lish a “Euro-corps”–precisely the sort of Ger­man-dom­i­nat­ed Euro­pean army that was envi­sioned in the ear­ly 1950s.

” . . . . The reac­tion of the Ger­man strate­gists to the Sovi­et Note of March 10, 1952, how­ev­er, expos­es their true designs. Ger­man geo-polit­i­cal jour­nals speak of it as “the high­est trump card in the hands of the Chan­cel­lor” which will enable him to mow down the resis­tance of France against Germany’s con­cept of a unit­ed Europe. The pro-Ade­nauer press inter­pret­ed the Russ­ian Note as a tremen­dous asset in speed­ing up the timetable for the cre­ation of a Euro­pean army under Ger­man dom­i­na­tion. . . .”

NOTE: It is our view that the Trump pro­nounce­ments serve a pur­pose sim­i­lar to the “Open Let­ter to Stal­in” pub­lished in the Buerg­er Zeitung–a com­mu­nique designed to pro­mote what the pro-Ade­nauer press char­ac­ter­ized as: ” . . . the heat­ed atmos­phere of an auc­tion room where two eager oppo­nents out­bid each oth­er. . . .”

We feel that a vehi­cle for the com­mu­ni­ca­tion of pol­i­cy vis a vis Rus­sia, Ukraine and NATO to Trump is Joseph E. Schmitz, an ultra-right wing Ger­manophile and Von Steuben-obsessed for­mer Depart­ment of Defense Inspec­tor Gen­er­al. In turn, we believe that Ger­man cor­po­rate and Under­ground Reich con­nec­tions to both Trump and the Schmitz fam­i­ly under­lie Trump’s pub­lic utter­ances.

The Trump pro­nounce­ments that have drawn so much media fire are, in our opin­ion, func­tion­ing in a man­ner anal­o­gous to the “Open Let­ter to Stal­in” pub­lished by Nazi vet­er­ans Fricke and Otto Strass­er in the Buerg­er Zeitungto sig­nal a bid­ding war between the U.S. and Rus­sia, to Ger­many’s ulti­mate ben­e­fit.

Joseph E. Schmitz’s broth­er John P. Schmitz rep­re­sents pow­er­ful Ger­man cor­po­ra­tions, help­ing them net­work with their Amer­i­can coun­ter­parts: ” . . . John’s clients have includ­ed the US Cham­ber of Com­merce, Gen­er­al Elec­tric, Bay­er AG, Ber­tels­mann, Bosch GmbH, Deutsche Welle, Gillette, Pfiz­er, Microsoft, Ver­i­zon, Eli Lil­ly Co., Ford Motor Co., and Arke­ma., among oth­ers. . . .”

Trump’s alto­geth­er opaque real estate projects have elud­ed even The New York Times’ inves­tiga­tive abil­i­ties. What the Times did man­age to uncov­er are pow­er­ful rela­tion­ships between the Byzan­tine Trump real estate empire and Ger­man inter­ests that are almost cer­tain­ly linked to the Bor­mann cap­i­tal net­work and the Under­ground Reich: ” . . . In a typ­i­cal­ly com­plex deal, loan doc­u­ments show that four lenders — Ger­man Amer­i­can Cap­i­tal, a sub­sidiary of Deutsche Bank; UBS Real Estate Secu­ri­ties; Gold­man Sachs Mort­gage Com­pa­ny; and Bank of Chi­na — agreed in Novem­ber 2012 to lend $950 mil­lion to the three com­pa­nies that own the build­ing. Those com­pa­nies, obscure­ly named HWA 1290 III LLC, HWA 1290 IV LLC and HWA 1290 V LLC, are owned by three oth­er com­pa­nies in which Mr. Trump has stakes. . . . .  At 40 Wall Street, Mr. Trump does not own even a sliv­er of the actu­al land; his long-term ground lease gives him the right to improve and man­age the build­ing. The land is owned by two lim­it­ed lia­bil­i­ty com­pa­nies; Mr. Trump pays the two enti­ties a total of $1.6 mil­lion a year for the ground lease, accord­ing to doc­u­ments filed with the S.E.C.

The major­i­ty own­er, 40 Wall Street Hold­ings Cor­po­ra­tion, owns 80 per­cent of the land; New Scan­dic Wall Lim­it­ed Part­ner­ship owns the rest, accord­ing to pub­lic doc­u­ments. New Scan­dic Wall Lim­it­ed Partnership’s chief exec­u­tive is Joachim Fer­di­nand von Grumme-Dou­glas, a busi­ness­man based in Europe, accord­ing to these doc­u­ments.

The peo­ple behind 40 Wall Street Hold­ings are hard­er to iden­ti­fy. For years, Germany’s Hin­neberg fam­i­ly, which made its for­tune in the ship­ping indus­try, con­trolled the prop­er­ty through a com­pa­ny called 40 Wall Lim­it­ed Part­ner­ship. In late 2014, their inter­est in the land was trans­ferred to a new com­pa­ny, 40 Wall Street Hold­ings. The Times was not able to iden­ti­fy the own­er or own­ers of this com­pa­ny, and the Trump Orga­ni­za­tion declined to com­ment. . . .”

The com­plex, opaque nature of the Trump real estate hold­ings is char­ac­ter­is­tic of the Bor­mann cap­i­tal net­work’s oper­at­ing struc­ture. Again, we are of the opin­ion that the pres­ence of Joseph E. Schmitz as a key Trump for­eign pol­i­cy advis­er, the Trump real estate oper­a­tions’ appar­ent rela­tion­ship with Ger­man cor­po­rate inter­ests and John P. Schmitz’s Ger­man cor­po­rate links are cen­tral to Trump’s pro­nounce­ments about Rus­sia, Ukraine and NATO.

At the same time as Trump is sig­nal­ing Ger­man Ost­poli­tik, many of the key fea­tures of what Ade­nauer artic­u­lat­ed in the ear­ly 1950s are being pro­posed and/or imple­ment­ed by Ger­many at this time:

  • Ger­many is solid­i­fy­ing an EU-wide, Ger­man-dom­i­nat­ed mil­i­tary union. ” . . . . Just a few days ago, For­eign Min­is­ter Stein­meier declared in the US jour­nal For­eign Affairs that Ger­many has become ‘a major pow­er’ and will ‘try its best’ on the world stage ‘to hold as much ground as possible.’[8] . . . Berlin sees an oppor­tu­ni­ty for reviv­ing its efforts at restruc­tur­ing the EU’s mil­i­tary and mobi­liz­ing as many mem­ber coun­tries as pos­si­ble for the EU’s future wars. . . .”
  • Cor­po­rate Ger­many is mov­ing in the direc­tion of lift­ing the sanc­tions on Rus­sia, boost­ing lucra­tive Ger­man eco­nom­ic rela­tion­ships with Russ­ian com­merce, inter­dict­ed to an an extent by the sanc­tions. ” . . . Sim­i­lar views were recent­ly expressed at the “East Forum Berlin,” con­vened by the Ger­man Com­mit­tee on East­ern Euro­pean Eco­nom­ic Rela­tions (OA) togeth­er with the Metro Group and Italy’s Uni­Cred­it, for the fourth time in the Ger­man cap­i­tal. More than 400 par­tic­i­pants — includ­ing the recent­ly fired Ukrain­ian Min­is­ter of Finances, Natal­ie Jaresko, and Rus­si­a’s First Deputy Min­is­ter of Eco­nom­ic Devel­op­ment, Alex­ey Likhachev — dis­cussed the devel­op­ment of an ‘eco­nom­ic space extend­ing from Lis­bon to Vladi­vos­tok.’ . . .”
  • Polls in Ger­many are show­ing strong sen­ti­ment for mov­ing clos­er to Rus­sia and away from the U.S.: ” . . . . when asked which coun­try Ger­many should work more close­ly with, 81% of those 1000 Ger­mans, par­tic­i­pat­ing in the sur­vey, opt­ed for Rus­sia — in sec­ond place behind France (89%) and far ahead of the USA (59%). In Rus­sia, 62% of the respon­dents chose Ger­many as their favorite coop­er­a­tion part­ner (ahead of Chi­na and France with 61% each). 69% of the Ger­mans favor lift­ing the sanc­tions on Rus­sia. And last­ly, 95% believe that it is “impor­tant” or “very impor­tant” that Ger­many and Rus­sia devel­op clos­er rela­tions over the next few years.[7] . . . ”
  • Ger­many is also imple­ment­ing oth­er nation­al secu­ri­ty struc­tures such as a Euro­pean-wide FBI and an EU equiv­a­lent of the NSA. This, again, as part of a Ger­man dri­ve to become a Third Force/military pow­er: ” . . . In Berlin, this is all being flanked by state­ments that can­not be oth­er­wise inter­pret­ed as oblique war threats. ‘Although it is dif­fi­cult for us to imag­ine,’ one should ‘nev­er for­get’ that ‘the idea of a unit­ed Europe, had been an idea of peace,’ claims the Ger­man Chancellor.[17] The alle­ga­tion cor­re­sponds less to his­tor­i­cal reality,[18] than to the EU’s self-pro­mo­tion. Yet, Merkel declares that in Europe, ‘rec­on­cil­i­a­tion and peace’ are both cur­rent­ly and in the future ‘any­thing oth­er than self-evi­dent.’ The chan­cel­lor has expressed this point of view in var­i­ous EU cri­sis sit­u­a­tions. (german-foreign-policy.com reported.[19]) Accord­ing to this view, the poten­tial of Euro­pean coun­tries set­tling their dis­putes mil­i­tar­i­ly remains essen­tial­ly unal­tered and can be unleashed, should they no longer choose inte­gra­tion in a Ger­man-dom­i­nat­ed EU. . . .”

The pro­gram con­cludes with a tran­si­tion­al ele­ment to our next pro­gram: Joseph E. Schmitz’s report­ed anti-Semi­tism and Holo­caust revi­sion­ism: ” . . . Daniel Mey­er, a senior offi­cial with­in the intel­li­gence com­mu­ni­ty, described Schmitz’s remarks in his com­plaint file. ‘His sum­ma­ry of his tenure’s achieve­ment report­ed as ‘…I fired the Jews,’ ’ wrote Mey­er, a for­mer offi­cial in the Pen­ta­gon inspec­tor general’s office whose griev­ance was obtained by McClatchy. Mey­er . . . cit­ed in his com­plaint anoth­er for­mer top Pen­ta­gon offi­cial, John Crane, as the source and wit­ness to the remarks. Crane worked with Schmitz, who served as inspec­tor gen­er­al between April 2002 and Sep­tem­ber 2005. In his com­plaint, Mey­er said Crane also said Schmitz played down the extent of the Holo­caust. ‘In his final days, he alleged­ly lec­tured Mr. Crane on the details of con­cen­tra­tion camps and how the ovens were too small to kill 6 mil­lion Jews,’ . . . ”

Pro­gram High­lights Include:

  • Review of John P. Schmitz’s links with Bun­destag mem­ber Matthias Wiss­man.
  • Review of the Bosch Foun­da­tion Fel­low­ship that con­nect­ed Schmitz with Wiss­man.
  • Review of the links between the Bosch Foun­da­tion Fel­low­ship and the Carl Duis­berg Soci­ety, through which Mohamed Atta infil­trat­ed the Unit­ed States.
  • Review of both Schmitz’s and Wiss­man­’s work for Wilmer, Cut­ler and Pick­er­ing, when that firm was work­ing on behalf of Ger­man and Swiss defen­dants in suits by Holo­caust sur­vivors.

1. Not­ing the back­ground of Paul Man­afort, the evi­dence weighs over­whelm­ing­ly against the pre­vail­ing the­o­ry that Man­afort is a Russ­ian pup­pet, there­fore Trump is a Russ­ian pup­pet, etc.

Man­afort worked for Fer­di­nand Mar­cos when Mar­cos was help­ing him­self to a large amount of  Gold­en Lily loot in the Philip­pines. The U.S. want­ed to use more of the gold for their own pur­pos­es, and Mar­cos was ulti­mate­ly removed in the “peo­ple pow­er” coup/covert oper­a­tion. Ulti­mate­ly, Cora­zon Aquino, the wid­ow of Benig­no Aquino, a long-time CIA agent and pro­tege of Edward Lans­dale replaced him. (Lans­dale was one of the main U.S. agents involved with the Gold­en Lily recov­ery pro­gram.) Inter­est­ing­ly and sig­nif­i­cant­ly, Aquino’s vice-pres­i­den­tial can­di­date was Sal­vador Lau­rel, the son of Jose Lau­rel, the pup­pet ruler of the Philip­pines for the Japan­ese occu­pa­tion gov­ern­ment dur­ing World War II.

Man­afort appears to be some­thing of an advance agent/fixer. In all prob­a­bil­i­ty he was help­ing to pave the way for the Maid­an coup. Remem­ber: the car­di­nal rule for a good dou­ble agent–“make your­self indis­pens­able to the effort.”

By the twist­ed ratio­nale pre­sent­ed by our media estab­lish­ment, we could come up with this: Petro Poroshenko, the cur­rent head of state of Ukraine, was Yanukovich’s finance min­is­ter, pre­sid­ing over the for­mer’s inef­fec­tive and cor­rupt gov­ern­ment. The West, includ­ing the U.S., backs Poroshenko. There­fore, the West, includ­ing the U.S.

“Secret Ledger in Ukraine Lists Cash for Don­ald Trump’s Cam­paign Chief” by Andrew E. Kramer, Mike McIn­tire and Bar­ry Meier; The New York Times; 8/14/2016.

. . . . The devel­op­ments in Ukraine under­score the risky nature of the inter­na­tion­al con­sult­ing that has been a sta­ple of Mr. Manafort’s busi­ness since the 1980s, when he went to work for the Philip­pine dic­ta­tor Fer­di­nand Mar­cos. Before join­ing Mr. Trump’s cam­paign this spring, Mr. Manafort’s most promi­nent recent client was Mr. Yanukovych, who — like Mr. Mar­cos — was deposed in a pop­u­lar upris­ing. . . .

2. In our pre­vi­ous pro­gram, we pre­sent­ed a 1949  “Open Let­ter to Stal­in” pub­lished in the Buerg­er Zeitung, a lead­ing Ger­man-lan­guage paper in the Unit­ed States. Note­wor­thy for our pur­pos­es here is the fact that the paper is the de-fac­to out­let for the Steuben Soci­ety, the top pan-Ger­man orga­ni­za­tion in the Unit­ed States. As will be seen below, the Steuben Soci­ety was part of the Nazi Fifth Col­umn in the U.S. before World War II and part of the Under­ground Reich infra­struc­ture in this coun­try after the war. In the lat­ter capac­i­ty, it advo­cat­ed for the release and reha­bil­i­ta­tion of Nazis, includ­ing war crim­i­nals.

Also of sig­nif­i­cance is the fact that the author, Bruno Fricke, was an asso­ciate of Otto Strass­er. Strass­er, along with his broth­er Gre­gor, was part of Ernst Rohm’s SA. Rohm was liq­ui­dat­ed in the Night of the Long Knives, along with Gre­gor Strass­er. Otto escaped to Czechoslavakia.

Tthe Buerg­er Zeitung was very anti-Com­mu­nist and strong­ly sup­port­ive of Joseph McCarthy’s witch hunts. Don­ald Trump’s lawyer for years was Roy Cohn, McCarthy’s top aide.

Waffen SS-clad World War II reenactors, in original photo used by Trump

Waf­fen SS-clad World War II reen­ac­tors, in orig­i­nal pho­to used by Trump

Three years after that let­ter was pub­lished in the Buerg­er Zeitung, the Sovi­et Union respond­ed with its Sovi­et Note of 3/10/1952. One of the most impor­tant aspect of the analy­sis of this event is the Ger­man plan to achieve a unit­ed Europe under Ger­man dom­i­na­tion, which has, of course, been achieved. ” . . . In the pro-Ade­nauer press, includ­ing the The Frank­furter All­ge­meine Zeitung, Christ und Welt, The Deutsche Zeitung of Stuttgart, edi­to­ri­als have been writ­ten assur­ing the Rus­sians that Dr. Adenauer’s pol­i­cy aims to cre­ate the secu­ri­ty nec­es­sary for both the Ger­mans and the Rus­sians, and that this can only be brought about after Ger­many had become a third pow­er fac­tor which could employ its influ­ence in such a way as to deter the Unit­ed States “from start­ing a pre­ven­tive war.” [The aggres­sive U.S./NATO stance toward Ukraine and Rus­sia are impress­ing many around the world in a fash­ion that would be famil­iar to those in the ear­ly 1950’s–D.E.] Thus, while, in the short run, the Bonn Gov­ern­ment aims to cre­ate a Unit­ed Europe, it hopes ulti­mate­ly to reach a sol­id under­stand­ing with the Sovi­ets at the expense of the Unit­ed States. . . .”

This “Europa Germanica”–the EU in the event–was, in turn, to become a Third Force. In exchange for mov­ing away from the push for a Third World War and pulling Europe out of NATO, this Third Force would gain con­ces­sions from the Sovi­ets. Also of note is the fact that a major fea­ture of this Unit­ed Europe would be an all-Euro­pean army, also under Ger­man dom­i­na­tion.

” . . . The Ger­man Chancellor’s plan is that the U.S.A. is now so deeply com­mit­ted to her Euro­pean defense pledge that she will read­i­ly sac­ri­fice dozens of bil­lions of dol­lars in the strength­en­ing and the rearm­ing of a Ger­man-dom­i­nat­ed Europe. After is this accom­plished, Dr. Adenauer’s grandiose con­cept envi­sions nego­ti­a­tions with Rus­sia with the prospect of get­ting sub­stan­tial ter­ri­to­r­i­al con­ces­sions from the Krem­lin in East­ern Europe for which Ger­many in return will break away, with the whole of West­ern Europe, from the North Atlantic Treaty Orga­ni­za­tion. . . .” Trump’s pro­nounce­ments about NATO are to be seen in this con­text.

As we shall see in this broad­cast, a major push is under­way to estab­lish a “Euro-corps”–precisely the sort of Ger­man-dom­i­nat­ed Euro­pean army that was envi­sioned in the ear­ly 1950s.

” . . . . The reac­tion of the Ger­man strate­gists to the Sovi­et Note of March 10, 1952, how­ev­er, expos­es their true designs. Ger­man geo-polit­i­cal jour­nals speak of it as “the high­est trump card in the hands of the Chan­cel­lor” which will enable him to mow down the resis­tance of France against Germany’s con­cept of a unit­ed Europe. The pro-Ade­nauer press inter­pret­ed the Russ­ian Note as a tremen­dous asset in speed­ing up the timetable for the cre­ation of a Euro­pean army under Ger­man dom­i­na­tion. . . .”

3a. We learned some­thing more about Don­ald Trump’s intend­ed for­eign pol­i­cy goals: he appears to be con­sid­er­ing a US pull out of NATO. We rumi­nate about one of his for­eign pol­i­cy advi­sors, Joseph E. Schmitz, for­mer inspec­tor gen­er­al of the Depart­ment of Defense.

“Don­ald Trump’s New For­eign Pol­i­cy Advis­ers Are as Rot­ten as His Steaks” by Shane Har­ris; The Dai­ly Beast; 3/21/2016.

. . . . These are the minds advis­ing Repub­li­can pres­i­den­tial can­di­date Don­ald Trump on for­eign pol­i­cy and nation­al security.Trump, who has been pressed for months to name his coun­cil of advis­ers, revealed five in a meet­ing with the Wash­ing­ton Post edi­to­r­i­al board on Tues­day: Kei­th Kel­logg, Carter Page, George Papadopou­los, Walid Phares, and Joseph E. Schmitz. . . .

. . . . Trump revealed lit­tle about what spe­cif­ic advice they’d giv­en so far, or how any of them may have shaped Trump’s sur­pris­ing new posi­tion that the U.S. should rethink whether it needs to remain in the sev­en-decades-old NATO alliance with Europe.

Sound­ing more like a CFO than a com­man­der-in-chief, Trump said of the alliance, “We cer­tain­ly can’t afford to do this any­more,” adding, “NATO is cost­ing us a for­tune and yes, we’re pro­tect­ing Europe with NATO, but we’re spend­ing a lot of mon­ey.”

U.S. offi­cials, includ­ing for­mer Defense Sec­re­tary Robert Gates, have said that Euro­pean allies have to shoul­der a big­ger bur­den of NATO’s cost. But call­ing for the pos­si­ble U.S. with­draw­al from the treaty is a rad­i­cal depar­ture for a pres­i­den­tial candidate—even a can­di­date who has been endorsed by Russ­ian Pres­i­dent Vladimir Putin.

It also wasn’t clear how Trump’s arguably anti-inter­ven­tion­ist posi­tion on the alliance squared with his choice of advis­ers.

Anoth­er Trump advis­er, Schmitz, has served in gov­ern­ment, as the Defense Depart­ment inspec­tor gen­er­al. Schmitz was brought in dur­ing the first term of Pres­i­dent George W. Bush with a man­date to reform the watch­dog office, but he even­tu­al­ly found him­self the sub­ject of scruti­ny.

“Schmitz slowed or blocked inves­ti­ga­tions of senior Bush admin­is­tra­tion offi­cials, spent tax­pay­er mon­ey on pet projects and accept­ed gifts that may have vio­lat­ed ethics guide­lines,” accord­ing to an inves­ti­ga­tion by the Los Ange­les Times in 2005. Cur­rent and for­mer col­leagues described him as “an intel­li­gent but eas­i­ly dis­tract­ed leader who seemed to obsess over details,” includ­ing the hir­ing of a speech­writer and designs for a bath­room.

Schmitz also raised eye­brows for what the paper’s sources described as his “unusu­al” fas­ci­na­tion with Baron Friedrich Von Steuben, a Rev­o­lu­tion­ary War hero who’s regard­ed as the military’s first inspec­tor gen­er­al. Schmitz report­ed­ly replaced the Defense Depart­ment IG’s seal in its office across the coun­try with a new one bear­ing the Von Steuben fam­i­ly mot­to, Sub Tutela Altissi­mi Sem­per, “under the pro­tec­tion of the Almighty always.”. . . .

3b. It’s also worth not­ing that Joseph’s broth­er, John P. Schmitz, is a lawyer who spe­cial­izes in US/German reg­u­la­to­ry issues who’s clients include Bay­er AG, Ber­tels­mann, Bosch GmbH, Deutsche Welle.

Major Ger­man cor­po­ra­tions might well ben­e­fit if the Schmitz’s once again return to influ­en­tial posi­tions in a US admin­is­tra­tion. Espe­cial­ly of Joseph ends up over­see­ing more inves­ti­ga­tions, since, as this 2005 LA Times arti­cle notes, Joseph didn’t just exhib­it an obses­sion Baron Von Steuben while serv­ing as the Defense Department’s Inspec­tor Gen­er­al. He also had an obses­sion with pre­vent­ing polit­i­cal­ly sen­si­tive inves­ti­ga­tions:

“The Scru­ti­niz­er Finds Him­self Under Scruti­ny” by T. Chris­t­ian Miller; The Los Ange­les Times; 9/25/2005.

. . . . Schmitz slowed or blocked inves­ti­ga­tions of senior Bush admin­is­tra­tion offi­cials, spent tax­pay­er mon­ey on pet projects and accept­ed gifts that may have vio­lat­ed ethics guide­lines, accord­ing to inter­views with cur­rent and for­mer senior offi­cials in the inspec­tor general’s office, con­gres­sion­al inves­ti­ga­tors and a review of inter­nal e‑mail and oth­er documents.Schmitz also drew scruti­ny for his unusu­al fas­ci­na­tion with Baron Friedrich Von Steuben, a Rev­o­lu­tion­ary War hero who is con­sid­ered the military’s first true inspec­tor gen­er­al. Schmitz even replaced the offi­cial inspec­tor general’s seal in offices nation­wide with a new one bear­ing the Von Steuben fam­i­ly mot­to, accord­ing to the doc­u­ments and inter­views. . . .

. . . . His father was the ultra­con­ser­v­a­tive Orange Coun­ty con­gress­man John G. Schmitz, who once ran for pres­i­dent but whose polit­i­cal career end­ed after he admit­ted hav­ing an affair with a Ger­man immi­grant sus­pect­ed of child abuse. Schmitz’s sis­ter is Mary Kay Letourneau, the Wash­ing­ton state teacher who served more than sev­en years in prison after a 1997 con­vic­tion for rape after hav­ing sex with a sixth-grade pupil with whom she had two chil­dren. After Letourneau’s release from prison, she and the for­mer pupil, now an adult, mar­ried each oth­er.

Schmitz, who resigned on Sept. 10 to take a job with the par­ent com­pa­ny of defense con­trac­tor Black­wa­ter USA, is now the tar­get of a con­gres­sion­al inquiry and a review by the President’s Coun­cil on Integri­ty and Effi­cien­cy, the over­sight body respon­si­ble for inves­ti­gat­ing inspec­tors gen­er­al, accord­ing to the doc­u­ments and inter­views. . . .

. . . . Schmitz’s allies said he was being per­se­cut­ed. One senior Pen­ta­gon offi­cial defend­ed Schmitz by say­ing that he was con­cerned about pro­tect­ing the rep­u­ta­tion of senior offi­cials in Wash­ing­ton, where polit­i­cal ene­mies can cause trou­ble with an anony­mous hot­line tip. . . .

. . . . He paid close atten­tion, how­ev­er, to the inves­ti­ga­tions of senior Bush admin­is­tra­tion appointees. At one point, inves­ti­ga­tors even stopped telling Schmitz who was under inves­ti­ga­tion, sub­sti­tut­ing let­ter codes for the names of indi­vid­u­als dur­ing week­ly brief­in­gs for fear that Schmitz would leak the infor­ma­tion to Pen­ta­gon supe­ri­ors, accord­ing to a senior Pen­ta­gon offi­cial. “He became very involved in polit­i­cal inves­ti­ga­tions that he had no busi­ness get­ting involved in,” said anoth­er senior offi­cial in the inspec­tor general’s office. . . .

. . . . Instead, the offi­cial said that Schmitz cre­at­ed a new pol­i­cy that made it more dif­fi­cult to get infor­ma­tion by sub­poe­na by requir­ing addi­tion­al bureau­crat­ic steps. Dur­ing his tenure, Schmitz also made it hard­er to ini­ti­ate an inves­ti­ga­tion of a polit­i­cal appointee, requir­ing high-rank­ing approval before inves­ti­ga­tors could pro­ceed. . . .

. . . . Some of the more unusu­al com­plaints regard­ing Schmitz deal with what senior offi­cials called an “obses­sion” with Von Steuben, the Rev­o­lu­tion­ary War hero who worked with George Wash­ing­ton to instill dis­ci­pline in the mil­i­tary. Von Steuben report­ed­ly fled Ger­many after learn­ing that he was going to be tried for homo­sex­u­al activ­i­ties. Short­ly after tak­ing office, Schmitz made Von Steuben’s lega­cy a focus. He spent three months per­son­al­ly redesign­ing the inspec­tor general’s seal to include the Von Steuben fam­i­ly mot­to, “Always under the pro­tec­tion of the Almighty.”

He dic­tat­ed the num­ber of stars, lau­rel leaves and col­ors of the seal. He also asked for a new eagle, say­ing that the one fea­tured on the old seal “looked like a chick­en,” cur­rent and for­mer offi­cials said.

In July 2004, he escort­ed Hen­ning Von Steuben, a Ger­man jour­nal­ist and head of the Von Steuben Fam­i­ly Assn., to a U.S. Marine Corps event. He also fet­ed Von Steuben at an $800 meal alleged­ly paid for by pub­lic funds, accord­ing to Grass­ley, and hired Von Steuben’s son to work as an unpaid intern in the inspec­tor general’s office, a for­mer Defense offi­cial said.

He also called off a $200,000 trip to attend a cer­e­mo­ny at a Von Steuben stat­ue ear­li­er this year in Ger­many after Grass­ley ques­tioned it.

Final­ly, Schmitz’s son, Phillip J. Schmitz, has a busi­ness rela­tion­ship with a group tied to Von Steuben. Schmitz, who runs a tech­nol­o­gy firm, pro­vides web-host­ing ser­vices for the World Secu­ri­ty Net­work, a non­prof­it news ser­vice focused on peace and con­flict issues. Von Steuben serves on the network’s advi­so­ry board.

Huber­tus Hoff­mann, a Ger­man busi­ness­man who found­ed the net­work, said Von Steuben played no role in assign­ing the con­tract to Phillip Schmitz, who is paid a “mod­est sum” for his work. Schmitz said he first made con­tact with Hoff­mann through his father but that he had nev­er met Von Steuben.

The rela­tion­ships trou­bled many at the Pen­ta­gon.

“He was con­sumed with all things Ger­man and all things Von Steuben,” said the for­mer Defense offi­cial, who did not want to be iden­ti­fied because of the ongo­ing inquiries. “He was obsessed.” . . . .

3c. Don­ald Trump, him­self, is not stranger to the milieu of the Steuben Soci­ety:

“Don­ald Trump;”  wikipedia.

. . . . Trump has said that he is proud of his Ger­man her­itage; he served as grand mar­shal of the 1999 Ger­man-Amer­i­can Steuben Parade in New York City.[12][nb 1]. . . . .

4. It’s also worth not­ing that Joseph’s broth­er, John P. Schmitz, is a lawyer who spe­cial­izes in US/German reg­u­la­to­ry issues who’s clients include Bay­er AG, Ber­tels­mann, Bosch GmbH, Deutsche Welle.

Note that, as we spoke of in FTR #476,  Schmitz has a strong link with Bun­destag mem­ber Matthias Wiss­man, with whom he worked as a Bosch Foun­da­tion schol­ar. Wiss­man and Schmitz worked for Wilmer, Cut­ler and Pick­er­ing, a firm that defend­ed Ger­man and Swiss inter­ests in suits by Holo­caust sur­vivors.

“John P. Schmitz”; Schmitz Glob­al Part­ners LLP.

John Schmitz rep­re­sents US and Euro­pean com­pa­nies in com­plex inter­na­tion­al trans­ac­tions and reg­u­la­to­ry mat­ters, with a focus on antitrust, media and telecom­mu­ni­ca­tions, ener­gy and envi­ron­men­tal issues. He has spe­cial empha­sis on US and Ger­man polit­i­cal reg­u­la­to­ry con­cerns, and has expe­ri­ence with numer­ous high-pro­file busi­ness and reg­u­la­to­ry mat­ters involv­ing both Amer­i­can and Ger­man pub­lic pol­i­cy and legal activ­i­ties. John’s clients have includ­ed the US Cham­ber of Com­merce, Gen­er­al Elec­tric, Bay­er AG, Ber­tels­mann, Bosch GmbH, Deutsche Welle, Gillette, Pfiz­er, Microsoft, Ver­i­zon, Eli Lil­ly Co., Ford Motor Co., and Arke­ma., among oth­ers.

In Sep­tem­ber 2009, togeth­er with for­mer Ambas­sador C. Boy­den Gray, John estab­lished Gray & Schmitz LLP in Sep­tem­ber 2009 (renamed Schmitz Glob­al Part­ners LLP in 2011). In 1993, John joined May­er Brown as a part­ner to open its first Ger­man office in Berlin. From 1993 to 2009, John helped lead and devel­op a promi­nent and thriv­ing Ger­man prac­tice at May­er Brown. Before join­ing May­er Brown in 1993, John held a wide range of sig­nif­i­cant pub­lic pol­i­cy posi­tions. Between 1985 and 1993, he served as Deputy Coun­sel to George H. W. Bush in both the White House and the Office of the Vice Pres­i­dent. . . .

. . . . John has also held a num­ber of high-pro­file fel­low­ships. In Ger­many, under a Robert Bosch Foun­da­tion Fel­low­ship, he served at the Office of Bun­destag Mem­ber Matthias Wiss­mann (Bonn), and the Office of Gen­er­al Coun­sel, Robert Bosch, GmbH (Stuttgart). . . .

5. Not­ing the “bid­ding war” allud­ed to in Ger­many Plots with the Krem­lin: ” . . . He [Ade­nauer] assured his lis­ten­ers that Russia’s con­cil­ia­to­ry atti­tude was most help­ful to Germany’s aspi­ra­tions and that oth­er Russ­ian offers were to be expect­ed in which even greater con­ces­sions would be made to Ger­many, espe­cial­ly on the ter­ri­to­r­i­al ques­tion of the Oder-Neisse Line. The Chan­cel­lor hint­ed in his talks that the Sovi­et Note had cre­at­ed the heat­ed atmos­phere of an auc­tion room where two eager oppo­nents out­bid each oth­er. . . .”

We note in that regard, that Trump’s oblique­ly con­cil­ia­to­ry remarks about Putin and Ukraine are con­sis­tent with the atti­tudes of Ger­man cor­po­ra­tions, many of which would like to see the sanc­tions lift­ed, so that they may regain lost eco­nom­ic lever­age.

Ger­man cor­po­rate ele­ments, in con­cert with oth­er Euro­pean com­pa­nies, also envis­age pos­si­ble coop­er­a­tion with Rus­si­a’s Eurasian Eco­nom­ic Union. With anoth­er trans-Atlantic trade agree­ment pend­ing between the U.S. and EU/Germany, we may well be see­ing anoth­er bid­ding war between Rus­sia and the West.

Ger­man polit­i­cal and nation­al secu­ri­ty ele­ments have been pur­su­ing a hard line against Rus­sia over Ukraine, at the same time that oth­er polit­i­cal and eco­nom­ic ele­ments have pur­sued a pol­i­cy of detente.

The U.S., of course, is play­ing “bad cop” to Ger­many’s corporate/political “good cop.”

“Dis­pute over Sanc­tions on Rus­sia (II);” german-foreign-policy.com; 5/03/2016.http://www.german-foreign-policy.com/en/fulltext/58936

Ger­man busi­ness cir­cles and proxy for­eign pol­i­cy orga­ni­za­tions are cam­paign­ing to have the sanc­tions against Rus­sia lift­ed. More than two-thirds of the peo­ple in Ger­many are in favor of lift­ing sanc­tions, reports Koer­ber Foun­da­tion (Ham­burg) based on a cur­rent opin­ion poll. More than four-fifths want close coop­er­a­tion with Rus­sia, and 95 per­cent con­sid­er a rap­proche­ment in the next few years to either be “impor­tant” or “very impor­tant.” The Koer­ber Foun­da­tion, an influ­en­tial orga­ni­za­tion in the field of for­eign pol­i­cy, has, for years, been engaged in devel­op­ing coop­er­a­tion between Ger­many and Rus­sia. The hope of an ear­ly lift­ing of sanc­tions was also the sub­ject of the 4th East Forum Berlin, an eco­nom­ic forum with top-rank par­tic­i­pants, held in mid-April, at which a state sec­re­tary of the Min­istry of For­eign Affairs spoke in favor of new con­tacts between the EU and the Moscow-ini­ti­at­ed Eurasian Eco­nom­ic Union (EAEU). The objec­tive is the cre­ation of a com­mon “eco­nom­ic space from Lis­bon to Vladi­vos­tok.” The ini­tia­tives tak­en in Ger­many are being met with approval in sev­er­al EU coun­tries, includ­ing Italy and Aus­tria.

Grow­ing Dis­con­tent

Demands to aban­don the sanc­tions pol­i­cy against Moscow have been grow­ing loud­er in var­i­ous EU mem­ber coun­tries, such as Italy, for which Rus­sia is one of its most impor­tant busi­ness part­ners. Already in mid-March, the for­eign min­is­ters of Italy and Hun­gary had opposed an auto­mat­ic pro­lon­ga­tion of the sanc­tions with­out a debate. Fol­low­ing talks in Moscow in ear­ly April, the Pres­i­dent of Aus­tria, Heinz Fis­ch­er, announced he was also work­ing toward halt­ing the puni­tive measures.[1] Last week, France’s Nation­al Assem­bly passed a plea to end the sanctions.[2] Anger is also appar­ent in Greece. More­over, resis­tance is grow­ing with­in Ger­man busi­ness cir­cles, who, if the sanc­tions are soon lift­ed, hope for a new start of their busi­ness with East­ern Europe. Exports to Rus­sia have plum­met­ed from an annu­al vol­ume of 39 bil­lion Euros to less that 22 bil­lion, since 2012 alone. If sanc­tions are lift­ed, Ger­man com­pa­nies are count­ing on being able to redeem at least part of these loss­es.

From Lis­bon to Vladi­vos­tok

Sim­i­lar views were recent­ly expressed at the “East Forum Berlin,” con­vened by the Ger­man Com­mit­tee on East­ern Euro­pean Eco­nom­ic Rela­tions (OA) togeth­er with the Metro Group and Italy’s Uni­Cred­it, for the fourth time in the Ger­man cap­i­tal. More than 400 par­tic­i­pants — includ­ing the recent­ly fired Ukrain­ian Min­is­ter of Finances, Natal­ie Jaresko, and Rus­si­a’s First Deputy Min­is­ter of Eco­nom­ic Devel­op­ment, Alex­ey Likhachev — dis­cussed the devel­op­ment of an “eco­nom­ic space extend­ing from Lis­bon to Vladi­vos­tok.” In a sur­vey of 180 par­tic­i­pants of this top-rank forum, more than 80 per­cent clear­ly favored nego­ti­a­tions between the EU and the Moscow-led Eurasian Eco­nom­ic Union (EAEU) on the estab­lish­ment of a com­mon “eco­nom­ic space.”[3] They found sym­pa­thet­ic lis­ten­ers. In his “East Forum,” open­ing speech, State Sec­re­tary in Ger­many’s Min­istry of For­eign Affairs, Stephan Stein­lein, con­firmed that the Ger­man gov­ern­ment sup­ports “con­tacts between the EU and the Eurasian Eco­nom­ic Union.” “Tech­ni­cal stan­dards, trade rules, cross-bor­der infra­struc­ture and sim­pli­fied exchange pro­ce­dures” should be discussed.[4] Sanc­tions against Rus­sia was anoth­er impor­tant issue dis­cussed at the East Forum. Thir­ty five per­cent of those sur­veyed pre­dict­ed an end to the sanc­tions in the course of this year, while 27 per­cent pre­dict­ed 2017. Only slight­ly more than a third thought the sanc­tions would last longer than 2017.

A New Start Required

Last week, Ham­burg’s Koer­ber Foun­da­tion, one of Ger­many’s for­eign pol­i­cy orga­ni­za­tions, which has pro­mot­ed clos­er coop­er­a­tion between Ger­many and Rus­sia for years, took a stand. “Dia­logue and under­stand­ing” between the two coun­tries have, “for decades, been an impor­tant ele­ment of our work,” declared the foun­da­tion. Cur­rent­ly, “with its focus on ‘Rus­sia in Europe,’ the Koer­ber Foun­da­tion devotes itself to the reju­ve­na­tion of an open, crit­i­cal, and con­struc­tive dia­logue between Rus­sia and its Euro­pean neighbors.”[5] With­in this frame­work, the orga­ni­za­tion con­vokes a “Ger­man-Russ­ian Inter­na­tion­al Dia­logue” twice annu­al­ly, in which experts and politi­cians of the two coun­tries can dis­cuss “ques­tions of Euro­pean secu­ri­ty and EU-Rus­sia rela­tions in a con­fi­den­tial atmos­phere” in Moscow or Berlin.”[6] The Koer­ber Foun­da­tion reached the con­clu­sion after its most recent meet­ing, which took place Decem­ber 5, 2015 in Moscow, that “the EU-Russ­ian rela­tions require a new start.” In this sense, “future dia­logue should focus on inter­ests and explore against this back­drop the pos­si­bil­i­ties for coop­er­a­tion.” “Eco­nom­ic issues” are “an area of com­mon inter­ests that pro­vide spe­cif­ic oppor­tu­ni­ties for coop­er­a­tion.”

Desired Rap­proche­ment

To under­line its quest, the Koer­ber Foun­da­tion has just recent­ly pub­lished the results of a rep­re­sen­ta­tive sur­vey con­duct­ed on its behalf in both Ger­many and Rus­sia by TNS Infrat­est in late Feb­ru­ary and ear­ly March. The sur­vey shows that two years after esca­la­tion of the Ukrain­ian con­flict, a sig­nif­i­cant estrange­ment between the pop­u­la­tions of the two coun­tries can be noticed. 48% of the Ger­mans per­ceive Rus­sia as a “threat,” only 50% believe — emphat­i­cal­ly — that Rus­sia belongs to “Europe.” More than half of the Ger­man pop­u­la­tion con­sid­ers the EU’s pol­i­cy toward Rus­sia as “appro­pri­ate.” How­ev­er, when asked which coun­try Ger­many should work more close­ly with, 81% of those 1000 Ger­mans, par­tic­i­pat­ing in the sur­vey, opt­ed for Rus­sia — in sec­ond place behind France (89%) and far ahead of the USA (59%). In Rus­sia, 62% of the respon­dents chose Ger­many as their favorite coop­er­a­tion part­ner (ahead of Chi­na and France with 61% each). 69% of the Ger­mans favor lift­ing the sanc­tions on Rus­sia. And last­ly, 95% believe that it is “impor­tant” or “very impor­tant” that Ger­many and Rus­sia devel­op clos­er rela­tions over the next few years.[7]

The Ben­e­fit of Coop­er­a­tion

A first step toward rap­proche­ment was actu­al­ly accom­plished on April 20, with the NATO-Rus­sia Coun­cil’s first meet­ing in two years — pro­mot­ed par­tic­u­lar­ly by the Ger­man gov­ern­ment. After the meet­ing, NATO Sec­re­tary Gen­er­al Jens Stoltenberg spoke of “pro­found and per­sis­tent dis­agree­ments.” But he also con­firmed that the dia­log would be continued.[8] Berlin there­fore suc­ceed­ed in reviv­ing the dia­log between Moscow and the west­ern war alliance. At the same time, the Ger­man chan­cel­lor has announced a de fac­to per­ma­nent deploy­ment of Ger­man sol­diers — as part of a NATO bat­tal­ion — in Lithua­nia. This would be a breach of the NATO-Rus­sia Found­ing Act and would fur­ther esca­late the con­flict between the West and Russia.[9] Russ­ian protests against this deploy­ment would, more than like­ly, be eas­i­er to pla­cate with­in a NATO-Rus­sia Coun­cil than in the absence of an estab­lished frame­work for dia­log — a tac­ti­cal advan­tage for a high­ly prof­itable eco­nom­ic coop­er­a­tion.

For more infor­ma­tion on the sub­ject of sanc­tions against Russ­ian see: Dis­pute over Sanc­tions on Rus­sia (I).

[1] Rus­s­land-Sank­tio­nen: Fis­ch­er “loy­al” zu EU-Lin­ie. diepresse.com 06.04.2016.
[2] L’Assem­blée nationale demande la lev­ée des sanc­tions con­tre la Russie. www.latribune.fr 28.04.2016.
[3] 4. east forum Berlin mit Reko­rd­beteili­gung. www.ost-ausschuss.de 19.04.2016.
[4] Keynote von Staatssekretär Stephan Stein­lein bei der Eröff­nung des 4. east forum Berlin am 18.04.2016.
[5] Annäherung oder Abschot­tung? Ergeb­nisse ein­er repräsen­ta­tiv­en Umfrage von TNS Infrat­est. Ham­burg 2016.
[6] Rus­s­land und die EU: Zusam­me­nar­beit in Zeit­en der Krise. Kör­ber-Stiftung Inter­na­tionale Poli­tik, März 2016.
[7] Annäherung oder Abschot­tung? Ergeb­nisse ein­er repräsen­ta­tiv­en Umfrage von TNS Infrat­est. Ham­burg 2016.
[8] “Tief­greifende und andauernde Dif­feren­zen”. Frank­furter All­ge­meine Zeitung 21.04.2016.
[9] See Dis­pute over Sanc­tions on Rus­sia (I).

6. At the same time that Trump is cast­ing a jaun­diced rhetor­i­cal on NATO, Ger­many and the EU are look­ing to ful­fill the devel­op­ment of a “Euro-Corps”

“The Euro­pean War Union”; german-foreign-policy.com; 6/28/2016.

Togeth­er with his French coun­ter­part, the Ger­man for­eign min­is­ter has announced the EU’s trans­for­ma­tion to become a “polit­i­cal union” and its res­olute mil­i­ta­riza­tion for glob­al mil­i­tary oper­a­tions. In a joint posi­tion paper, Frank-Wal­ter Stein­meier (SPD) and Jean-Marc Ayrault (PS) are call­ing for the EU’s com­pre­hen­sive mil­i­tary buildup, based on a divi­sion of labor, to enable future glob­al mil­i­tary oper­a­tions. Fol­low­ing the Brex­it, the EU should, step-by-step, become an “inde­pen­dent” and “glob­al” actor. All forces must be mobi­lized and all “of the EU’s polit­i­cal instru­ments” must be con­sol­i­dat­ed into an “inte­grat­ed” EU for­eign and mil­i­tary pol­i­cy. Stein­meier and Ayrault are there­fore push­ing for a “Euro­pean Secu­ri­ty Com­pact,” which calls for main­tain­ing “employ­able high-readi­ness forces” and estab­lish­ing “stand­ing mar­itime forces.” The Euro­pean Coun­cil should meet once a year as “Euro­pean Secu­ri­ty Coun­cil.” Before this paper was made pub­lic, Ger­many’s for­eign min­is­ter and chan­cel­lor had made com­ments also pro­mot­ing a Ger­man glob­al pol­i­cy and mas­sive rear­ma­ment, pos­si­bly also with EU-sup­port.

The EU’s Glob­al Mis­sion

In a joint posi­tion paper prop­a­gat­ed by the Ger­man for­eign min­istry yes­ter­day, Ger­man For­eign Min­is­ter Frank-Wal­ter Stein­meier (SPD) along with his French coun­ter­part, Jean-Marc Ayrault (PS) announced steps toward a polit­i­cal union. They not­ed that Britain’s with­draw­al from the EU has cre­at­ed “a new sit­u­a­tion” with con­se­quences “for the entire EU.”[1] Berlin and Paris “firm­ly believe” that the EU pro­vides “a his­tor­i­cal­ly unique and indis­pens­able frame­work” not only for “the pur­suit of free­dom, pros­per­i­ty, and secu­ri­ty in Europe,” but also “for con­tribut­ing to peace and sta­bil­i­ty in the world.” There­fore, fur­ther steps will be made “towards a polit­i­cal union in Europe” and “oth­er Euro­pean states” are invit­ed “to join us in this endeav­or.” The EU should become “more coher­ent and more assertive on the world stage.” It is not only an actor “in its direct neigh­bor­hood” but also on “a glob­al scale.” In their paper, Stein­meier and Ayrault wrote, “on a more con­test­ed and com­pet­i­tive inter­na­tion­al scene, France and Ger­many will pro­mote the EU as an inde­pen­dent [!] and glob­al [!] actor.”

Euro­pean Secu­ri­ty Com­pact

To imple­ment the EU poli­cies of glob­al pow­er, Stein­meier and his French coun­ter­part drew up ele­ments for a “Euro­pean Secu­ri­ty Com­pact.” “Exter­nal crises” have become “more numer­ous” and have moved geo­graph­i­cal­ly “clos­er to Europe both east and south of its bor­ders.” There is no men­tion that the EU and its major pow­ers have sig­nif­i­cant­ly con­tributed to the foment­ing war and civ­il war — euphem­ized by Stein­meier and Ayrault as “crises”: In Ukraine, by seek­ing, through the Asso­ci­a­tion Agree­ment, to ful­ly inte­grate the coun­try into its sphere of hegemony;[2] in Libya, through its aggres­sion, oust­ing the Gaddafi government;[3] or in Syr­ia, through its polit­i­cal and low-inten­si­ty mil­i­tary sup­port of an increas­ing­ly jihadist-con­trolled insurgency.[4] Nev­er­the­less, the Ger­man for­eign min­is­ter and his French coun­ter­part announce that they not only sup­port “the emerg­ing gov­ern­ment of nation­al accord in Libya,” but that they are also “con­vinced that Africa needs a con­tin­u­ous com­mit­ment, being a con­ti­nent of great chal­lenges and oppor­tu­ni­ties.”

Max­i­mum of Inse­cu­ri­ty

Accord­ing to Stein­meier and Ayrault, the “Euro­pean Secu­ri­ty Com­pact” will be com­pre­hen­sive and include “all aspects of secu­ri­ty and defense dealt with at the Euro­pean lev­el.” The for­eign min­is­ters write that the EU must “ensure the secu­ri­ty of our cit­i­zens.” How­ev­er, the con­crete demands indi­cate that the “Euro­pean Secu­ri­ty Com­pact” will, of course, not bring greater secu­ri­ty, but rather the con­trary, a max­i­mum of inse­cu­ri­ty — an increase in EU-pro­voked wars and the inevitable effects, they will have on the cen­ters of Euro­pean prosperity.[5]

Every­thing for Poli­cies of Glob­al Pow­er

As a first step, the paper writ­ten by France and Ger­many’s for­eign min­is­ters pro­pos­es that “a com­mon analy­sis of our strate­gic envi­ron­ment” be made. These reviews will be reg­u­lar­ly pre­pared “by an inde­pen­dent sit­u­a­tion assess­ment capa­bil­i­ty, based on the EU intel­li­gence and sit­u­a­tion cen­tre” and sub­mit­ted and dis­cussed at the “For­eign Affairs Coun­cil and at the Euro­pean Coun­cil.” On the basis of this com­mon “under­stand­ing,” the EU should “estab­lish agreed strate­gic pri­or­i­ties for its for­eign and secu­ri­ty pol­i­cy.” It is polit­i­cal expe­ri­ence that reach­ing an “under­stand­ing” in the process of for­eign and mil­i­tary pol­i­cy stan­dard­iza­tion, the stand­point of the strongest mem­ber-state — Ger­many — will be tak­en par­tic­u­lar­ly into con­sid­er­a­tion. The results should then be “more effec­tive­ly” than ever, imple­ment­ed “as real pol­i­cy,” accord­ing to the paper. The objec­tive is an “inte­grat­ed EU for­eign and secu­ri­ty pol­i­cy bring­ing togeth­er all [!] EU pol­i­cy instru­ments.”

Arms, Arms, Arms

Stein­meier and Ayrault write in detail that to “plan and con­duct civ­il and mil­i­tary oper­a­tions more effec­tive­ly,” the EU should insti­tute a “per­ma­nent civ­il-mil­i­tary chain of com­mand.” In addi­tion, it must “be able to rely on employ­able high-readi­ness forces.” In order to “live up to the grow­ing secu­ri­ty chal­lenges,” Euro­peans need “to step up their defense efforts.” For this, the Euro­pean mem­ber states should “reaf­firm and abide by the com­mit­ments made col­lec­tive­ly on defense bud­gets and the por­tion of spend­ing ded­i­cat­ed to the pro­cure­ment of equip­ment and to research and tech­nol­o­gy (R and T).” A few days ago, Chan­cel­lor Angela Merkel had already tak­en the first step in this direc­tion, when she declared that Ger­many’s defense bud­get should now begin to con­verge with that of the Unit­ed States, in terms of their respec­tive GDP per­cent­ages — Ger­many spends 1.2 per­cent of its GDP on mil­i­tary, while the US spends 3.4 percent.[6] Next, Stein­meier and Ayrault explain that a “Euro­pean semes­ter” should sup­port the coor­di­na­tion of the indi­vid­ual mem­ber coun­tries’ future mil­i­tary plan­ning. “Syn­er­gism” is the objec­tive. Through­out the EU, an arms buildup must be as coor­di­nat­ed and effi­cient as pos­si­ble. The EU should pro­vide com­mon financ­ing for its oper­a­tions. “Mem­ber states” could estab­lish per­ma­nent struc­tured coop­er­a­tion in the field of defense “or push ahead to launch oper­a­tions.” Par­tic­u­lar­ly impor­tant is “estab­lish­ing stand­ing mar­itime forces” or acquir­ing “EU-owned capa­bil­i­ties in oth­er key areas.”

More Domes­tic Repres­sion

The Social Demo­c­rat Stein­meier and the Social­ist Ayrault write that to ensure “inter­nal secu­ri­ty,” the “oper­a­tional capac­i­ty” must be enhanced at the EU lev­el. This includes mak­ing the best use of “reten­tion of flight pas­sen­ger data (PNR)” — the “data exchange with­in the EU” must be “improved” — but also “mak­ing the best use of Europol and its coun­tert­er­ror­ism cen­tre.” “In the medi­um term,” there should oth­er­wise be the “cre­ation of a Euro­pean plat­form for intel­li­gence coop­er­a­tion.” Last week­end, SPD Chair, Sig­mar Gabriel and the Pres­i­dent of the Euro­pean Par­lia­ment, Mar­tin Schulz (SPD) called for the exten­sion of domes­tic repres­sion as well as the cre­ation of a “Euro­pean FBI.”[7]

Seize the Oppor­tu­ni­ty

Just a few days ago, For­eign Min­is­ter Stein­meier declared in the US jour­nal “For­eign Affairs” that Ger­many has become “a major pow­er” and will “try its best” on the world stage “to hold as much ground as possible.”[8] With Britain, which had always adamant­ly opposed an inte­grat­ed EU mil­i­tary pol­i­cy, leav­ing the EU, Berlin sees an oppor­tu­ni­ty for reviv­ing its efforts at restruc­tur­ing the EU’s mil­i­tary and mobi­liz­ing as many mem­ber coun­tries as pos­si­ble for the EU’s future wars.

[1] This and the fol­low­ing quotes are tak­en from “A strong Europe in a World of Uncer­tain­ties” — Joint con­tri­bu­tion by the French For­eign Min­is­ter Jean-Marc Ayrault and Fed­er­al For­eign Min­is­ter Frank-Wal­ter Stein­meier. www.auswaertiges-amt.de.
[2] See Expan­sive Ambi­tions and Die Ver­ant­wor­tung Berlins.
[3] See Vom West­en befre­it (II).
[4] See Forced to Flee (I).
[5] Zu den Rück­wirkun­gen der von europäis­chen Staat­en geführten Kriege s. etwa Der Krieg kehrt heim, Der Krieg kehrt heim (II) and Der Krieg kehrt heim (III).
[6] See Auf Welt­macht­niveau.
[7] See Flex­i­ble Union with a Euro­pean FBI.
[8] See Auf Welt­macht­niveau.

7. The devel­op­ment of an EU “secu­ri­ty estab­lish­ment” would include the cre­ation of a Euro­pean-wide FBI. In past dis­cus­sions of L’Af­faire Snow­den, we not­ed that the EU was also work­ing toward an EU-wide equiv­a­lent of the NSA.

“Flex­i­ble Union with a Euro­pean FBI”; german-foreign-policy.com; 6/27/2016.

Berlin is apply­ing intense pres­sure in the after­math of the Brex­it, to reor­ga­nize the EU. Under the slo­gan, “flex­i­ble Union,” ini­tial steps are being tak­en to estab­lish a “core Europe.” This would mean an EU, led by a small, tight-knit core of coun­tries, with the rest of the EU mem­ber coun­tries being sub­or­di­nat­ed to sec­ond-class sta­tus. At the same time, the Pres­i­dent of the Euro­pean Par­lia­ment and Ger­many’s Min­is­ter of the Econ­o­my (both SPD) are call­ing for the com­mu­ni­ta­riza­tion of the EU’s for­eign pol­i­cy, rein­force­ment of its exter­nal bor­ders, the enhance­ment of domes­tic repres­sion and the cre­ation of a “Euro­pean FBI.” The Ger­man chan­cel­lor has invit­ed France’s pres­i­dent and Italy’s prime min­is­ter to Berlin on Mon­day to stip­u­late in advance, mea­sures to be tak­en at the EU-sum­mit on Tues­day. Ger­man media com­men­ta­tors are speak­ing in terms of the EU’s “new direc­torate” under Berlin’s lead­er­ship. At the same time, Berlin is inten­si­fy­ing pres­sure on Lon­don. The chair of the Bun­destag’s EU Com­mis­sion pre­dicts a new Scot­tish ref­er­en­dum on seces­sion and calls for Scot­land’s rapid inte­gra­tion into the EU. Ger­man politi­cians in the Euro­pean Par­lia­ment are exert­ing pres­sure for rapid­ly imple­ment­ing the Brex­it and reor­ga­niz­ing the EU. Chan­cel­lor Merkel has reit­er­at­ed her veiled threat that “rec­on­cil­i­a­tion and peace” in Europe are “any­thing but self-evi­dent,” should Euro­pean coun­tries choose to no longer be inte­grat­ed in the EU.

Core Europe

Already ear­li­er this year, Berlin had ini­ti­at­ed prepa­ra­tions for trans­form­ing the EU into a “flex­i­ble Union” and cre­at­ing a “core Europe.” On Feb­ru­ary 9, the for­eign min­is­ters of the six found­ing EU coun­tries [1] held an exclu­sive meet­ing in Rome to dis­cuss the EU’s var­i­ous cur­rent crises. This unusu­al meet­ing for­mat was also con­sid­ered to be a coun­ter­point to the Viseg­rád-Group [2], which had been par­tic­u­lar­ly crit­i­cal of Berlin’s refugee pol­i­cy. The dis­cus­sion in Rome was focused not only on the refugee pol­i­cy, but also includ­ed a pos­si­ble Brexit.[3] In their Joint Com­mu­niqué, the six for­eign min­is­ters under­lined the “dif­fer­ent paths of inte­gra­tion,” pro­vid­ed for by the Lis­bon Treaty — a hint at the option of a “flex­i­ble Union.”[4] The for­eign min­is­ters of the six found­ing coun­tries again met on Mai 20, at the Val Duchesse Cas­tle south of Brus­sels, this time explic­it­ly to dis­cuss the EU’s devel­op­ment in case of a Brex­it. They met again last Sat­ur­day to dis­cuss a paper joint­ly pre­sent­ed by the Ger­man and French for­eign min­is­ters, lit­er­al­ly demand­ing a “flex­i­ble Union.”[5] The com­mon dec­la­ra­tion, agreed upon by the six min­is­ters on Sat­ur­day, does not men­tion that polar­iz­ing term, while para­phras­ing their aspired core Europe. There is a need to “rec­og­nize” that among the mem­ber coun­tries there are “dif­fer­ent lev­els of ambi­tion towards Euro­pean integration.”[6]

The Strong Man behind Junck­er

Using this for­mat of the found­ing coun­tries, Berlin is push­ing for a “flex­i­ble Union” that is par­tic­u­lar­ly reject­ed by those mem­ber coun­tries, to be rel­e­gat­ed to sec­ond-class sta­tus. At the same time, Berlin is exert­ing pres­sure at oth­er lev­els. Already on May 23, an ini­tial offi­cial meet­ing with­in the frame­work of the EU Com­mis­sion, was held, to make arrange­ments for a pos­si­ble Brexit.[7] The invi­ta­tion had been extend­ed by the Ger­man jurist, Mar­tin Sel­mayr, Chef de Cab­i­net of Jean-Claude Junck­er, Pres­i­dent of the Euro­pean Com­mis­sion. From 2001 to 2004, Sel­mayr man­aged the Ber­tels­man AG office in Brus­sels. He sub­se­quent­ly became spokesper­son and then Chef de Cab­i­net for EU Com­mis­sion­er Viviane Red­ing (Lux­em­bourg). Observers, refer­ring to his influ­ence, not­ed that some con­sid­ered Red­ing to be the “dum­my of the ven­tril­o­quist, Selmayr.”[8] Accord­ing to Ger­man media, Sel­mayr, the strong man behind Juncker,[9] had extend­ed the invi­ta­tion for the May 23 strat­e­gy meet­ing, not only to rep­re­sen­ta­tives of Slo­va­kia and Mal­ta — the two coun­tries to assume EU pres­i­den­cy in July and Jan­u­ary, respec­tive­ly, but also to Uwe Corsepius, Merkel’s Euro­pean pol­i­cy advi­sor. Corsepius is con­sid­ered one of Berlin’s most impor­tant Euro­pean pol­i­cy strategists.[10]

The New Direc­torate

Beyond such long-term agree­ments, Chan­cel­lor Angela Merkel has invit­ed France’s Pres­i­dent, François Hol­lande, Italy’s Prime Min­is­ter, Mat­teo Ren­zi and EU Coun­cil Pres­i­dent Don­ald Tusk to Berlin, Mon­day to dis­cuss the EU’s future, after Great Britain’s with­draw­al. The objec­tive is to agree upon impor­tant stip­u­la­tions pri­or to the EU’s Tues­day sum­mit — which is sim­i­lar to the 2010 — 2011 meet­ings she had held with the French pres­i­dent at the time, Nico­las Sarkozy (“Merkozy”), to set the guide­lines for the EU’s han­dling of the Euro cri­sis. Observes point to the fact that Merkel’s invit­ing Ren­zi along with Hol­lande has osten­ta­tious­ly demot­ed France’s sta­tus. Simul­ta­ne­ous­ly, Ger­man media are speak­ing in terms of the EU’s “new direc­torate.” Of course, there is no doubt that “Ger­many remains the most impor­tant EU nation, both polit­i­cal­ly as well as economically.”[11] In prac­tice, the “direc­torate” serves the func­tion — as in the pre­vi­ous cas­es of Merkel’s Sarkozy meet­ings — pri­mar­i­ly of trans­mis­sion of Ger­man spec­i­fi­ca­tions to the EU’s oth­er mem­ber coun­tries.

The Cen­tral Role

Berlin’s pre­dom­i­nance with­in the EU is being, more or less, offi­cial­ly con­firmed by the Pres­i­dent of the Euro­pean Com­mis­sion, Jean-Claude Junck­er. Also in the future, Ger­many will “con­tin­ue to play a cen­tral role, if not an even more sig­nif­i­cant role, in the Euro­pean Union,” Junck­er declared.[12]

Supra­na­tion­al Repres­sion

Par­al­lel to prepa­ra­tions for the trans­for­ma­tion of the Euro­pean Union, lead­ing Ger­man Social Democ­rats are call­ing for sup­ple­men­tary steps for the polit­i­cal-eco­nom­ic stream­lin­ing the EU or its core.[13] For exam­ple, in their posi­tion paper enti­tled “Re-Found Europe,” Ger­many’s Min­is­ter of the Econ­o­my, Sig­mar Gabriel, and the Pres­i­dent of the Euro­pean Par­lia­ment, Mar­tin Schulz, are call­ing for an expan­sion of the EU’s sin­gle mar­ket, under the top­ic an “eco­nom­ic Schen­gen.” In the process, across the board “cen­tral” job mar­ket reforms must be imple­ment­ed. The mass­es in the French pop­u­la­tion are cur­rent­ly up in arms fight­ing the impo­si­tion of these job mar­ket reforms.[14] In addi­tion, Gabriel and Schulz are call­ing on the EU to “more than ever” “act as a uni­fied gov­ern­ing force,” which would sig­ni­fy that the “com­mu­ni­ta­riza­tion” of the EU’s for­eign pol­i­cy. The imple­men­ta­tion of this com­mu­ni­ta­riza­tion, would mean Ger­many’s glob­al inter­ests being pur­sued via insti­tu­tions in Brus­sels due, to a large extent, to Berlin’s pre­dom­i­nance with­in the EU. Final­ly, the Ger­man social democ­rats are call­ing for the sys­tem­at­ic cre­ation and expan­sion of supra-nation­al struc­tures of repres­sion. For exam­ple, insti­tu­tions ward­ing off refugees from the EU must be sys­tem­at­i­cal­ly rein­forced (“effec­tive­ly secur­ing Euro­pean exter­nal bor­ders”) and coop­er­a­tion between domes­tic repres­sive author­i­ties inten­si­fied. The cre­ation, for exam­ple, of a “Euro­pean FBI” should be an objec­tive.

Project Deter­rence

To deter oth­er EU coun­tries from hold­ing ref­er­en­dums, Berlin is mas­sive­ly inten­si­fy­ing pres­sure on Lon­don. To avoid need­less dis­sention, the British gov­ern­ment seeks to con­sci­en­tious­ly pre­pare and car­ry out the nego­ti­a­tions. Pres­i­dent of the Euro­pean Par­lia­ment, Mar­tin Schulz, declared in the form of an ulti­ma­tum, that he “expects” the British gov­ern­ment to present its with­draw­al appli­ca­tion at the EU sum­mit on Tues­day. Chair of the EPP par­lia­men­tary cau­cus, Man­fred Weber (CSU) called on Britain to with­draw “with­in the planned two-year delay, and even bet­ter, with­in a year.”[15] Brus­sels has already cre­at­ed a “Brex­it Task Force” and an “Arti­cle 50 Task Force” — the lat­ter named after the respec­tive arti­cle of the Lis­bon Treaty reg­u­lat­ing a mem­ber state’s with­draw­al from the EU. Above all, lead­ing Ger­man politi­cians are fan­ning Scot­tish seces­sion­ist plans. “The EU will con­tin­ue to con­sist of 28 mem­ber coun­tries,” declared Gun­ther Krich­baum (CDU), Chair of the EU Affairs Com­mit­tee in the Ger­man Bun­destag, “because I expect a renewed inde­pen­dence ref­er­en­dum in Scot­land, which will be suc­cess­ful this time.” Krich­baum says, “we should prompt­ly reply to this pro-EU coun­try’s mem­ber­ship application.”[16] The Ger­man media is also ener­get­i­cal­ly fir­ing on Scot­tish sep­a­ratism. Since 1945, the Fed­er­al Repub­lic of Ger­many has pos­si­bly nev­er engaged in such unabashed encour­age­ment of the dis­in­te­gra­tion of a West Euro­pean coun­try.

War in Europe

In Berlin, this is all being flanked by state­ments that can­not be oth­er­wise inter­pret­ed as oblique war threats. “Although it is dif­fi­cult for us to imag­ine,” one should “nev­er for­get” that “the idea of a unit­ed Europe, had been an idea of peace,” claims the Ger­man Chancellor.[17] The alle­ga­tion cor­re­sponds less to his­tor­i­cal reality,[18] than to the EU’s self-pro­mo­tion. Yet, Merkel declares that in Europe, “rec­on­cil­i­a­tion and peace” are both cur­rent­ly and in the future “any­thing oth­er than self-evi­dent.” The chan­cel­lor has expressed this point of view in var­i­ous EU cri­sis sit­u­a­tions. (german-foreign-policy.com reported.[19]) Accord­ing to this view, the poten­tial of Euro­pean coun­tries set­tling their dis­putes mil­i­tar­i­ly remains essen­tial­ly unal­tered and can be unleashed, should they no longer choose inte­gra­tion in a Ger­man-dom­i­nat­ed EU.

For more on this theme: The First Exit.

[1] Bun­desre­pub­lik Deutsch­land, Frankre­ich, Ital­ien, Bel­gien, Nieder­lande, Lux­em­burg.
[2] Der Viseg­rád-Gruppe gehören Polen, Tschechien, die Slowakei und Ungarn an.
[3] EU-Grün­der­staat­en: “Europäis­che Dreifachkrise” und “Her­aus­fordernde Zeit­en”. de.euronews.com 10.02.2016.
[4] Joint Com­mu­niqué. Chart­ing the way ahead. An EU Found­ing Mem­bers’ ini­tia­tive on strength­en­ing Cohe­sion in the Euro­pean Union. www.esteri.it 09.02.2016.
[5] Berlin und Paris schla­gen “flex­i­ble EU” vor. www.handelsblatt.com 24.06.2016.
[6] Gemein­same Erk­lärung der Außen­min­is­ter Bel­giens, Deutsch­lands, Frankre­ichs, Ital­iens, Lux­em­burgs und der Nieder­lande am 25. Juni 2016.
[7] EU rüstet sich für Brex­it-Ern­st­fall. www.spiegel.de 27.05.2016.
[8] Hen­drick Kaf­sack, Wern­er Mus­sler: Die EU spricht deutsch. www.faz.net 26.06.2014. See Par­tic­u­lar­ly Close to Ger­many.
[9] Hen­drick Kaf­sack: Der starke Mann hin­ter Junck­er. www.faz.net 10.09.2014.
[10] See Under the Ger­man Whip (I).
[11] Niko­las Busse: Das neue Direk­to­ri­um. Frank­furter All­ge­meine Zeitung 25.06.2016.
[12] Junck­er sieht starke Rolle für Deutsch­land. www.handelsblatt.com 25.06.2016.
[13] Sig­mar Gabriel, Mar­tin Schulz: Europa neu grün­den. www.spd.de.
[14] See The Price of Dereg­u­la­tion.
[15] EU-Par­la­mentspräsi­dent Schulz fordert Aus­trittsantrag der Briten bis Dien­stag. www.sueddeutsche.de 25.06.2016.
[16] Jacques Schus­ter, Daniel Friedrich Sturm: Und zurück bleiben die ver­wirrten Staat­en von Europa. www.welt.de 26.06.2016.
[17] Press­es­tate­ment von Bun­deskan­z­lerin Merkel zum Aus­gang des Ref­er­en­dums über den Verbleib Großbri­tan­niens in der Europäis­chen Union am 24. Juni 2016 in Berlin.
[18] Die “Eini­gung” des europäis­chen Kon­ti­nents unter deutsch­er Dom­i­nanz gehörte bere­its zu den deutschen Kriegszie­len im Ersten Weltkrieg; damals sprach beispiel­sweise Reich­skan­zler Theobald von Beth­mann Holl­weg von der Grün­dung eines “mit­teleu­ropäis­chen Wirtschaftsver­bands”. Auch im NS-Staat wur­den entsprechende “Einigungs”-Strategien vertreten. Mehr dazu: Europas Einiger.
[19] See A Ques­tion of Peace or War in Europe, Man­age­ment with a Crow­bar and Vom Krieg in Europa.

8a. We have not­ed Trump’s real estate deal­ings in the past, and the opaque nature of his rela­tion­ships. Orga­nized crime ele­ments are one of the ele­ments for which Trump’s real estate empire appar­ent­ly “fronts.”

A New York Times inves­ti­ga­tion revealed that Ger­man cor­po­rate ele­ments are anoth­er major play­er in the com­plex Trump real estate deal­ings. The nature of the rela­tion­ships is so com­plex that not even The Times could unrav­el some of the rela­tion­ships.

Deutsche Bank and the Union Bank of Switzer­land are major Bor­mann cap­i­tal net­work play­ers. The Hineberg com­pa­ny, as a dom­i­nant inter­na­tion­al ship­ping con­cern and a major Ger­man cor­po­ra­tion is almost cer­tain­ly a major Bor­mann cap­i­tal net­work play­er.

“Trump’s Empire: A Maze of Debts and Opaque Ties” by Susanne Craig; The New York Times; 8/21/2016.

. . . .Yet The Times’s exam­i­na­tion under­scored how much of Mr. Trump’s busi­ness remains shroud­ed in mys­tery. He has declined to dis­close his tax returns or allow an inde­pen­dent val­u­a­tion of his assets.

Ear­li­er in the cam­paign, Mr. Trump sub­mit­ted a 104-page fed­er­al finan­cial dis­clo­sure form. It said his busi­ness­es owed at least $315 mil­lion to a rel­a­tive­ly small group of lenders and list­ed ties to more than 500 lim­it­ed lia­bil­i­ty com­pa­nies. Though he answered the ques­tions, the form appears to have been designed for can­di­dates with sim­pler finances than his, and did not require dis­clo­sure of por­tions of his busi­ness activ­i­ties. . . .

. . . .The Times found three oth­er instances in which Mr. Trump had an own­er­ship inter­est in a build­ing but did not dis­close the debt asso­ci­at­ed with it. In all three cas­es, Mr. Trump had pas­sive invest­ments in lim­it­ed lia­bil­i­ty com­pa­nies that had bor­rowed sig­nif­i­cant amounts of mon­ey.

One of these invest­ments involves an office tow­er at 1290 Avenue of Amer­i­c­as, near Rock­e­feller Cen­ter. In a typ­i­cal­ly com­plex deal, loan doc­u­ments show that four lenders — Ger­man Amer­i­can Cap­i­tal, a sub­sidiary of Deutsche Bank; UBS Real Estate Secu­ri­ties; Gold­man Sachs Mort­gage Com­pa­ny; and Bank of Chi­na — agreed in Novem­ber 2012 to lend $950 mil­lion to the three com­pa­nies that own the build­ing. Those com­pa­nies, obscure­ly named HWA 1290 III LLC, HWA 1290 IV LLC and HWA 1290 V LLC, are owned by three oth­er com­pa­nies in which Mr. Trump has stakes. . . . .

. . . .At 40 Wall Street in Man­hat­tan, a lim­it­ed lia­bil­i­ty com­pa­ny, or L.L.C., con­trolled by Mr. Trump holds the ground lease — the lease for the land on which the build­ing stands. In 2015, Mr. Trump bor­rowed $160 mil­lion from Lad­der Cap­i­tal, a small New York firm, using that long-term lease as col­lat­er­al. On his finan­cial dis­clo­sure form that debt is list­ed as val­ued at more than $50 mil­lion. . . .

. . . .Trac­ing the own­er­ship of many of Mr. Trump’s build­ings can be a com­pli­cat­ed task. Some­times he owns a build­ing and the land under­neath it; some­times, he holds a par­tial inter­est or just the com­mer­cial por­tion of a prop­er­ty.

And in some cas­es, the iden­ti­ties of his busi­ness part­ners are obscured behind lim­it­ed lia­bil­i­ty com­pa­nies — rais­ing the prospect of a pres­i­dent with unknown busi­ness ties.

At 40 Wall Street, Mr. Trump does not own even a sliv­er of the actu­al land; his long-term ground lease gives him the right to improve and man­age the build­ing. The land is owned by two lim­it­ed lia­bil­i­ty com­pa­nies; Mr. Trump pays the two enti­ties a total of $1.6 mil­lion a year for the ground lease, accord­ing to doc­u­ments filed with the S.E.C.

The major­i­ty own­er, 40 Wall Street Hold­ings Cor­po­ra­tion, owns 80 per­cent of the land; New Scan­dic Wall Lim­it­ed Part­ner­ship owns the rest, accord­ing to pub­lic doc­u­ments. New Scan­dic Wall Lim­it­ed Partnership’s chief exec­u­tive is Joachim Fer­di­nand von Grumme-Dou­glas, a busi­ness­man based in Europe, accord­ing to these doc­u­ments.

The peo­ple behind 40 Wall Street Hold­ings are hard­er to iden­ti­fy. For years, Germany’s Hin­neberg fam­i­ly, which made its for­tune in the ship­ping indus­try, con­trolled the prop­er­ty through a com­pa­ny called 40 Wall Lim­it­ed Part­ner­ship. In late 2014, their inter­est in the land was trans­ferred to a new com­pa­ny, 40 Wall Street Hold­ings. The Times was not able to iden­ti­fy the own­er or own­ers of this com­pa­ny, and the Trump Orga­ni­za­tion declined to com­ment. . . .

8b. In con­nec­tion both with Trump’s real estate hold­ings and John P. Schmitz’s cor­po­rate work, we review the con­trol of Ger­man indus­try and finance by the Bor­mann net­work.

Mar­tin Bor­mann: Nazi in Exile by Paul Man­ning; Copy­right 1981 by Paul Man­ning; Lyle Stu­art Inc. [HC]; ISBN 0–8184-0309‑B; pp. 284–285.

. . . Atop an orga­ni­za­tion­al pyra­mid that dom­i­nates the indus­try of West Ger­many through banks, vot­ing rights enjoyed by major­i­ty share­hold­ers in sig­nif­i­cant car­tels, and the pro­fes­sion­al input of a rel­a­tive­ly young lead­er­ship group of lawyers, invest­ment spe­cial­ists, bankers, and indus­tri­al­ists, he [Bor­mann] is sat­is­fied that he achieved his aim of help­ing the Father­land back on its feet. To ensure con­ti­nu­ity of pur­pose and direc­tion, a close watch is main­tained on the prof­it state­ments and man­age­ment reports of cor­po­ra­tions under its con­trol else­where. This lead­er­ship group of twen­ty, which is in fact a board of direc­tors, is chaired by Bor­mann, but pow­er has shift­ed to the younger men who will car­ry on the ini­tia­tive that grew from that his­toric meet­ing in Stras­bourg on August 10, 1944. Old Hein­rich Mueller, chief of secu­ri­ty for the NSDAP in South Amer­i­ca, is the most feared of all, hav­ing the pow­er of life and death over those deemed not to be act­ing in the best inter­ests of the orga­ni­za­tion. Some still envi­sion a Fourth Reich. . . What will not pass is the eco­nom­ic influ­ences of the Bor­mann orga­ni­za­tion, whose com­mer­cial direc­tives are obeyed almost with­out ques­tion by the high­est ech­e­lons of West Ger­man finance and indus­try. ‘All orders come from the share­hold­ers in South Amer­i­ca,’ I have been told by a spokesman for Mar­tin Bor­mann. . . . 

9. Com­ing on the heels of the Trump campaign’s lat­est pub­lic embrace of the “Alt Right”, news that one of Trump’s advi­sors has been accused of enthu­si­as­ti­cal­ly fir­ing Jews and Holo­caust denial­ism while he was the DoD’s Inspec­tor Gen­er­al almost qual­i­fies as ‘dog bites man’ news at this point. Still, it’s news. Very omi­nous ‘dog bites man’ news:

“Trump Advis­er Accused of Mak­ing Anti-Semit­ic Remarks” by Marisa Tay­lor and William Dou­glas; McClatchy News Bureau; 8/18/2016.

Alle­ga­tions of anti-Semi­tism have sur­faced against one of Don­ald Trump’s for­eign pol­i­cy advis­ers, rais­ing fur­ther ques­tions about the guid­ance the Repub­li­can pres­i­den­tial nom­i­nee is receiv­ing.

Joseph Schmitz, named as one of five advis­ers by the Trump cam­paign in March, is accused of brag­ging when he was Defense Depart­ment inspec­tor gen­er­al a decade ago that he pushed out Jew­ish employ­ees.

The rev­e­la­tions feed two themes that his oppo­nent Hillary Clin­ton has used to erode Trump’s cred­i­bil­i­ty: That he is a for­eign pol­i­cy neo­phyte, and that his cam­paign, at times, has offend­ed Jews and oth­er minori­ties.

Schmitz, who is a lawyer in pri­vate prac­tice in Wash­ing­ton, says the alle­ga­tions against him are lies. All three peo­ple who have cit­ed the remarks, includ­ing one who tes­ti­fied under oath about them, have pend­ing employ­ment griev­ances with the fed­er­al gov­ern­ment.

Daniel Mey­er, a senior offi­cial with­in the intel­li­gence com­mu­ni­ty, described Schmitz’s remarks in his com­plaint file.

“His sum­ma­ry of his tenure’s achieve­ment report­ed as ‘…I fired the Jews,’ ” wrote Mey­er, a for­mer offi­cial in the Pen­ta­gon inspec­tor general’s office whose griev­ance was obtained by McClatchy.

Mey­er, who declined to com­ment about the mat­ter, cit­ed in his com­plaint anoth­er for­mer top Pen­ta­gon offi­cial, John Crane, as the source and wit­ness to the remarks. Crane worked with Schmitz, who served as inspec­tor gen­er­al between April 2002 and Sep­tem­ber 2005.

In his com­plaint, Mey­er said Crane also said Schmitz played down the extent of the Holo­caust.

“In his final days, he alleged­ly lec­tured Mr. Crane on the details of con­cen­tra­tion camps and how the ovens were too small to kill 6 mil­lion Jews,” wrote Mey­er, whose com­plaint is before the Mer­it Sys­tems Pro­tec­tion Board (MSPB).

Schmitz said that Crane was the source of oth­er false accu­sa­tions against him.

“The alle­ga­tions are com­plete­ly false and defam­a­to­ry,” Schmitz said in an inter­view Tues­day.

“I do not recall ever even hear­ing of any ‘alle­ga­tions of anti-Semi­tism against [me],’ which would be pre­pos­ter­ous­ly false and defam­a­to­ry because, among oth­er reason(s), I am quite proud of the Jew­ish her­itage of my wife of 38 years,” he wrote in an email.

Lat­er in a phone inter­view, he said his wife was not a prac­tic­ing Jew but “eth­ni­cal­ly Jew­ish” because her mater­nal grand­moth­er was a Jew.

Mey­er, who pre­vi­ous­ly over­saw the Defense Department’s deci­sions on whistle­blow­ing cas­es, said he could not com­ment because his case is still pend­ing. Mey­er is now the Oba­ma administration’s top offi­cial over­see­ing how intel­li­gence agen­cies han­dle whistle­blow­er com­plaints.

Crane would not com­ment direct­ly about his con­ver­sa­tion with Schmitz but said, “if, when, I am required to tes­ti­fy under oath in a MSPB hear­ing, I would then com­ment on the state­ment attrib­uted to me by Mr. Mey­er.”

“State­ments made under oath at the request of a judge in a for­mal pro­ceed­ing would also remove my vul­ner­a­bil­i­ty to any poten­tial civ­il lit­i­ga­tion by any par­ty involved in the fil­ings by Mr. Mey­er,” he added.

Crane’s lawyer, Andrew Bakaj, also refut­ed Schmitz’s charges about Crane. He said Crane “has had no asso­ci­a­tion or involve­ment with any of the numer­ous news accounts chal­leng­ing the actions or deci­sions made by Mr. Schmitz when he was Inspec­tor Gen­er­al.”

The anti-Semit­ic alle­ga­tions have also become part of anoth­er case.

David Tenen­baum, an Army engi­neer at the Tank Auto­mo­tive Com­mand (TACOM) in War­ren, Michi­gan, is now cit­ing the alle­ga­tions in a let­ter this week to Act­ing Pen­ta­gon Inspec­tor Gen­er­al Glenn Fine as new evi­dence that cur­rent and for­mer Pen­ta­gon offi­cials helped per­pe­trate an anti-Semit­ic cul­ture with­in the mil­i­tary that left him vul­ner­a­ble.

“The anti-Semit­ic envi­ron­ment began under a pri­or Inspec­tor Gen­er­al, Mr. Joseph Schmitz,” the let­ter from Tenenbaum’s lawyer May­er Mor­gan­roth of Birm­ing­ham, Mich., states.

Trump’s cam­paign did not return mul­ti­ple calls and emails over a week about Schmitz.

The alle­ga­tions against Schmitz are in Meyer’s employ­ment griev­ance that was filed in June with the MSPB, which decides such cas­es filed by fed­er­al employ­ees. In the com­plaint, Mey­er alleges for­mer and cur­rent Defense Depart­ment Inspec­tor Gen­er­al offi­cials dis­crim­i­nat­ed against him as a gay man and retal­i­at­ed against him for inves­ti­gat­ing and report­ing mis­con­duct by high-lev­el Pen­ta­gon offi­cials.

Crane, a for­mer assis­tant Defense Depart­ment inspec­tor gen­er­al, resigned in 2013 when he learned he was going to be fired after an admin­is­tra­tive inquiry. He filed a whistle­blow­er dis­clo­sure say­ing retal­i­a­tion had forced his res­ig­na­tion. The dis­clo­sure is still before the Office of Spe­cial Coun­sel, which inves­ti­gates such com­plaints.

The let­ter from Tenenbaum’s lawyer May­er Mor­gan­roth also alleges Schmitz made remarks about fir­ing Jews and play­ing down the extent of the Holo­caust, cit­ing a “sworn state­ment” from an unnamed source with knowl­edge of the Tenen­baum case.

A fed­er­al offi­cial with knowl­edge of the mat­ter told McClatchy that Crane tes­ti­fied, under oath, about anti-Semit­ic remarks Schmitz made to him. Crane was inter­viewed in at least two inves­ti­ga­tions involv­ing Pen­ta­gon inspec­tor gen­er­al offi­cials.

Schmitz was accused of shield­ing Bush admin­is­tra­tion offi­cials from inves­ti­ga­tions, includ­ing an inquiry into a Boe­ing con­tract. He was cleared of the alle­ga­tions.

Schmitz left the gov­ern­ment to become gen­er­al coun­sel of the par­ent com­pa­ny of the defense con­trac­tor then known as Black­wa­ter.

A fel­low Repub­li­can, Sen. Chuck Grass­ley of Iowa, was one of Schmitz’s biggest crit­ics.

Grass­ley, for exam­ple, com­plained to the Pen­ta­gon about Schmitz’s plans to send Pen­ta­gon offi­cials to an event in Ger­many hon­or­ing Baron Friedrich Von Steuben, a Pruss­ian-born Army offi­cer who served under George Wash­ing­ton dur­ing the Rev­o­lu­tion­ary War.

Schmitz, who speaks Ger­man, was described as fas­ci­nat­ed with Von Steuben, who was known as the nation’s first U.S. inspec­tor gen­er­al.

Schmitz’s father, the late Repub­li­can Con­gress­man John Schmitz who rep­re­sent­ed Cal­i­for­nia, was a fer­vent anti-Com­mu­nist and drew crit­i­cism in 1981 for remarks about Jews, includ­ing his press release that called the audi­ence at abor­tion hear­ings “a sea of hard, Jew­ish and (arguably) female faces.”

Bart Buech­n­er, Joseph Schmitz’s for­mer mil­i­tary assis­tant at the inspec­tor general’s office, said he had fre­quent con­tact with Schmitz and nev­er wit­nessed any anti-Semi­tism.

“He would not say any­thing neg­a­tive or pejo­ra­tive about any eth­nic group,” Buech­n­er said.

For­mer Inte­ri­or Depart­ment Inspec­tor Gen­er­al Earl Devaney, who served dur­ing the Clin­ton, Bush and Oba­ma admin­is­tra­tions, said he was sur­prised to hear Trump picked Schmitz as his advis­er.

“I was shocked,” Devaney said. “In fact, a bunch of us for­mer inspec­tors gen­er­al called each oth­er when we saw the news, and we couldn’t stop laugh­ing because it was so ridicu­lous that some­one so odd and out of the main­stream would be select­ed, par­tic­u­lar­ly for that posi­tion.”

Tenen­baum, who is alleg­ing offi­cials in the Pen­ta­gon inspec­tor general’s office con­tributed to anti-Semi­tism against him, was tar­get­ed as an Israeli spy by the Army, which launched a crim­i­nal inves­ti­ga­tion of him.

Brid­get Ser­chak, a Pen­ta­gon inspec­tor general’s office spokes­woman, declined to com­ment on the case. Her office con­clud­ed in 2008 that Tenen­baum had been sin­gled out for “unusu­al and unwel­come scruti­ny because of his faith” as an Ortho­dox Jew.

His treat­ment from 1992 to 1997, the inspec­tor general’s report con­clud­ed, amount­ed to dis­crim­i­na­tion.

Tenen­baum got his secu­ri­ty clear­ance back and it was even increased to top secret. He was nev­er charged with any wrong­do­ing. In his let­ter this week to Pen­ta­gon author­i­ties, he asked the inspec­tor gen­er­al to review his case because he said the office nev­er inter­vened on his behalf.

“… In light of the infor­ma­tion recent­ly obtained, (we) believe your office has and con­tin­ues to engage in dis­crim­i­na­to­ry behav­ior,” his lawyer wrote.

Though Schmitz left the gov­ern­ment in 2005, he has insert­ed him­self in pub­lic affairs often through writ­ing edi­to­ri­als and giv­ing speech­es.

Schmitz spoke to law stu­dents in March 2015 at South­ern Methodist Uni­ver­si­ty in Dal­las in a forum about com­mu­nism and its impact on soci­ety.

Ren­wei Chung, a stu­dent who took notes of Schmitz’s speech, said it appeared to him that Schmitz was call­ing Oba­ma a com­mu­nist. He described how Schmitz held up the book: “The Com­mu­nist: Frank Mar­shall Davis – The Untold Sto­ry of Barack Obama’s Men­tor” and said to the forum, “The Chi­nese wor­ship Mao. They have pic­tures of Mao every­where. Do you know who the sec­ond most pop­u­lar per­son in Chi­na is? Oba­ma. … Why is that?”

Jef­frey Kahn, a pro­fes­sor who also spoke at the forum, said the encounter with Schmitz left him “chilled.”

Kahn wrote in an opin­ion piece pub­lished in July in the Dal­las Morn­ing News that “I had wit­nessed a ghost from McCarthy’s staff,” a ref­er­ence to for­mer Sen. Joseph McCarthy, who was obsessed with expos­ing com­mu­nists in the 1950s.

“What for­eign pol­i­cy advice will Schmitz whis­per into Trump’s ear?” Kahn wrote. “I shud­der to think what he might do in such a posi­tion of pow­er.”

 

 

Discussion

10 comments for “FTR #919 The Trumpenkampfverbande, Part 2: German Ostpolitik, Part 2”

  1. Here’s an inter­est­ing emerg­ing post-Brex­it dynam­ic in the EU that should be con­sid­ered with­ing the con­text of Trump’s ques­tion­ing the need for NATO, some­thing that would be use­ful for form­ing an EU army that’s been a goal of the Euro­pean Right for a while: Some of the EU mem­bers that are cur­rent­ly most in favor cre­at­ing a more decen­tral­ized EU (and are gen­er­al­ly pro-Trump-ish EU gov­ern­ments), like Poland and Hun­gary, are call­ing for the cre­ation of a joint EU army:

    TheLocal.de

    East­ern Europe push­es Ger­many for joint EU army

    Pub­lished: 26 Aug 2016 16:19 GMT+02:00

    East­ern EU coun­tries on Fri­day pushed for the bloc to cre­ate a joint army as they met with Ger­many for talks on sketch­ing Europe’s post-Brex­it future.

    “We must pri­ori­tise secu­ri­ty, and let’s start by build­ing a com­mon Euro­pean army,” Hun­gary’s rightwing prime min­is­ter, Vik­tor Orban, said at talks with Czech, Ger­man, Pol­ish and Slo­vak lead­ers.

    The five-nation gath­er­ing in War­saw is part of a string of meet­ings among var­i­ous groups of coun­tries ahead of a sum­mit on the EU’s future fol­low­ing the June 23 British ref­er­en­dum.

    Left­ist Czech Pre­mier Bohuslav Sobot­ka, for his part, said that “we should also begin a dis­cus­sion about cre­at­ing a com­mon Euro­pean army.”

    Ger­man Chan­cel­lor Angela Merkel also sup­port­ed the idea of stronger secu­ri­ty but urged cau­tion on how plans were trans­lat­ed into acts.

    “Secu­ri­ty is a fun­da­men­tal issue... we can do more togeth­er in the areas of secu­ri­ty and defence,” she said.

    “Brex­it is not just any event, it’s a break­ing point in the his­to­ry of EU so we need to work out a very care­ful response,” Merkel added, accord­ing to the offi­cial Eng­lish trans­la­tion of her words.

    In an ear­ly response to Britain’s shock vote to exit the EU, Poland’s pow­er­ful rightwing leader Jaroslaw Kaczyn­s­ki called for EU insti­tu­tion­al reforms that would forge a con­fed­er­a­tion of nation states under a pres­i­dent in charge of a pow­er­ful com­mon mil­i­tary.

    Chal­lenge to EU

    How­ev­er, the con­cept of a com­mon army is a thorny issue with­in the Euro­pean Union (EU).

    All five EU coun­tries at Fri­day’s War­saw talks are also mem­bers of the 28-mem­ber NATO West­ern defence alliance.

    But six of the EU’s 27 post-Brex­it mem­ber­ship do not belong to NATO: Aus­tria, Cyprus, Fin­land, Ire­land, Mal­ta and Swe­den.

    EU and NATO ties with Rus­sia plunged to their low­est point since the Cold War after Moscow’s 2014 annex­a­tion of the Crimean penin­su­la from Ukraine.

    The Krem­lin’s sabre-rat­tling in the Baltic region has also spooked NATO and EU mem­bers there.

    EU lead­ers from 27 states meet on Sep­tem­ber 16 in the Slo­vak cap­i­tal of Bratisla­va for an infor­mal sum­mit that will go ahead with­out Britain.

    Talks are like­ly to be chal­leng­ing as Berlin’s pre­ferred vision of a cen­tralised, fed­er­al Europe clash­es with pro­pos­als for a con­fed­er­a­tion of nation states pop­u­lar among lead­ers of east­ern EU mem­bers.

    ...

    “In an ear­ly response to Britain’s shock vote to exit the EU, Poland’s pow­er­ful rightwing leader Jaroslaw Kaczyn­s­ki called for EU insti­tu­tion­al reforms that would forge a con­fed­er­a­tion of nation states under a pres­i­dent in charge of a pow­er­ful com­mon mil­i­tary.”

    A con­fed­er­a­tion of states shar­ing one giant army. So, like, a euro­zone ver­sion of the mil­i­tary? What could pos­si­bly go wrong?

    It’s also worth keep­ing in mind that a cen­tral­ized EU mil­i­tary prob­a­bly even­tu­al­ly means cen­tral deci­sions on weapons pro­cure­ment, which in turn prob­a­bly means that some mem­ber states’ defense sec­tors are going to win big while oth­ers get wiped out. And since Ger­many is the third largest arms exporter in the world, with exports dou­bling just last year, it seems high­ly like­ly that the big win­ners are going to be Ger­man defense con­trac­tors because they’re appar­ent­ly mak­ing a lot of appeal­ing mil­i­tary hard­ware. If the EU’s mas­sive and dan­ger­ous intra-union account imbal­ances (which threat­ens the macro­eco­nom­ic sta­bil­i­ty of the euro­zone) seems bad now, just wait until we get to add EU army pur­chas­es to the list of fac­tors dri­ving that imbal­ance.

    So it will be real­ly inter­est­ing to see not just what mil­i­tary hard­ware gets man­u­fac­tured, and which mem­ber states do the man­u­fac­tur­ing where, but also who ends up pay­ing for all that new hard­ware and how this impacts that already dys­func­tion­al EU account imbal­ances because a shiny new army is going to be pret­ty damn expen­sive. Will Greece, for instance, be effec­tive­ly forced to buy Ger­man sub­marines for its share of the joint EU navy? That might be con­tro­ver­sial. Hope­ful­ly ques­tions like that get mean­ing­ful­ly asked before after the EU decides to form its joint army but since they prob­a­bly won’t be asked, it’s a reminder that a joint EU army that’s being pre­sent­ed as a kind of post-Brex­it sym­bol­ic act of EU uni­ty might not end up being very uni­fy­ing.

    So that’s one way Trump could be a favorite can­di­date of Berlin: being the only can­di­date that’s inclined to ques­tion the US’s com­mit­ment to NATO, Trump is unique­ly pro-EU-Mil­i­tary Indus­tri­al Com­plex at a moment when the EU-MIC might exac­er­bate the under­ly­ing EU’s cur­rent account calami­tous con­dun­drums. Isn’t he a joy?

    Posted by Pterrafractyl | August 26, 2016, 9:25 pm
  2. Con­sid­er­ing the media atten­tion that’s already been giv­en to Don­ald Trump’s reliance on Deutsche Bank for financ­ing a num­ber of his projects and the mas­sive debts he still owes to the bank, it’s kind of sur­pris­ing some of the oth­er investors in those projects Deutsche Bank helped finance haven’t got­ten more atten­tion. Or, more specif­i­cal­ly, it’s kind of sur­pris­ing George Soro’s part­ner­ship in Trump’s big Chica­go sky­scraper project dis­cussed below has got­ten more atten­tion.

    Sure, on the on hand it’s just a busi­ness part­ner­ship and you would expect Trump to form part­ner­ships will all sorts of dif­fer­ent char­ac­ters over the years. But con­sid­er­ing we just came out a rather bruis­ing GOP pri­ma­ry with a sig­nif­i­cant anti-Trump con­tin­gent and con­sid­er­ing we’re in an age where the far-right media in now main­stream and man­u­fac­tured sto­ries like “Hillary Clin­ton secret health prob­lems!” are now the norm, it’s kind of sur­pris­ing the Soros con­nec­tion has­n’t come up more:

    The Chica­go Tri­bune

    Big names back Trump tow­er
    Soros, Deutsche Bank said to be in on 90-sto­ry build­ing

    Octo­ber 28, 2004|By Thomas A. Corf­man, Tri­bune staff reporter.

    Don­ald Trump has lined up three New York hedge funds, includ­ing mon­ey from bil­lion­aire George Soros, to invest $160 mil­lion in his Chica­go sky­scraper, a key piece in per­haps the largest con­struc­tion financ­ing in the city’s his­to­ry, accord­ing to real estate sources and pub­lic doc­u­ments.

    Despite reports about the pro­jec­t’s record-break­ing sales, most of them from Trump him­self, many Chica­go real estate devel­op­ers and lenders have expressed doubts about whether the 90-sto­ry tow­er would ever be built.

    “It is such a huge project, and the prices he said he was get­ting were so out­side the norm,” said Robert Glick­man, pres­i­dent and chief exec­u­tive of Chica­go-based Corus Bank.

    “It was rea­son­able to say, ‘Is this real?’ ” he said.

    Much of the skep­ti­cism springs from Trump’s own hype. “Chica­go devel­op­ers are much less flam­boy­ant,” said Glick­man.

    The mas­sive financ­ing, which sources say also will include a $650 mil­lion con­struc­tion loan from Deutsche Bank, should quell those doubts.

    Trump flies to Chica­go Thurs­day morn­ing for a cer­e­mo­ni­al demo­li­tion of the for­mer home of the Chica­go Sun-Times, 401 N. Wabash Ave., which will be replaced by his 2.5 mil­lion-square-foot tow­er. The demo­li­tion is expect­ed to begin for real in Jan­u­ary.

    On Wednes­day Trump declined to com­ment on the financ­ing, empha­siz­ing instead the lux­u­ry pro­jec­t’s record-break­ing sales.

    The chief exec­u­tive of New York-based Trump Orga­ni­za­tion said he has agree­ments to sell three-fourths of the 461 con­do­mini­ums and 227 hotel-con­do units for a com­bined $515 mil­lion.

    “Nobody to my knowl­edge any­where in the Unit­ed States has ever sold more than $500 mil­lion worth of apart­ments pri­or to con­struc­tion,” he said. “It’s a great trib­ute to Chica­go, to the loca­tion and to a great design.

    “And, I guess, to Trump, when you think of it,” he added.

    The investor trio is led by Fortress Invest­ment Group LLC, accord­ing to a financ­ing state­ment filed Oct. 19 with the Cook Coun­ty recorder’s office.

    Fortress, which man­ages more than $10 bil­lion in invest­ments, is famil­iar with the down­town Chica­go con­do­mini­um mar­ket after pro­vid­ing a key $26 mil­lion loan on the Riv­er East mixed-use devel­op­ment last year.

    The doc­u­ment does not iden­ti­fy the oth­er par­tic­i­pants, but a key mem­ber is Grove Cap­i­tal LLP, accord­ing to sources famil­iar with the trans­ac­tion.

    The firm man­ages most of the multi­bil­lion-dol­lar real estate port­fo­lio of the $13 bil­lion Soros Fund Man­age­ment, from which Grove Cap­i­tal was spun off last month.

    The third investor is Black­acre Insti­tu­tion­al Cap­i­tal Man­age­ment LLC, the real estate arm of hedge fund Cer­berus Cap­i­tal Man­age­ment LP, which man­ages assets total­ing $14 bil­lion.

    Exec­u­tives with the three hedge funds could not be reached for com­ment.

    The $160 mil­lion invest­ment is in the form of a mez­za­nine loan, a kind of sec­ond mort­gage that typ­i­cal­ly charges a much high­er inter­est rate than a first-mort­gage con­struc­tion loan.

    Unlike the mez­za­nine loan, which has closed, terms of the $650 mil­lion con­struc­tion loan have not yet been final­ized, sources said.

    Frank­furt, Ger­many-based Deutsche Bank, an active com­mer­cial real estate lender in the U.S., is expect­ed to split up the loan with oth­er banks.

    ...

    Although lin­ing up the financ­ing was a big step for Trump, he still has hur­dles to over­come, includ­ing avoid­ing con­struc­tion delays and cost over­runs.

    Still, he expressed no con­cern about the doubts har­bored by some local real estate exec­u­tives.

    “It’s a very expen­sive build­ing to build because of the qual­i­ty we are putting into it,” he said. “So peo­ple of course would say, ‘Gee, that’s a lot of mon­ey to raise.’

    “But for me, it’s not a lot of mon­ey. You under­stand,” he said.

    “The $160 mil­lion invest­ment is in the form of a mez­za­nine loan, a kind of sec­ond mort­gage that typ­i­cal­ly charges a much high­er inter­est rate than a first-mort­gage con­struc­tion loan.”

    So Soros led a group of three hedge funds that lend­ed Trump $160 mil­lion in high-inter­est loans which was on top of the ~$650 mil­lion from Deutsche Bank. And we already know what hap­pened to those Deutsche Bank loans (it was paid off with a new loan from Deutsche Bank’s pri­vate bank).

    But what about that $160 mil­lion high-inter­est mez­za­nine loan Soros helped finance? Well, it’s not easy to find much infor­ma­tion on that, but it turns out some­one cre­at­ed a blog, apt­ly named trumpsoroschicago.wordpress.com, with just a sin­gle post ded­i­cat­ed sole­ly to elu­ci­dat­ing what hap­pened from pub­lic sources. And it sure looks like that high-inter­est loan was also for­giv­en in 2012 and there’s no indi­ca­tion it was for­giv­en by issu­ing a new loan, but instead just for­giv­en:

    Trumpsoroschicago.wordpress.com

    Did George Soros free Don­ald Trump of a $312 mil­lion debt?

    March 19, 2016
    by sorostrumpchica­go

    * In 2005 Trump start­ed con­struc­tion on his sky­scraper the Trump Inter­na­tion­al Hotel and Tow­er (Chica­go)
    * To build the tow­er, Trump received a loan from Deutsche Bank for $650 mil­lion
    * Trump also received a $160 mil­lion mez­za­nine loan* from a group of pri­vate investors includ­ing George Soros, Fortress Invest­ment Group and Black­acre Cap­i­tal (The loan was esti­mat­ed by the Wall Street Jour­nal of hav­ing a total val­ue as high as $360 mil­lion with accrued inter­est)
    * By Octo­ber 2008 Trump had sold near­ly $600 mil­lion in con­do and con­do-hotel units, more than half of the total val­ue of all the units in his tow­er
    * After sev­en years (2005–2012) Trump was on his way to pay­ing off his main con­struc­tion loan to Deutsche Bank
    * For rea­sons unex­plained to the pub­lic, the major­i­ty of Trump’s mez­za­nine loan was qui­et­ly for­giv­en by the loan’s orig­i­nal lenders
    * No media out­let cov­er­ing the deal has put togeth­er the pieces and told the pub­lic that George Soros let Don­ald Trump off the hook for what has been val­ued between $82 and $312 mil­lion in debt
    * Why would Soros give what amounts to a mas­sive debt relief to Trump dur­ing a finan­cial­ly suc­cess­ful peri­od in Trump’s life? Are these men friends, ene­mies or busi­ness part­ners?

    We have come across infor­ma­tion relat­ed to a long and bizarre finan­cial deal between Don­ald J. Trump, George Soros, Fortress Invest­ment Group and Black­acre Cap­i­tal, a deal dis­cov­ered by fol­low­ing a spe­cif­ic on-going mon­ey trail and like­ly part­ner­ship between these enti­ties.

    In 2005, when Trump began financ­ing the con­struc­tion of the tallest res­i­den­tial tow­er on the North Amer­i­can con­ti­nent the Trump Inter­na­tion­al Hotel and Tow­er (Chica­go), he need­ed more than just the basic loan he had received from Deutsche Bank. Trump need­ed what is called a “mez­za­nine loan”, a loan which is far more expen­sive than a reg­u­lar bank loan. This kind of loan needs to be paid off more quick­ly to avoid high inter­est pay­ments. It also needs to be paid back in full to keep the lender from tak­ing own­er­ship of the under­ly­ing asset.

    “Mez­za­nine financ­ing is basi­cal­ly debt cap­i­tal that gives the lender the rights to con­vert to an own­er­ship or equi­ty inter­est in the com­pa­ny if the loan is not paid back in time and in full…

    …Since mez­za­nine financ­ing is usu­al­ly pro­vid­ed to the bor­row­er very quick­ly with lit­tle due dili­gence on the part of the lender and lit­tle or no col­lat­er­al on the part of the bor­row­er, this type of financ­ing is aggres­sive­ly priced with the lender seek­ing a return in the 20–30% range.” 1

    Soros along with Fortress and Black­acre came to Trump with just such a loan at a cost­ly $160 mil­lion prin­ci­pal*. The The Wall Street Jour­nal had val­ued the loan at as much as $360 mil­lion, depend­ing on the length of time it accrued inter­est.

    “Don­ald Trump has lined up three New York hedge funds, includ­ing mon­ey from bil­lion­aire George Soros, to invest $160 mil­lion in his Chica­go sky­scraper, a key piece in per­haps the largest con­struc­tion financ­ing in the city’s his­to­ry, accord­ing to real estate sources and pub­lic doc­u­ments… The mas­sive financ­ing, which sources say also will include a $650 mil­lion con­struc­tion loan from Deutsche Bank…” 2

    “Big names back Trump tow­er” Chica­go Tri­bune – Octo­ber 28, 2004

    “A loan doc­u­ment says Mr. Trump could have to pay Fortress as much as $360 mil­lion, depend­ing on how long the loan accrues inter­est. Com­bined with the Deutsche Bank senior loan, he would owe more than $1 bil­lion in total.” 3

    “In Chica­go, Trump Hits Head­winds” The Wall Street Jour­nal – Octo­ber 29, 2008

    By Octo­ber 2008, the tow­er was almost com­plete and Trump had sold near­ly $600 mil­lion in con­do and con­do-hotel units, more than half of the total val­ue of all units in the tow­er.

    “So far, Mr. Trump has lined up buy­ers for a bit less than $600 mil­lion of con­do units and con­do-hotel units in a res­i­den­tial mar­ket that has vir­tu­al­ly seized up… He has closed around $200 mil­lion in sales so far, with rough­ly $380 mil­lion still in con­tract.”3

    “In Chica­go, Trump Hits Head­winds” The Wall Street Jour­nal – Octo­ber 29, 2008

    In 2012, Trump con­tin­ued to owe mon­ey to his lenders but sales of his con­do­mini­ums had picked up and his tow­er had a 69% occu­pan­cy rate. As Crain’s Chica­go put it: “The region’s hous­ing and con­do mar­ket is still mired in a his­toric slump. But when it comes to buy­ing and sell­ing in Chicago’s high-end con­do mar­ket, life is sur­pris­ing­ly good… Con­do­mini­um own­ers at the $850 mil­lion Trump Inter­na­tion­al Hotel & Tow­er and oth­er new­er top-end build­ings have, more often than not, expe­ri­enced val­ue appre­ci­a­tion when they sold in recent years.” 4

    While Trump was not yet mak­ing a prof­it on his tow­er, his sales and val­ue appre­ci­a­tions were such that his build­ing was gen­er­at­ing sig­nif­i­cant rev­enue, more than enough rev­enue to pay back to his lenders large por­tions of his loans. As for­mer New York real estate devel­op­er David Rose writes in his arti­cle “How to pay off a Sky­scraper”:

    “After a num­ber of years have passed, sev­er­al things are like­ly to have hap­pened: 1) the mort­gage has been sig­nif­i­cant­ly paid down; 2) the val­ue of the under­ly­ing build­ing has increased; and 3) the own­er has wait­ed for a time in the eco­nom­ic cycle where mort­gage rates are low. At that point [they] will ‘refi­nance’ the orig­i­nal mort­gage, and put the bal­ance to work some­where else where it can make even more mon­ey.” 5

    “How Long Does It Take To Pay Off a Sky­scraper?” Slate – July 12, 2012

    (For­tu­nate­ly for Trump, favor­able finan­cial con­di­tions exist­ed in 2012. 6 By all accounts, includ­ing his own, Trump was ready and able to pay off the loans for his Chica­go tow­er. 7)

    Yet Trump did not have to wor­ry about pay­ing back the major­i­ty of his mez­za­nine loan. A spe­cial group of lenders came in and erased a sig­nif­i­cant por­tion of this oblig­a­tion.

    That group was the orig­i­nal mez­za­nine loan lenders: Soros, Fortress and Black­acre; all of whom decid­ed to for­give Trump’s future inter­est pay­ments on the loan, sell­ing it to him at the mas­sive­ly reduced price of $48 mil­lion. To put that in stark­er terms, Soros and the oth­ers effec­tive­ly gave Trump pos­si­bly hun­dreds of mil­lions of dol­lars in debt for­give­ness, while cut­ting down the prin­ci­pal of his loan by $82 mil­lion**. Basi­cal­ly, Soros and the oth­ers for­gave Trump as much as $312 mil­lion for no appar­ent rea­son.

    “Don­ald Trump has paid $48 mil­lion to buy out junior cred­i­tors on his 92-sto­ry Chica­go con­do­mini­um and hotel project… The New York devel­op­er says he bought the debt, which had a face val­ue of $130 mil­lion, back from a group of cred­i­tors led by Fortress Invest­ment Group.” 8

    “Trump buys out tow­er cred­i­tors” Crain’s Chica­go Busi­ness– March 28, 2012

    In a fur­ther twist to the sto­ry, in the same arti­cle from Chica­go Busi­ness revealed: “After buy­ing out the junior debt [the mez­za­nine loan], Mr. Trump says he now owes about $120 mil­lion on the build­ing that comes due in 1½ years.” 8

    The afore­men­tioned shows us that in 2012 Trump had already paid off most of the Deutsche Bank loan before Soros, etc. came in and wiped out most of his mez­zai­n­ine debt. This rais­es the ques­tion, why wasn’t Trump expect­ed by Soros, Fortress and Black­acre to pay back their riski­er, high-inter­est mez­za­nine loan? Also, how was Trump able to pay down his Deutsche Bank loan – demon­strat­ing the means to pay off all his loans – yet still have Soros and the oth­ers give him some­where between $82 mil­lion and $312 mil­lion in debt for­give­ness?

    Addi­tion­al­ly to that, why have we heard almost noth­ing about this gigan­tic give­away to Trump? And why were Soros and Black­acre, two of the three main investors in the mez­za­nine loan, scrubbed from media’s cov­er­age of the final debt for­give­ness deal? What back­room agree­ments were made con­cern­ing this mez­za­nine loan?

    ...

    And indeed, not only was this deal made in a cloaked man­ner, it may have been the most gen­er­ous amount of debt for­give­ness ever giv­en on a mez­za­nine loan to a bor­row­er who was in good finan­cial health and who had a steadi­ly appre­ci­at­ing asset, as was Trump and his Chica­go tow­er.

    Foot­notes:

    *Two arti­cles quote the total for the mez­za­nine loan at $130 mil­lion, how­ev­er due to the lim­it­ed cov­er­age of the deal we do not know at this time which is the true fig­ure. 6 7

    **If we were to rely on the orig­i­nal fig­ure of the $160 mil­lion prin­ci­pal, this would be $112 mil­lion give­away on the loan’s prin­ci­ple to Trump

    Sources:

    1. “Mez­za­nine Financ­ing” Investo­pe­dia: http://www.investopedia.com/terms/m/mezzaninefinancing.asp
    2. “Big names back Trump tow­er” Chica­go Tri­bune – Octo­ber 28, 2004: http://articles.chicagotribune.com/2004–10-28/news/0410280265_1_donald-trump-soros-fund-management-blackacre-institutional-capital-management
    3. “In Chica­go, Trump Hits Head­winds” The Wall Street Jour­nal – Octo­ber 29, 2008: http://www.wsj.com/articles/SB122523704293478077
    4. “Trumped up: Tro­phy tow­ers’ con­dos rise above hous­ing slump” Crain’s Chica­go Busi­ness – April 14, 2012: http://www.chicagobusiness.com/article/20120414/ISSUE01/304149974/trumped-up-trophy-towers-condos-rise-above-housing-slump
    5. “How Long Does It Take To Pay Off a Sky­scraper?” Slate – July 12, 2012: http://www.slate.com/blogs/quora/2012/07/12/how_long_does_it_take_to_pay_off_a_skyscraper_.html
    6. “Mort­gage rates sink to new record low” CNN Mon­ey – June 7, 2012: http://money.cnn.com/2012/06/07/real_estate/mortgage-rates/
    7. “The 400 Rich­est Amer­i­cans – #134 Don­ald Trump” Forbes – Sept. 17, 2008: http://www.forbes.com/fdc/welcome_mjx.shtml
    8. “Trump buys out tow­er cred­i­tors” Crain’s Chica­go Busi­ness – March 28, 2012: http://www.chicagobusiness.com/realestate/20120328/CRED03/120329769/trump-buys-out-tower-creditors
    9. “Trump sues lenders for more time to pay off loan on Tow­er” Chica­go Real Estate Dai­ly – Novem­ber 07, 2008: http://www.chicagobusiness.com/realestate/20081107/CRED03/200031749/trump-sues-lenders-for-more-time-to-pay-off-loan-on-tower

    “That group was the orig­i­nal mez­za­nine loan lenders: Soros, Fortress and Black­acre; all of whom decid­ed to for­give Trump’s future inter­est pay­ments on the loan, sell­ing it to him at the mas­sive­ly reduced price of $48 mil­lion. To put that in stark­er terms, Soros and the oth­ers effec­tive­ly gave Trump pos­si­bly hun­dreds of mil­lions of dol­lars in debt for­give­ness, while cut­ting down the prin­ci­pal of his loan by $82 mil­lion**. Basi­cal­ly, Soros and the oth­ers for­gave Trump as much as $312 mil­lion for no appar­ent rea­son.”

    It is a bit of a head-scratch­er. And a great area of media inquiry con­sid­er­ing Soro’s sta­tus as a major Demo­c­ra­t­ic donor. At least it seems like it should be a great area of inquiry. Although note there there is one pos­si­ble expla­na­tion avail­able from exist­ing report­ing for why Trump was expect­ed to pay back his low­er inter­est but larg­er Deutsche Bank loans but not his mez­za­nine loan: Trump was only able to pay off his Deutsche Bank loans in 2012 with the help of an addi­tion­al Deutsche Bank pri­vate bank loan (which is part of why he still owes so much mon­ey to Deutsche Bank). So it’s pos­si­ble that Trump real­ly could­n’t pay off any of his loans in 2012 relat­ed to that Chica­go sky­scraper project. Instead Deutsche Bank bailed him out with a new pri­vate bank loan and the Soros/Fortress/Cerberus group bailed him out by sell­ing back the debt at a mas­sive­ly reduced price.

    So it’s pos­si­ble the mys­tery behind the sweet­heart Soros debt for­give­ness is sim­ply that Trump had sim­ply made a bad invest­ment and Soros and Deutsche Bank made a bad invest­ment in Trump. Although it’s still some­what mys­te­ri­ous since, as we just saw, the sky­scraper mar­ket in Chica­go in 2012 was actu­al­ly look­ing pret­ty decent for big devel­op­ers like Trump, with sig­nif­i­cant appre­ci­a­tion in the val­ue of the under­ly­ing asset:

    ...
    In 2012, Trump con­tin­ued to owe mon­ey to his lenders but sales of his con­do­mini­ums had picked up and his tow­er had a 69% occu­pan­cy rate. As Crain’s Chica­go put it: “The region’s hous­ing and con­do mar­ket is still mired in a his­toric slump. But when it comes to buy­ing and sell­ing in Chicago’s high-end con­do mar­ket, life is sur­pris­ing­ly good… Con­do­mini­um own­ers at the $850 mil­lion Trump Inter­na­tion­al Hotel & Tow­er and oth­er new­er top-end build­ings have, more often than not, expe­ri­enced val­ue appre­ci­a­tion when they sold in recent years.” 4
    ...

    If Trump was indeed unable to pay back both his Deutsche Bank and mez­za­nine loans, that does sound cir­cum­stan­tial­ly at least kind of odd. It would be an odd time for mas­sive loan for­give­ness when the high-end Chica­go sky­scraper mar­ket was look­ing pret­ty good in 2012. The con­do units on the Trump Tow­er were basi­cal­ly sold out by 2014, so busi­ness was clear­ly pret­ty great in the wake of that round of loan for­give­ness.

    All in all, it’s an odd busi­ness sto­ry. But con­sid­er­ing that it’s an odd busi­ness sto­ry involv­ing the con­spir­a­cy-mon­ger­ing GOP nom­i­nee get­ting a mys­tery sweet­heart loan deal a major Demo­c­ra­t­ic donor, and not just some ran­dom big donor but George Soros, and this was all just four years ago, the odd­est part of this sto­ry might be how rarely it’s been told.

    Posted by Pterrafractyl | August 27, 2016, 3:00 pm
  3. With much of the world jus­ti­fi­ably ter­ri­fied of the prospect that Pres­i­dent-elect Don­ald Trump is going to effec­tive­ly reverse any US com­mit­ments to pre­vent­ing cat­a­stroph­ic cli­mate change and pull the US out of the Paris accord, it’s worth keep­ing in mind, giv­en our Trumpian tra­jec­to­ry that could impact the cli­mate for decades to come, that food secu­ri­ty is basi­cal­ly guar­an­teed to be a glob­al emer­gency in com­ing decades. There was already a loom­ing arable land short­age and now it’s only going to get worse. And that all sug­gests that we could see a lot more geostrate­gic inter­est by nation-states in secur­ing access to those regions of the world with large amounts of arable farm­land.

    Giv­en all that, it’s also worth not­ing that Ukraine is set to be the world’s third largest food exporter some time in the next decade due to its incred­i­bly pro­duc­tive arable land:

    Bloomberg Busi­ness­week

    That Boom You Hear Is Ukraine’s Agri­cul­ture
    With the con­flict frozen, mon­ey is flow­ing to mod­ern­ize farms

    Alan Bjer­ga
    Volodymyr Ver­byany

    Octo­ber 13, 2016 — 10:00 PM CDT

    Ihor Makarevych bumps along the pit­ted roads to his fields, talk­ing about war­fare and his crops. When con­flict broke out in east­ern Ukraine in 2014, heli­copter-launched heat flares scorched his land. Lat­er, 19 of his employ­ees were con­script­ed into the army. “There were nine road check­points installed by Ukrain­ian sol­diers near our farm­lands,” says the 52-year-old, who was an offi­cer in the Sovi­et Army in the 1980s.

    Makarevych is chief exec­u­tive offi­cer of Agrofir­ma Podo­livs­ka, which man­ages farm­land in Ukraine’s Kharkiv region, to the north bor­der­ing Rus­sia and to the east, the Donet­sk and Luhan­sk regions, part­ly con­trolled by sep­a­ratists. Despite that prox­im­i­ty, when he arrives at his fields, the war seems far away. Semi-auto­mat­ed New Hol­land and John Deere com­bines are start­ing to har­vest corn and sun­flow­ers, fol­low­ing chore­og­ra­phy devel­oped by Kharkiv-based coders. Farm­ers check mois­ture lev­els on mon­i­tors inside their cabs, while deep-yel­low grain is cut against a blue sky, the col­ors of the Ukrain­ian flag.

    The corn and sun­flow­ers will make their way to the ports of Odessa and Myko­layiv for export, sold to Archer Daniels Mid­land, Cargill, and oth­er multi­na­tion­als as part of the stream of grain and oilseeds that makes Ukraine the world’s fifth-biggest sell­er of wheat and oth­er grains. Com­pa­nies are bet­ting that glob­al appetites will increas­ing­ly rely on Black Sea soil even as obsta­cles to growth remain. “Ukraine is a big answer to the ques­tion of how you feed the world,” says Steve Pifer, a for­mer U.S. ambas­sador there who’s now with the Brook­ings Insti­tu­tion. “But it’s a com­plex place to do busi­ness.”

    ...

    The country’s agri­cul­tur­al super­pow­ers start with its soil, called cher­nozem, or “black earth.” High in humus and nat­ur­al fer­til­iz­ers, it’s cel­e­brat­ed by agrar­i­ans for its fer­til­i­ty. “In Iowa, good black soil may be a foot deep,” Pifer says. “In Ukraine, it’s three or four feet deep.” Prox­im­i­ty to the Euro­pean Union, Mid­dle East, Rus­sia, and Africa pro­vides nat­ur­al mar­kets. So does sus­pi­cion of genet­i­cal­ly mod­i­fied crops. Ukraine’s non-GMO corn vari­eties have made it China’s No.1 source, help­ing to turn the for­mer Sovi­et bread­bas­ket into a glob­al play­er.

    Ukraine sold $7.6 bil­lion of bulk farm com­modi­ties world­wide in 2015, quin­tu­pling its rev­enue from a decade ear­li­er and top­ping Rus­sia, its clos­est rival on world mar­kets. By the mid-2020s, “Ukraine will be No.3, after the U.S. and Brazil,” in food pro­duc­tion world­wide, says Mar­tin Schuldt, the top rep­re­sen­ta­tive in Ukraine for Cargill, the world’s largest grain trad­er. The com­pa­ny, head­quar­tered in Min­neton­ka, Minn., saw its sun­flower-seed pro­cess­ing plant in the Donet­sk region over­run by sep­a­ratists in 2014; it still can’t regain access to the facil­i­ty. Nonethe­less, the com­pa­ny is invest­ing $100 mil­lion in a new grain ter­mi­nal in Ukraine. Bunge, the world’s biggest soy proces­sor, opened a port this year at a cer­e­mo­ny with Ukrain­ian Pres­i­dent Petro Poroshenko—another vote of con­fi­dence in the coun­try.

    Con­flict in what’s broad­ly referred to as the Don­bas pret­ty much hasn’t spilled over to the rest of the coun­try, says John Shmorhun, CEO of Agro­Gen­er­a­tion, a com­pa­ny in the port­fo­lio of SigmaB­leyz­er Invest­ment Group, a glob­al pri­vate equi­ty firm based in Hous­ton. Agro­Gen­er­a­tion owns Agrofir­ma Podo­livs­ka, which cul­ti­vates part of the 120,000 hectares (296,500 acres) of land it oper­ates in Ukraine. It would like to have more land. “I know that if I take some­one else’s land, I can dou­ble, triple the yield,” says Shmorhun, a Ukrain­ian Amer­i­can and ex‑U.S. fight­er pilot who led Ukraine oper­a­tions for DuPont before mov­ing to Agro­Gen­er­a­tion.

    About 1 in every 6 acres of agri­cul­tur­al land in Ukraine isn’t being farmed. Of land in pro­duc­tion, Shmorhun says only about a quar­ter is reach­ing yields on the lev­el of those in the devel­oped world, because of low­er-qual­i­ty seeds, fer­til­iz­ers, and equip­ment. “It’s a huge upside. It’s mind-bog­gling,” he says. Despite occa­sion­al saber rat­tling, the coun­try is sta­ble, he says. “The way I look at the war today, there is a con­flict zone. You draw a line around it.”

    Land reform in the years imme­di­ate­ly after Ukrain­ian inde­pen­dence in 1991 left title to much of the farm­land in the hands of for­mer Sovi­et farm­work­ers and their descen­dants, along with the gov­ern­ment. Legal­ly, no one can sell it—companies such as Agro­Gen­er­a­tion have grown by sign­ing long-term leas­es with own­ers for parcels as small as 5 acres. But the uncer­tain­ty of land titles has deterred investors and kept farm­ers from expand­ing, says Pifer, the for­mer U.S. diplo­mat.

    “Lack of cheap fund­ing is a big obsta­cle,” Shmorhun says. “If you want to get high­er qual­i­ty, you must invest in infra­struc­ture, includ­ing roads, grain ele­va­tors, dry­ers, stor­age.” Aver­age long-term bor­row­ing costs exceed 20 per­cent for loans in hryv­nia and 7 per­cent for loans in for­eign currencies—at 26 to the dol­lar, the hryv­nia is one of the world’s weak­est currencies—making invest­ments from any but the best-cap­i­tal­ized enter­pris­es rare. “With­out a mort­gage mar­ket, farm­ers can’t finance bet­ter seeds or machin­ery,” Shmorhun says. That leaves the bulk of farm­land to be tilled and har­vest­ed with 20th cen­tu­ry, and in some cas­es 19th cen­tu­ry, tech­nol­o­gy. Giv­en the out­mod­ed farm tech­nol­o­gy used by most, it’s remark­able Ukraine pro­duces as much as it does.

    Poroshenko sup­ports cre­at­ing a mar­ket for farm­land, but the Par­lia­ment reg­u­lar­ly extends the ban on sell­ing agri­cul­tur­al prop­er­ty. Ear­li­er in Octo­ber, leg­is­la­tors backed a bill pro­long­ing the mora­to­ri­um through 2018, but the pres­i­dent has yet to sign it. The fear is that large Ukrain­ian com­pa­nies and for­eign investors will gob­ble up the land and dis­place small farm­ers.

    ...

    “Ukraine sold $7.6 bil­lion of bulk farm com­modi­ties world­wide in 2015, quin­tu­pling its rev­enue from a decade ear­li­er and top­ping Rus­sia, its clos­est rival on world mar­kets. By the mid-2020s, “Ukraine will be No.3, after the U.S. and Brazil,” in food pro­duc­tion world­wide, says Mar­tin Schuldt, the top rep­re­sen­ta­tive in Ukraine for Cargill, the world’s largest grain trad­er. The com­pa­ny, head­quar­tered in Min­neton­ka, Minn., saw its sun­flower-seed pro­cess­ing plant in the Donet­sk region over­run by sep­a­ratists in 2014; it still can’t regain access to the facil­i­ty. Nonethe­less, the com­pa­ny is invest­ing $100 mil­lion in a new grain ter­mi­nal in Ukraine. Bunge, the world’s biggest soy proces­sor, opened a port this year at a cer­e­mo­ny with Ukrain­ian Pres­i­dent Petro Poroshenko—another vote of con­fi­dence in the coun­try.”

    Yes, the coun­try that, in the words of for­mer US ambas­sador Steve Pifer is “a big answer to the ques­tion of how you feed the world”, is also cur­rent­ly in the mid­dle of civ­il war and both US and Ger­man agri­cul­tur­al giants have a major pres­ence there and plan on even more invest­ments. Oh, and Don­ald Trump’s cli­mate change poli­cies are sig­nal­ing to the world that the US is going to do what it can to ensure that cli­mate change is as extreme and bru­tal as human­i­ty can make it. So while many Ukraini­ans are prob­a­bly some­what ner­vous about a Trump pres­i­den­cy giv­en the wide­spread assump­tion that Trump is a Putin pup­pet, they can at least find solace in the fact that the gross irre­spon­si­b­li­ty of Trump’s cli­mate poli­cies is prob­a­bly going to make one of Ukraine’s key nat­ur­al resources a glob­al trea­sure.

    Of course, any sit­u­a­tion that makes Ukraine’s land a glob­al trea­sure also rais­es the stakes for the out­come of the con­flict, and that means when you read some­thing like this...

    ...
    Land reform in the years imme­di­ate­ly after Ukrain­ian inde­pen­dence in 1991 left title to much of the farm­land in the hands of for­mer Sovi­et farm­work­ers and their descen­dants, along with the gov­ern­ment. Legal­ly, no one can sell it—companies such as Agro­Gen­er­a­tion have grown by sign­ing long-term leas­es with own­ers for parcels as small as 5 acres. But the uncer­tain­ty of land titles has deterred investors and kept farm­ers from expand­ing, says Pifer, the for­mer U.S. diplo­mat.

    ...

    Poroshenko sup­ports cre­at­ing a mar­ket for farm­land, but the Par­lia­ment reg­u­lar­ly extends the ban on sell­ing agri­cul­tur­al prop­er­ty. Ear­li­er in Octo­ber, leg­is­la­tors backed a bill pro­long­ing the mora­to­ri­um through 2018, but the pres­i­dent has yet to sign it. The fear is that large Ukrain­ian com­pa­nies and for­eign investors will gob­ble up the land and dis­place small farm­ers.
    ...

    ...those fears of large Ukrain­ian com­pa­nies and for­eign investors gob­bling up the land and dis­plac­ing small farm­ers are prob­a­bly going to become a real­i­ty at some point.

    So we’ll see how a Trump admin­is­tra­tion shifts the prospects for peace or greater con­flict in Ukraine. But con­sid­er­ing that this is a Pres­i­dent-elect who appears to view for­eign poli­cies as busi­ness trans­ac­tions and prof­it oppor­tu­ni­ties, the fact that Trump’s cli­mate poli­cies are prob­a­bly going to turn Ukraine’s black soil into an agri­cul­tur­al gold mine is some­thing to keep in mind.

    Posted by Pterrafractyl | November 17, 2016, 9:35 pm
  4. If it turns out the 2016 US elec­tions were actu­al­ly hacked by Rus­sia and not the myr­i­ad of oth­er viable sus­pects (like the GOP or far-right hack­ers), here’s an exam­ple of why that could end up being one of the biggest blun­ders the Russ­ian gov­ern­ment could have pos­si­bly made...unless a heavy mil­i­tary build up in Europe is part of some sneaky long-term plan: Look who’s using Trump’s win as an excuse rea­son to ‘tur­bo boost’ a mas­sive defense spend­ing spree and build a giant, new­ly inte­grat­ed mil­i­tary indus­tri­al com­plex right on Rus­si­a’s bor­der. Pre­dictably:

    Finan­cial Times

    Brus­sels plans to ‘tur­bo boost’ defence spend­ing

    EU pro­pos­al comes as Don­ald Trump press­es Nato allies to lift mil­i­tary expen­di­ture

    by: Arthur Beesley in Brus­sels
    11/28/2016

    Brus­sels is to unveil plans to “tur­bo boost” spend­ing on cyber secu­ri­ty, war ships and drone tech­nol­o­gy as part of a multi­bil­lion-euro Euro­pean Defence Fund, which comes as US pres­i­dent-elect Don­ald Trump press­es Nato allies to sig­nif­i­cant­ly increase mil­i­tary spend­ing.

    The pro­pos­als from the Euro­pean Com­mis­sion, to be unveiled on Wednes­day, fol­low a deci­sion by mem­ber states to deep­en defence co-ordi­na­tion in an effort to for­ti­fy Europe’s anti-ter­ror defences and rein­force exter­nal bor­ders.

    The plans include an increase in cross-bor­der defence pro­cure­ment and greater empha­sis on the stan­dard­i­s­a­tion of equip­ment, as well as the use of EU space pro­grammes for secu­ri­ty and defence pur­pos­es. At the moment about 80 per cent of defence pro­cure­ment is run on a nation­al basis, the com­mis­sion esti­mates.

    Mr Trump’s elec­tion win has prompt­ed deep anx­i­ety with­in Nato. The pres­i­dent-elect warned dur­ing his cam­paign that Wash­ing­ton might not defend its allies under Russ­ian attack, although he lat­er “under­lined Nato’s endur­ing impor­tance” in a post-elec­tion call with Jens Stoltenberg, sec­re­tary-gen­er­al of the alliance.

    But he has con­sis­tent­ly called for Euro­pean mem­bers of Nato to increase defence expen­di­ture to meet the alliance’s tar­get to spend 2 per cent of eco­nom­ic out­put on defence. Twen­ty-two of the 28 EU mem­ber states are in Nato, although only the UK, Esto­nia, Poland and Greece meet the thresh­old.

    The new plan from the EU exec­u­tive, to be put for­ward by Jyr­ki Katainen, com­mis­sion vice-pres­i­dent, aims to increase Europe’s land, air, sea and space capa­bil­i­ties, as well as invest­ment in cyber secu­ri­ty and intel­li­gence gath­er­ing.

    It comes amid height­ened con­cern in Europe about the threat of inter­na­tion­al ter­ror­ism and the increase in mil­i­tary activ­i­ty by Rus­sia, par­tic­u­lar­ly after its seizure of Crimea from Ukraine and sup­port for sep­a­ratist fac­tions in the east of that coun­try.

    The UK’s loom­ing depar­ture from the EU has pre­sent­ed an oppor­tu­ni­ty to has­ten plans for greater Euro­pean defence co-oper­a­tion. Lon­don has tra­di­tion­al­ly opposed Europe-wide defence ini­tia­tives, argu­ing that was Nato’s exclu­sive respon­si­bil­i­ty.

    France and Ger­many have led the charge for deep­er defence co-ordi­na­tion, backed by Italy and Spain. Fed­er­i­ca Mogheri­ni, EU for­eign pol­i­cy chief, believes that Euro­pean pub­lic opin­ion increas­ing­ly views secu­ri­ty as a mat­ter for the EU.

    Jean-Claude Junck­er, Euro­pean Com­mis­sion pres­i­dent, has said Europe can­not afford to “pig­gy-back” on the mil­i­tary might of oth­ers. He said recent­ly that a spe­cial defence fund was required “to tur­bo boost research and inno­va­tion”.

    The key objec­tive in the new pro­pos­al is to deliv­er a bet­ter return from ris­ing defence expen­di­ture in the bloc. Although mem­ber states would still own all mil­i­tary assets and tech­nol­o­gy, the plan assumes some mem­bers would pool nation­al resources to max­imise the ben­e­fit and effi­cien­cy of strate­gic equip­ment.

    Mr Katainen sug­gest­ed in an FT inter­view in Sep­tem­ber that mem­ber states might raise Euro­pean defence bonds on finan­cial mar­kets to fund joint pur­chas­es of “EU-owned” assets through a Euro­pean Defence Fund.

    Although Europe has the sec­ond-largest mil­i­tary expen­di­ture in the world, the com­mis­sion paper will argue that such spend­ing is inef­fi­cient because of dupli­ca­tion, the lack of inter­op­er­abil­i­ty with equip­ment and tech­no­log­i­cal gaps. The com­mis­sion esti­mates that lack of co-ordi­na­tion costs €25bn-€100bn a year giv­en the absence of com­pe­ti­tion and economies of scale for indus­try and pro­duc­tion.

    The US invests more than twice as much as EU mem­ber states’ total defence spend, while Chi­na has increased its defence bud­get 150 per cent in the past decade.

    The plan will say that Europe’s €100bn defence indus­try could fall behind the next-gen­er­a­tion tech­nol­o­gy of glob­al rivals with­out a sus­tained invest­ment by mem­ber states in defence capa­bil­i­ty. Fail­ure to boost invest­ment would com­pro­mise the bloc’s efforts to devel­op the capac­i­ty to act autonomous­ly when nec­es­sary.

    ...

    “Although Europe has the sec­ond-largest mil­i­tary expen­di­ture in the world, the com­mis­sion paper will argue that such spend­ing is inef­fi­cient because of dupli­ca­tion, the lack of inter­op­er­abil­i­ty with equip­ment and tech­no­log­i­cal gaps. The com­mis­sion esti­mates that lack of co-ordi­na­tion costs €25bn-€100bn a year giv­en the absence of com­pe­ti­tion and economies of scale for indus­try and pro­duc­tion.”

    Yep, the mil­i­tary bloc that rep­re­sents the sec­ond-largest mil­i­tary expen­di­ture in the world is about to simul­ta­ne­ous­ly go on both a spend­ing spree but also an over­haul of how that mon­ey is spent to max­i­mize the amount of real mil­i­tary pow­er gained from such spend­ing. If encour­ag­ing the EU to dra­mat­i­cal­ly, and like­ly per­ma­nent­ly, increase the EU’s mil­i­tary capac­i­ty was part of the Krem­lin’s plan, it must be a pret­ty sophis­ti­cate plan. A sophis­ti­cat­ed plan that is thus far work­ing quite well.

    And if that plan includ­ed giv­ing the EU a big push towards a post-NATO secu­ri­ty arrange­ment and its own “EU Army”, that part of the plan also appears to be work­ing:

    The Inde­pen­dent

    Euro­pean Par­lia­ment backs plans to cre­ate a defence union

    The EU takes a step clos­er to the for­ma­tion of a ‘Euro­pean army’

    She­hab Khan
    Stras­bourg

    Tues­day 22 Novem­ber 2016

    The Euro­pean Par­lia­ment has backed plans to cre­ate a defence union which will secure struc­tured coop­er­a­tion between nations as well as a new EU mil­i­tary oper­a­tional head­quar­ters.

    Law­mak­ers at the Euro­pean Par­lia­ment vot­ed 369–255 in favour of the pro­pos­als, which also calls for greater spend­ing by nations on defence.

    Although the vote is not legal­ly bind­ing it does rep­re­sent sup­port for the propo­si­tion before the Euro­pean Coun­cil meets in Decem­ber to dis­cuss Europe’s defence capa­bil­i­ties.

    Urmas Paet, the for­mer for­eign min­is­ter of Esto­nia, draft­ed the report and told The Inde­pen­dent he was glad Par­lia­ment had made a clear state­ment on how Euro­pean defence should now devel­op.

    “There are more and more risks to Europe relat­ed to ter­ror­ism, Rus­sia, the Mid­dle East and North and Cen­tral Africa,” Mr Paet said.

    “[Cur­rent­ly] if there is some cri­sis emerg­ing and you need to move mil­i­tary per­son­nel and equip­ment from one Euro­pean coun­try to anoth­er, then it will take days or even weeks to get all the approvals.

    “It is a very bureau­crat­ic process and we all under­stand that when it is a cri­sis there is no time to wait for this kind of stuff.”

    The plan was pro­posed in Sep­tem­ber by France and Ger­many but some have argued that the new Euro­pean Defence Union would be a threat to Nato.

    Geof­frey Van Orden, the Conservative’s Euro­pean defence and mil­i­tary spokesman, argued strong­ly against the pro­pos­als.

    “You can’t have the Euro­pean Union try­ing to hijack what is essen­tial­ly a Nato require­ment. You have to sep­a­rate the require­ments for mem­ber states, in oth­er words Euro­pean allies, to spend two per cent of their GDP on defence, which has pre­cious lit­tle to do with the EU’s ambi­tions,” Mr Van Orden told The Inde­pen­dent.

    “The ambi­tions have been height­ened for the cre­ation of a Euro­pean Defence Union and call it by what­ev­er name you like, some sort of ‘Euro­pean army’. Although they deny that’s what they want; but it is a ‘Euro­pean army’ in every­thing but the name.”

    Mr Orden also added that the moti­va­tion behind the pro­pos­al was to cre­ate fur­ther polit­i­cal inte­gra­tion and for the EU to act as “some sort of actor on the world stage”.

    Mr Paet reject­ed this notion and said his pro­pos­als would strength­en the capa­bil­i­ties of Nato.

    “Every­thing the EU does must go hand in hand with Nato. Some say it will weak­en Nato but vice ver­sa, we should do this in close coor­di­na­tion with Nato

    “...Twen­ty-two EU mem­ber states are also Nato mem­bers. If they increase their defence bud­gets, it also auto­mat­i­cal­ly means more mon­ey for Nato,” the Eston­ian MEP told The Inde­pen­dent.

    Mr Paet was also very strong in denounc­ing the idea that this rep­re­sent­ed a new “Euro­pean army”.

    “If Nato is there and func­tion­al, I don’t think so. If you have this ‘[Euro­pean] army’ of 28 nations, there will be oth­er prob­lems. Cul­tur­al back­grounds and his­tor­i­cal back­grounds and so on,” Mr Paet said.

    “Mr Paet was also very strong in denounc­ing the idea that this rep­re­sent­ed a new “Euro­pean army”.”

    LOL! Yeah, it’s not an a “Euro­pean army”. It’s mere­ly a “Defense Union”. With its own mil­i­tary head­quar­ters. Also keep in mind that the head of NATO, Jens Stoltenberg, declared just a few days before this EU par­lia­ment vote that the Euro­pean Defense Force pro­pos­al was dead, and should­n’t hap­pen any­way because it would dupli­cate and weak­en NATO.

    So we’re head­ing into a sit­u­a­tion where, whether or not Trump ends up effec­tive­ly weak­en­ing NATO by destroy­ing Europe’s con­fi­dence in the US’s ded­i­ca­tion to the alliance, NATO might effec­tive­ly die any­way, or just fade away by being effec­tive­ly dupli­cat­ed by the EU’s new army. And while end­ing, or at least sig­nif­i­cant­ly weak­en­ing, NATO is some­thing the Krem­lin would no doubt love to encour­age, doing that at the cost of cat­alyz­ing an EU army seems like a ques­tion­able trade off. Espe­cial­ly since one of the goals of the EU army that we keep hear­ing about is increas­ing the EU’s capac­i­ty to project pow­er on the world stage in a way it can’t do at this point. If that was part of some Krem­lin plan to assist Trump, it must be one hel­lu­va plan.

    Posted by Pterrafractyl | November 29, 2016, 4:10 pm
  5. With big ques­tions loom­ing over how, or even if, a Trump admin­is­tra­tion will mod­i­fy the US’s var­i­ous trade agree­ments, it’s prob­a­bly worth not­ing we haven’t heard Trump men­tion a trade war with Ger­many despite all his tirades against Chi­na and Mex­i­co. It rais­es the ques­tion of why, since Ger­many’s unprece­dent­ed and dam­ag­ing sur­plus­es make it such an obvi­ous trade war tar­get:

    Mar­ket­Watch

    Opin­ion: If Trump wants a trade war, start­ing one with Ger­many makes more sense

    By Matthew Lynn

    Pub­lished: Nov 30, 2016 5:35 a.m. ET

    LONDON (Mar­ket­Watch) — Build­ing a wall along the bor­der with Mex­i­co. Launch­ing a trade war with Chi­na. Scrap­ping the Trans-Pacif­ic Part­ner­ship, and rethink­ing the involve­ment of the Unit­ed States in trade agree­ments around the world.

    When he moves into the White House in Jan­u­ary, Pres­i­dent Don­dald Trump will have plen­ty of options for mak­ing good on his cam­paign promise to use tar­iff bar­ri­ers to rebuild Amer­i­can indus­try.

    There is one poten­tial trade war, how­ev­er, that few peo­ple have so far noticed — but which could soon be his eas­i­est tar­get. Ger­many. Giv­en the size of its pop­u­la­tion, it runs a far larg­er trade sur­plus than Chi­na — and a mas­sive sur­plus with the U.S. in par­tic­u­lar. Even bet­ter, the indus­tries to pick off are rel­a­tive­ly sim­ple to iden­ti­fy, and would actu­al­ly have a chance of cre­at­ing well-paid Amer­i­can jobs.

    Heck, Trump would even be set­tling a fam­i­ly score — the Ger­mans deport­ed his grand­fa­ther, Fred­er­ick Trump, for draft-dodg­ing. They might be feel­ing ner­vous about Jan. 20, the day of Trump’s inau­gu­ra­tion, in Bei­jing and Mex­i­co City — but the place they should be feel­ing real­ly ner­vous is Berlin.

    When Trump con­found­ed expec­ta­tions ear­li­er this month, and brushed aside Hillary Clin­ton to win the pres­i­den­cy, world lead­ers were not exact­ly falling over one anoth­er to con­grat­u­late them. Few had want­ed him to win. Even so, the mes­sage from Ger­man Chan­cel­lor Angela Merkel was espe­cial­ly chilly, mak­ing plen­ty of point­ed remarks about lib­er­al val­ues and shared respon­si­bil­i­ties.

    To most com­men­ta­tors, that was a reflec­tion of Merkel’s com­mit­ment to tol­er­ance and open­ness, which are cer­tain­ly among her best qual­i­ties. But it may have reflect­ed some­thing else as well. Trump’s cam­paign rhetoric about rip­ping up free-trade agree­ments, and about pro­tect­ing Amer­i­can indus­try, must sound trou­bling to any­one who is aware of what keeps the Ger­man econ­o­my tick­ing.

    In Ger­many, the threat its mas­sive trade sur­plus with Amer­i­ca has already been not­ed. The influ­en­tial and well-con­nect­ed mag­a­zine Der Spiegel ran an arti­cle in the wake of his vic­to­ry say­ing that Ger­many was prepar­ing itself for a trade war with Trump’s Amer­i­ca. The country’s Eco­nom­ics Min­istry has, the mag­a­zine report­ed, been told to start putting togeth­er the counter-argu­ments against tar­iffs bar­ri­ers — point­ing out that it is the result of the country’s aging pop­u­la­tion and the struc­ture of its indus­tri­al base.

    If there is to be a diplo­mat­ic war over the issue, Ger­many wants its ground to be well-pre­pared.

    Is it right to be wor­ried?

    It cer­tain­ly is.

    Germany’s trade sur­plus is absolute­ly mas­sive, and unprece­dent­ed in mod­ern indus­tri­al his­to­ry.

    Last year it hit 8.9% of gross domes­tic prod­uct, and it is like­ly to break through 9% before the end of 2016. Glob­al­ly, it is sec­ond in size only to China’s, but giv­en that Ger­many is a far small­er coun­try, it is only fair to mea­sure it on a per capi­ta basis — and when you look at it that way, Germany’s sur­plus is sev­en times big­ger than China’s.

    Even worse, Chi­na is a devel­op­ing coun­try — and those are gen­er­al­ly expect­ed to run sur­plus­es as they build up indus­tries through exports. Over time, those sur­plus­es come down, as domes­tic demand grows, and that process already seems to be under­way in Chi­na. In con­trast, Ger­many is a mature indus­tri­al econ­o­my, and yet its sur­plus keeps on grow­ing relent­less­ly.

    In truth, Ger­many has become a machine for dump­ing defla­tion on the rest of the world.

    Its sur­plus with the U.S. is par­tic­u­lar­ly acute. Accord­ing to U.S. gov­ern­ment fig­ures, the coun­try ran a deficit with Ger­many of $74 bil­lion in 2015. Go back to 2006 and that was only $47 bil­lion — it has almost dou­bled in a decade, and keeps on grow­ing.

    Out of the total deficit for 2015 of $531 bil­lion, Ger­many account­ed for 14% of it, an impres­sive achieve­ment giv­en that Ger­many only accounts for 4.6% of the glob­al econ­o­my. If you are sit­ting in the White House, think­ing that you want to do some­thing about the deficit, then it makes a lot more sense to con­cen­trate on Ger­many than Mex­i­co or Chi­na.

    That is not all.

    Much of Germany’s trade sur­plus is clear­ly the result of cur­ren­cy manip­u­la­tion. The euro has depressed the real val­ue of the country’s exports, allow­ing it rack up those huge exports. You can argue about whether China’s cur­ren­cy is real­ly at its fair val­ue or not — but no one can real­ly dis­pute that Germany’s cur­ren­cy is way, way below what it would be if it still had the deutschemark.

    Even more sig­nif­i­cant­ly, there would be some real gains from tak­ing action. When Trump talks of bring­ing back well-paid man­u­fac­tur­ing jobs, it is hard to see how a trade war with Chi­na would help. Blue-col­lar work­ers in Michi­gan don’t real­ly want to assem­ble toys 12-hours a day on near-star­va­tion wages, which is what a lot of Chi­nese labor­ers do.

    But Germany’s exports to the U.S. are high-end goods such as auto­mo­biles, which account for 12% of its exports by them­selves, fol­lowed by vehi­cle parts, chem­i­cals and aero­space. Those are pre­cise­ly the kind of well-paid jobs that Trump vot­ers thought their man would deliv­er for them.

    So could Trump launch a trade war with Ger­many?

    Under World Trade Orga­ni­za­tion rules, it would not be easy. It is very hard to impose uni­lat­er­al tar­iffs on one coun­try with­out rip­ping up the entire net­work. But that doesn’t mean that he couldn’t find a way. Volkswagen’s diesel scan­dal, for exam­ple, might be the per­fect excuse to slap puni­tive restric­tions on the Ger­man car indus­try. Like­wise, its med­ical exports can always be deemed “unsafe.”

    If Amer­i­cans had to ditch their BMWs for Cadil­lacs and Lin­colns, that would cer­tain­ly cre­ate a few decent­ly paid jobs.

    ...

    A trade war between the Unit­ed Sates and Ger­many is prob­a­bly the last thing it needs. But if Trump wants to make good on some of his pledges, restric­tions on Ger­man exports are the eas­i­est way to do that — and that means it can’t be ruled out.

    “Much of Germany’s trade sur­plus is clear­ly the result of cur­ren­cy manip­u­la­tion. The euro has depressed the real val­ue of the country’s exports, allow­ing it rack up those huge exports. You can argue about whether China’s cur­ren­cy is real­ly at its fair val­ue or not — but no one can real­ly dis­pute that Germany’s cur­ren­cy is way, way below what it would be if it still had the deutschemark.”

    Yeah, it’s kind of hard to argue that there isn’t sys­tem­at­ic cur­ren­cy manip­u­la­tion tak­ing place when a coun­try is part of a mas­sive cur­ren­cy union that per­ma­nent­ly low­ers the val­ue of its cur­ren­cy. And then there’s the sys­tem­at­ic wage sup­pres­sion specif­i­cal­ly intend­ed to encour­age exports. Or the fact that, on a per capi­ta basis, Ger­many’s sur­plus is sev­en times larg­er than Chi­na’s and is cur­rent­ly only behind Chi­na and Japan (bare­ly) in the rank­ing of coun­tries run­ning sur­plus­es with the US. If you’re deter­mined to pick a trade war, that all sure seems like a rea­son to pick one with Ger­many. Espe­cial­ly since the Ger­man gov­ern­ment is already hon­ing its coun­ter­ar­gu­ments against these crit­i­cism, and they basi­cal­ly amount to some­thing along the lines of ‘don’t blame us, all of the crit­i­cism aren’t real­ly very valid, and there noth­ing we can do about this...or intend to do about this’:

    Der Spiegel Inter­na­tion­al

    Ger­many Pre­pares for Trade Con­flict with Trump

    Ger­many’s cur­rent account sur­plus is high­er than ever before and the coun­try is con­cerned that it could become a tar­get of US pres­i­dent-elect Don­ald Trump’s ire as a result. Berlin is already mak­ing prepa­ra­tions for the pos­si­ble con­flict.

    By Chris­t­ian Reier­mann
    Novem­ber 25, 2016 06:00 PM

    US pres­i­dent-elect Don­ald Trump has long accused Chi­na of being a rogue state on the glob­al eco­nom­ic stage. He has blast­ed the coun­try for alleged­ly destroy­ing huge num­bers of Amer­i­can jobs with its exports and he says he is plan­ning puni­tive tar­iffs in retal­i­a­tion.

    This kind of trade pol­i­cy blus­ter com­ing from the new­ly elect­ed pres­i­dent is gen­er­at­ing unease in Berlin. The Ger­man gov­ern­ment is con­cerned that Ger­many could soon fall into Trump’s sights as well.

    There are plen­ty of rea­sons for that. Ger­many’s cur­rent account sur­plus has nev­er been as high as it is this year and nev­er before has that sur­plus rep­re­sent­ed such a sig­nif­i­cant share of the coun­try’s gross domes­tic prod­uct. Mak­ing mat­ters worse is the fact that the US is the largest con­sumer of Ger­man exports.

    Accord­ing to Ger­man gov­ern­ment cal­cu­la­tions from Octo­ber, the cur­rent account sur­plus is set to climb to 8.9 per­cent this year, which would be larg­er than ever before and high­er even than Chi­na’s. Such a sur­plus comes about when a coun­try pro­duces more than it con­sumes and receives more rev­enues from over­seas than it invests.

    As high as it is, though, the cur­rent sur­plus is like­ly to con­tin­ue grow­ing. The recent fall in the euro’s val­ue rel­a­tive to the dol­lar fol­low­ing Trump’s elec­tion makes Ger­man prod­ucts and ser­vices even more com­pet­i­tive. And many econ­o­mists believe that the val­ue of the dol­lar will con­tin­ue to climb, which means that the val­ue of the euro against the dol­lar will shrink cor­re­spond­ing­ly. Their pre­dic­tions are based on recent indi­ca­tions that Trump’s announced eco­nom­ic stim­u­lus poli­cies will push up both Amer­i­ca’s sov­er­eign debt load and its inter­est rates.

    Experts at Ger­many’s cen­tral bank, the Bun­des­bank, and at the Euro­pean Cen­tral Bank have cal­cu­lat­ed an even high­er cur­rent account sur­plus for Ger­many in a fore­cast to be released in two weeks. Accord­ing­ly, Ger­many’s sur­plus will exceed 9 per­cent for this year — and per­haps by quite a lot.

    Nev­er before has a large, mature and pros­per­ous econ­o­my like Ger­many’s pro­duced high­er sur­plus­es. Such val­ues tend to be seen in emerg­ing economies, which lever­age their com­pet­i­tive advan­tages — such as low wages — to achieve pros­per­i­ty via exports.

    ...

    Ongo­ing Con­flict

    It seems like­ly that Trump’s admin­is­tra­tion will ulti­mate­ly turn its ire on Berlin and experts in both the Finance Min­istry and the Eco­nom­ics Min­istry are prepar­ing for a pos­si­ble new trans-Atlantic front in what has been an ongo­ing con­flict with its Euro­pean neigh­bors.

    Indeed, Ger­many has had plen­ty of oppor­tu­ni­ty in recent years to for­mu­late its coun­ter­ar­gu­ments. The Eco­nom­ics Min­istry, under the lead­er­ship of Merkel’s vice chan­cel­lor Sig­mar Gabriel, recent­ly pre­sent­ed a sweep­ing rejec­tion of the wide­spread crit­i­cism. The argu­ment holds that Ger­many’s sur­plus would be much low­er if both the euro and oil weren’t so cheap. Such tem­po­rary fac­tors “like­ly account for around a third of Ger­many’s pre­vail­ing cur­rent account sur­plus,” they wrote in a recent report. In oth­er words, once the euro gains strength and oil prices go up, the sur­plus will shrink on its own.

    The Eco­nom­ics Min­istry report claims that con­ser­v­a­tive col­lec­tive bar­gain­ing agree­ments play less of a role. Rel­a­tive­ly low wages make Ger­man prod­ucts more afford­able in addi­tion to sup­press­ing domes­tic demand, which reduces the num­ber of import­ed prod­ucts sold in the coun­try. But the report says that con­ser­v­a­tive wages in the past “have rel­a­tive­ly lit­tle effect on the cur­rent account bal­ance.” Plus, the report con­tin­ues, such effects wane as wages climb, as has been the case more recent­ly.

    Oth­er caus­es, by con­trast, are longer last­ing. The report notes that an aging soci­ety, like Ger­many’s, tends to focus more on sav­ing mon­ey for retire­ment, which damp­ens con­sump­tion. Up to 3 per­cent of Ger­many’s sur­plus can be traced back to that phe­nom­e­non, the report claims. Fur­ther­more, Ger­mans often invest their saved mon­ey in the US, thus mak­ing mon­ey avail­able to the Amer­i­cans with which they can buy Ger­man prod­ucts.

    Such cap­i­tal exports con­tin­ue to increase the cur­rent account sur­plus in sub­se­quent years as well. The mon­ey from Ger­many tends to be invest­ed in long-term secu­ri­ties such as com­pa­ny or sov­er­eign bonds. Yields from these invest­ments are then wired to Ger­many, which increas­es the sur­plus fur­ther. Around 2 per­cent of Ger­many’s cur­rent sur­plus is attrib­ut­able to this effect, accord­ing to the report.

    Only about 1 per­cent of Ger­many’s cur­rent account sur­plus, the Ger­man Eco­nom­ics Min­istry report posits, is the result of eco­nom­ic pol­i­cy deci­sions over which the gov­ern­ment in Berlin has con­trol — by invest­ing more mon­ey in the coun­try’s infra­struc­ture, for exam­ple, or low­er­ing tax­es. The report arrives at the con­clu­sion “that the vast major­i­ty of Ger­many’s cur­rent account sur­plus is the prod­uct of mar­ket econ­o­my process­es and deci­sions of mar­ket par­tic­i­pants, both domes­ti­cal­ly and abroad.”

    In oth­er words, Ger­man politi­cians can’t do much about it. The ques­tion, how­ev­er, is if Trump will agree.

    Only about 1 per­cent of Ger­many’s cur­rent account sur­plus, the Ger­man Eco­nom­ics Min­istry report posits, is the result of eco­nom­ic pol­i­cy deci­sions over which the gov­ern­ment in Berlin has con­trol — by invest­ing more mon­ey in the coun­try’s infra­struc­ture, for exam­ple, or low­er­ing tax­es. The report arrives at the con­clu­sion “that the vast major­i­ty of Ger­many’s cur­rent account sur­plus is the prod­uct of mar­ket econ­o­my process­es and deci­sions of mar­ket par­tic­i­pants, both domes­ti­cal­ly and abroad.””

    That’s the big, bold set of sweep­ing argu­ments the Ger­man gov­ern­ment already has ready: ignor­ing sys­temic deval­u­a­tion that came with join­ing the euro and large­ly ignor­ing the strat­e­gy of wage sup­pres­sion while simul­ta­ne­ous­ly pre­dict­ing these trade sur­plus­es will keep grow­ing for the fore­see­able future. In oth­er words, it will be rather odd if Trump goes a trade war ram­page but does­n’t pick one with Ger­many.

    So we’ll see what hap­pens, but also note there’s anoth­er pos­si­ble solu­tion to Amer­i­ca’s trade deficit with Ger­many giv­en the new Ger­man focus on build­ing a EU army: sell­ing Ger­many a bunch of US mil­i­tary hard­ware that it would have oth­er­wise pur­chased else­where. Don’t be super shocked if that ends up being part of a mutu­al­ly agree­able solu­tion.

    Posted by Pterrafractyl | November 30, 2016, 8:56 pm
  6. While improv­ing rela­tions between the US and Rus­sia would under nor­mal cir­cum­stances prob­a­bly be seen as the kind of thing that could ben­e­fit some­thing like nuclear arms con­trol, these are not nor­mal cir­cum­stance. These are Trumpian cir­cum­stances. So, of course, both Putin and Trump are now talk­ing about the need to invest in stronger nuclear forces:

    Finan­cial Times

    Putin and Trump call for stronger nuclear forces

    Rus­sia pres­i­dent says mil­i­tary now ‘stronger than any poten­tial aggres­sor’

    by: Max Sed­don in Moscow and Demetri Sev­astop­u­lo in Wash­ing­ton
    12/22/2016

    Vladimir Putin and Don­ald Trump on Thurs­day called for the strength­en­ing of their coun­tries’ nuclear capa­bil­i­ties.

    Speak­ing at a meet­ing of defence chiefs in Moscow, Mr Putin said Rus­sia need­ed to “strength­en the strate­gic nuclear forces, for that we should devel­op mis­siles capa­ble of pen­e­trat­ing any cur­rent and prospec­tive mis­sile defence sys­tems”, accord­ing to the Tass news agency.

    Mr Putin claimed Russia’s mil­i­tary was able to repel any pos­si­ble threat. Rus­sia was now “stronger than any poten­tial aggres­sor”, he said.

    A few hours after the Russ­ian pres­i­dent spoke, Mr Trump tweet­ed that the US need­ed to expand its nuclear capa­bil­i­ties. “The Unit­ed States must great­ly strength­en and expand its nuclear capa­bil­i­ty until such time as the world comes to its sens­es regard­ing nukes,” the US pres­i­dent-elect wrote.

    The Trump tran­si­tion team did not respond imme­di­ate­ly to ques­tions about whether Mr Trump was refer­ring to the cur­rent US nuclear mod­erni­sa­tion pro­gramme, which will not result in an increase in the num­ber of war­heads in the nuclear arse­nal.

    The Trump tran­si­tion web­site con­tains a state­ment that his incom­ing admin­is­tra­tion “rec­og­nizes the unique­ly cat­a­stroph­ic threats posed by nuclear weapons and cyber attacks” and that Mr Trump would “ensure our strate­gic nuclear tri­ad is mod­ern­ized to ensure it con­tin­ues to be an effec­tive deter­rent”.

    Daryl Kim­ball, head of the Arms Con­trol Asso­ci­a­tion in Wash­ing­ton, said it was unclear if Mr Trump was sim­ply sup­port­ing the cur­rent US pro­gramme ovr was talk­ing about adding more weapons.

    The tweet came the morn­ing after Mr Trump met Michael Fly­nn, his nation­al secu­ri­ty advis­er, and some of the top Pen­ta­gon brass.

    “This tweet is prob­a­bly his ham-hand­ed attempt to express his sup­port for the (mod­erni­sa­tion pro­gramme),” said Mr Kim­ball. “(But) he also said we must strength­en and expand our nuclear capac­i­ty, which implies that he is think­ing about, or wants to build new nuclear warheads...which would be a rad­i­cal depar­ture in US pol­i­cy that goes back decades.”

    Mr Kim­ball stressed that, regard­less of the inten­tion of Mr Trump’s tweet, it was “very irre­spon­si­ble for the pres­i­dent-elect or pres­i­dent to, in 140 char­ac­ters, try to encap­su­late the future direc­tion of pol­i­cy of the worlds’ largest nuclear super­pow­er”.

    Mr Putin’s com­ments fol­low the most intense nuclear pos­tur­ing by Moscow since the end of the Sovi­et Union.

    Rus­sia has can­celled three nuclear deals with the US, while Russ­ian state tele­vi­sion recent­ly warned that Wash­ing­ton was about to start a war, com­par­ing ten­sion over Syr­ia with the Cuban mis­sile cri­sis.

    Some ana­lysts saw Moscow’s nuclear pos­tur­ing as an attempt at intim­i­dat­ing the incom­ing Trump admin­is­tra­tion, as well as bol­ster­ing Mr Putin ahead of elec­tions in 2018.

    Despite huge spend­ing on mil­i­tary mod­erni­sa­tion in recent years, Russia’s con­ven­tion­al forces remain a frac­tion of the size of Nato’s. But its nuclear arse­nal is on a par with America’s — though both are far small­er than at the height of the cold war — allow­ing it to lev­el the play­ing field.

    Russia’s armed forces have been deployed in Mr Putin’s stand-off with the west over Syr­ia and Ukraine. In 2014, they took the Crimean penin­su­la and last week helped Syr­i­an gov­ern­ment forces retake Alep­po, a key flash­point in the country’s five-year civ­il war.

    In Syr­ia, Russ­ian armed forces have killed 35,000 rebel fight­ers and destroyed 725 train­ing camps since Moscow inter­vened on behalf of pres­i­dent Bashar al-Assad’s regime last year, accord­ing to Sergei Shoigu, Russ­ian defence min­is­ter. Moscow had car­ried out 18,800 sor­ties and 71,000 strikes in Syr­ia, Mr Shoigu added.

    The mil­i­tary has used 162 dif­fer­ent weapons sys­tems in the con­flict, which has served as a show­case for much of the new equip­ment devel­oped under Mr Putin’s mod­erni­sa­tion dri­ve. Mr Shoigu also said Rus­sia would pro­duce five new strate­gic bombers and add three new units to Russia’s nuclear forces.

    ...

    Also on Thurs­day Mr Putin attend­ed the funer­al of Andrei Karlov, Russia’s ambas­sador to Turkey, who was shot dead by a for­mer riot police­man claim­ing to exact revenge for the Alep­po siege. Karlov was posthu­mous­ly named a Hero of Rus­sia, the country’s high­est hon­our.

    “A few hours after the Russ­ian pres­i­dent spoke, Mr Trump tweet­ed that the US need­ed to expand its nuclear capa­bil­i­ties. “The Unit­ed States must great­ly strength­en and expand its nuclear capa­bil­i­ty until such time as the world comes to its sens­es regard­ing nukes,” the US pres­i­dent-elect wrote.

    That appears to be the method to our con­tem­po­rary MAD­ness: we’re just going to keep build­ing these weapon sys­tems until the rest of you crazy bas­tards real­ize how insane this is and stop fol­low­ing our lead. And both the lead­ing nuclear pow­ers basi­cal­ly issued the same state­ment on the same day, with Trump writ­ing his nuclear armed tweets just a few hours after Putin’s announce­ment. Sounds expen­sive. And omi­nous.

    But if it seemed like Trump’s nuclear tweets were a response to Putin’s speech, not that there were anoth­er event hap­pen­ing right around the same time that could also par­tial­ly explain both the tim­ing of the tweet and the con­tent: It turns out Trump had a meet­ing with the CEOs of Boe­ing and Lock­heed Mar­tin yes­ter­day, and those com­pa­nies hap­pen to be two out of the three defense con­trac­tors cur­rent­ly bid­ding on a mas­sive defense con­tract to replace the US’s nuclear mis­sile silos:

    CNBC

    Trump’s nuclear tweet rais­es ques­tion of ‘quid pro quo’ for defense con­trac­tors

    Jake Novak
    12/22/2016

    Per­haps there is one pricey Wash­ing­ton pro­gram Pres­i­dent-elect Don­ald Trump does like. Just a few weeks after berat­ing Boe­ing for its high-priced Air Force One replace­ment pro­gram and Lock­heed Mar­tin for it’s even more pricey F‑35 fight­er jet, Trump tweet­ed out what sure looks like his sup­port for what could be the prici­est defense project of them all: Replac­ing the U.S. nuclear mis­sile arse­nal.

    The Unit­ed States must great­ly strength­en and expand its nuclear capa­bil­i­ty until such time as the world comes to its sens­es regard­ing nukes— Don­ald J. Trump (@realDonaldTrump) Decem­ber 22, 2016

    The above state­ment hard­ly comes out of nowhere. First, the Air Force is start­ing the process of replac­ing Amer­i­ca’s Min­ute­man nuclear arse­nal. More than 400 of those ICBMs, most built in the 1960s, now sit in mis­sile silos across the U.S.

    And, not coin­ci­den­tal­ly, the three com­pa­nies bid­ding to get the replace­ment con­tract are Boe­ing, Northrop Grum­man, and Lock­heed Mar­tin. Of course, the CEOs of Boe­ing and Lock­heed just met with Trump in Flori­da yes­ter­day. While Boe­ing came out of that meet­ing promis­ing to keep the costs of replac­ing Air Force One below $4 bil­lion, that’s chick­en­feed com­pared to the $60 bil­lion to $86 bil­lion esti­mat­ed cost of replac­ing the Min­ute­man pro­gram.

    Was some kind of quid pro quo dis­cussed in Mar a Lago Wednes­day? Per­haps we’ll nev­er know, but if Boe­ing gets the con­tract that will be a pre­vail­ing sus­pi­cion for years to come.

    ...

    With the F‑35 pro­gram pret­ty much a done deal, Trump’s focus on Amer­i­ca’s nuclear weapons is sig­nif­i­cant in terms of cost and the pro­jec­tion of U.S. mil­i­tary might. Through­out the elec­tion and tran­si­tion peri­od, Trump has tried to project an image of a leader who can increase Amer­i­can strength while stay­ing fis­cal­ly con­ser­v­a­tive.

    Thurs­day’s nuclear com­ments take what looks like a clear detour from the fis­cal side of that image since Trump did not men­tion cost at all. But it may sig­nal to every­one that when it comes to choos­ing strength or sav­ings, Trump is like­ly to go with strength from here on out.

    “And, not coin­ci­den­tal­ly, the three com­pa­nies bid­ding to get the replace­ment con­tract are Boe­ing, Northrop Grum­man, and Lock­heed Mar­tin. Of course, the CEOs of Boe­ing and Lock­heed just met with Trump in Flori­da yes­ter­day. While Boe­ing came out of that meet­ing promis­ing to keep the costs of replac­ing Air Force One below $4 bil­lion, that’s chick­en­feed com­pared to the $60 bil­lion to $86 bil­lion esti­mat­ed cost of replac­ing the Min­ute­man pro­gram.”

    Well, so that’s sort of a pos­i­tive spin on Trump’s nuclear tweet: maybe he was­n’t sig­nal­ing some sort of mas­sive new arms race. Hope­ful­ly he was just play­ing rhetor­i­cal foot­sie with a pair of pow­er­ful defense con­trac­tors and hyp­ing the exist­ing nuclear mod­ern­iza­tion pro­gram. That’s the kind of hope we get to have these days.

    But also note that these tweets did­n’t actu­al­ly address one of the biggest issues a Trump pres­i­den­cy presents to the world regard­ing the threat of nuclear con­flict: Is the US going to con­tin­ue cast­ing its nuclear umbrel­la over the the heads of exist­ing allies or will Trump do what he hint­ed at dur­ing the cam­paign and con­tin­ue sug­gest­ing that coun­tries like South Korea and Japan should get their own nuclear deter­rents. In oth­er words, is Trump sug­gest­ing the US needs to expand its nuclear capac­i­ty as a means of dis­suad­ing oth­er nations from pur­su­ing their own nuclear weapons? Or was Trump sug­gest­ing the US expand its capac­i­ty because he’s plan­ning on cre­at­ing a future where many more nations around the globe pos­sess their own nuclear stock­piles? That’s not real­ly clear from Trump’s tweet, and inquir­ing minds want to know. Espe­cial­ly in Europe’s cap­i­tals where they’re now look­ing into a nuclear deter­rent alter­nate:

    Der Spiegel

    Ele­phant in the Room Euro­peans Debate Nuclear Self-Defense after Trump Win

    For decades, Amer­i­can nuclear weapons have served as a guar­an­tor of Euro­pean secu­ri­ty. But what hap­pens if Don­ald Trump casts doubt on that atom­ic shield? A debate has already opened in Berlin and Brus­sels over alter­na­tives to the U.S. deter­rent.

    By Kon­stan­tin von Ham­mer­stein, Chris­tiane Hoff­mann, Peter Müller, Otfried Nas­sauer, Christoph Schult and Klaus Wiegrefe

    Decem­ber 09, 2016 06:08 PM

    The issue is so secret that it isn’t even list­ed on any dai­ly agen­da at NATO head­quar­ters. When mil­i­tary offi­cials and diplo­mats speak about it in Brus­sels, they meet pri­vate­ly and in very small groups — some­times only with two or three peo­ple at a time. There is a rea­son why signs are dis­played in the head­quar­ters read­ing, “no clas­si­fied con­ver­sa­tion.”

    And this issue is extreme­ly sen­si­tive. The alliance wants to avoid a pub­lic dis­cus­sion at any cost. Such a debate, one diplo­mat warns, could trig­ger an “avalanche.” The foun­da­tions of the trans-Atlantic secu­ri­ty archi­tec­ture would be endan­gered if this “Pan­do­ra’s box” were to be opened.

    Great Uncer­tain­ty

    The dis­cus­sion sur­rounds nuclear deter­rent. For decades, the final line of defense for Europe against pos­si­ble Russ­ian aggres­sion has been pro­vid­ed by the Amer­i­can nuclear arse­nal. But since Don­ald Trump’s elec­tion as the 45th pres­i­dent of the Unit­ed States, offi­cials in Berlin and Brus­sels are no longer cer­tain that Wash­ing­ton will con­tin­ue to hold a pro­tec­tive hand over Europe.

    It isn’t yet clear what for­eign pol­i­cy course the new admin­is­tra­tion will take — that is, if it takes one at all. It could be that Trump will run US for­eign pol­i­cy under the same prin­ci­ple with which he oper­ates his cor­po­rate empire: a max­i­mum lev­el of unpre­dictabil­i­ty.

    With his dis­parag­ing state­ments dur­ing the cam­paign about NATO being “obso­lete,” Trump has already cre­at­ed doubts about the Amer­i­cans’ loy­al­ty to the alliance. Con­se­quent­ly, Europe has begun prepar­ing for a future in which it is like­ly to have to pick up a much greater share of the costs for its secu­ri­ty.

    But what hap­pens if the pres­i­dent-elect has an even more fun­da­men­tal shift in mind for Amer­i­can secu­ri­ty pol­i­cy? What if he ques­tions the nuclear shield that pro­vid­ed secu­ri­ty to Europe dur­ing the Cold War?

    For more than 60 years, Ger­many entrust­ed its secu­ri­ty to NATO and its lead­ing pow­er, the Unit­ed States. With­out a cred­i­ble deter­rent, the Euro­pean NATO mem­ber states would be vul­ner­a­ble to pos­si­ble threats from Rus­sia. It would be the end of the trans-Atlantic alliance.

    Could the French or British Step In?

    In Euro­pean cap­i­tals, offi­cials have been con­tem­plat­ing the pos­si­bil­i­ty of a Euro­pean nuclear deter­rent since Trump’s elec­tion. The hur­dles — mil­i­tary, polit­i­cal and inter­na­tion­al law — are mas­sive and there are no con­crete inten­tions or plans. Still, French diplo­mats in Brus­sels have already been dis­cussing the issue with their coun­ter­parts from oth­er mem­ber states: Could the French and the British, who both pos­sess nuclear arse­nals, step in to pro­vide pro­tec­tion for oth­er coun­tries like Ger­many?

    “It’s good that this is final­ly being dis­cussed,” says Jan Techau, direc­tor of the Hol­brooke Forum at the Amer­i­can Acad­e­my in Berlin. “The ques­tion of Europe’s future nuclear defense is the ele­phant in the room in the Euro­pean secu­ri­ty debate. If the Unit­ed States’ nuclear secu­ri­ty guar­an­tee dis­ap­pears, then it will be impor­tant to clar­i­fy who will pro­tect us in the future. And how do we pre­vent our­selves from becom­ing black­mail­able over the nuclear issue in the future?”

    An essay in the Novem­ber issue of For­eign Affairs argues that if Trump seri­ous­ly ques­tions the Amer­i­can guar­an­tees, Berlin will have to con­sid­er estab­lish­ing a Euro­pean nuclear deter­rent on the basis of the French and British capa­bil­i­ties. Ger­many’s respect­ed Frank­furter All­ge­meine Zeitung news­pa­per, mean­while, even con­tem­plat­ed the “unthink­able” in an edi­to­r­i­al: a Ger­man bomb.

    ‘The Last Thing Ger­many Needs Now’

    Politi­cians in Berlin want to pre­vent a debate at all costs. “A pub­lic debate over what hap­pens if Trump were to change the Amer­i­can nuclear doc­trine is the very last thing that Ger­many needs right now,” says Wolf­gang Ischinger, head of the Munich Secu­ri­ty Con­fer­ence. “It would be a cat­a­stroph­ic mis­take if Berlin of all places were to start that kind of dis­cus­sion. Might Ger­many per­haps actu­al­ly want a nuclear weapon, despite all promis­es to the con­trary? That would pro­vide fod­der for any anti-Ger­man cam­paign.”

    The debate how­ev­er, is no longer rel­e­gat­ed the rel­a­tive­ly safe cir­cles of think tanks and for­eign pol­i­cy pub­li­ca­tions. In an inter­view that gained atten­tion inter­na­tion­al­ly in mid-Novem­ber, Roderich Kiesewet­ter, the chair­man for the con­ser­v­a­tive Chris­t­ian Democ­rats on the For­eign Pol­i­cy Com­mit­tee in Ger­man par­lia­ment pro­posed a French-British nuclear shield in the event Trump calls into ques­tion Amer­i­can pro­tec­tion for Europe. “The US nuclear shield and nuclear secu­ri­ty guar­an­tees are imper­a­tive for Europe,” he told Reuters. “If the Unit­ed States no longer wants to pro­vide this guar­an­tee, Europe still needs nuclear pro­tec­tion for deter­rent pur­pos­es.”

    Last week­end, Angela Merkel’s chief of staff, Peter Alt­maier, said in an inter­view that pro­vid­ing a nuclear shield for Europe was in Amer­i­ca’s “secu­ri­ty pol­i­cy inter­est.” Besides, he said, “two EU mem­ber states pos­sess nuclear weapons.”

    Unpop­u­lar and Polit­i­cal­ly Explo­sive

    Kiesewet­ter argues that Europe must pre­pare for all even­tu­al­i­ties. “There can be no lim­its placed on our secu­ri­ty debate,” he says. The CDU secu­ri­ty pol­i­cy expert is a for­mer colonel in the Ger­man armed forces and also did stints at both NATO head­quar­ters in Brus­sels and at the alliance’s mil­i­tary head­quar­ters in Mons, Bel­gium. After Trump’s elec­tion, he spoke not only to French and British diplo­mats, but also explored views with­in the Ger­man gov­ern­ment.

    He says he spoke with Christoph Heusgen, Merkel’s secu­ri­ty advis­er, and with Defense Min­istry Pol­i­cy Direc­tor Gésa von Geyr. Kiesewet­ter says the issue is not one that either the Chan­cellery or the Defense Min­istry is tak­ing up. At the same time, he says, he also did­n’t get the impres­sion that his ideas had been dis­missed as fan­ta­sy either.

    It’s under­stand­able that the Ger­man gov­ern­ment wants to quick­ly end the debate. The issue is polit­i­cal­ly explo­sive and would also be high­ly unpop­u­lar. In polls, more than 90 per­cent of Ger­mans have opposed the idea of Ger­many pos­sess­ing its own nuclear bomb. The Amer­i­can nuclear shield has so far offered Ger­mans the lux­u­ry of stand­ing on the right side of the moral debate even as Wash­ing­ton guar­an­tees their secu­ri­ty.

    ‘The Wrong Mes­sage’

    Offi­cials in Brus­sels also aren’t thrilled by the state­ments com­ing out of Berlin. “The fact that these con­sid­er­a­tions have been made pub­lic is deeply con­cern­ing,” a diplo­mat rep­re­sent­ing one NATO mem­ber state says. “It would send the wrong mes­sage to Amer­i­ca but also the grotesque­ly wrong mes­sage to Rus­sia,” says Ischinger. He warns that the mes­sage can­not be sent to Wash­ing­ton that Europe is in the process of explor­ing alter­na­tives to the Amer­i­can pro­tec­tive shield.

    But mil­i­tary offi­cers and diplo­mats are address­ing the issue inside NATO head­quar­ters. One diplo­mat says that these ideas have been cir­cu­lat­ing “infor­mal­ly and off-the-record” inside NATO head­quar­ters for a few months now. “The state­ments made by Mr. Kiesewet­ter reflect the con­cerns that exist every­where in Europe over what Trump’s inau­gu­ra­tion will mean for US engage­ment and its strat­e­gy on nuclear deter­rent.”

    On the nuclear ques­tion, Trump has attract­ed atten­tion pri­mar­i­ly for off-the-cuff remarks he made dur­ing the cam­paign. “If we have nuclear weapons, why can’t we use them?” he alleged­ly said dur­ing a for­eign pol­i­cy brief­ing in the sum­mer.

    Dur­ing the cam­paign, he also toyed with the idea of elim­i­nat­ing the US nuclear shield that pro­vides pro­tec­tion to Japan and South Korea. Essen­tial­ly, he blunt­ly sug­gest­ed that the two Asian nations ought to devel­op their own nuclear weapons. Euro­peans have wor­ried ever since that a sim­i­lar threat could be direct­ed at them.

    Such com­ments come at a time when Moscow is more focused on its role as a nuclear pow­er than it ever has been since the end of the Cold War. Like the Unit­ed States, Rus­sia is cur­rent­ly in the process of mod­ern­iz­ing its nuclear arse­nal. For a few years now, veiled threats about Moscow’s nuclear arse­nal have become part of the stan­dard reper­toire in Pres­i­dent Vladimir Putin’s rhetoric.

    The British and French Deter­rents

    Europe would face very high hur­dles if it sought to cre­ate its own nuclear shield. Why would Britain, cur­rent­ly in the process of leav­ing the Euro­pean Union, even agree to it? And why would the French give the Ger­mans any say when it comes to their Force de Frappe deter­rent? Both have alleged­ly declined to con­sid­er the notion in ini­tial probes in Brus­sels. But there’s yet a big­ger issue. Even if they were to coop­er­ate, would the nuclear arse­nal held by Euro­pean nuclear pow­ers even be suf­fi­cient to guar­an­tee a nuclear deter­rent?

    Like­ly, yes. Tak­en togeth­er, Britain and France may only have 10 per­cent as many nuclear weapons as the Amer­i­cans, but their sec­ond-strike capa­bil­i­ty is strong enough to effec­tive­ly deter poten­tial attack­ers.

    ...

    ‘Suf­fi­cient for Defend­ing Ger­many’

    “Viewed entire­ly from a mil­i­tary per­spec­tive, the nuclear weapons held by France and Britain would like­ly be suf­fi­cient for defend­ing Ger­many,” says the Amer­i­can Acad­e­my’s Techau. The fact that they don’t have the same num­ber of nuclear weapons as Rus­sia does­n’t real­ly mat­ter. “The sec­ond-strike capa­bil­i­ty, which is deci­sive for deter­rence, exists.”

    Polit­i­cal­ly, though, things get more com­pli­cat­ed. France has always viewed its nuclear capa­bil­i­ty as a nation­al asset and has nev­er placed its weapons under a NATO man­date. It coor­di­nates with Brus­sels, but would decide inde­pen­dent­ly of the alliance on any poten­tial deploy­ment of its nuclear weapons.

    Even dur­ing the Cold War, sev­er­al polit­i­cal efforts were made to estab­lish Ger­man-French nuclear coop­er­a­tion, but noth­ing ever came of them.

    Chan­cel­lor Kon­rad Ade­nauer and Defense Min­is­ter Franz Josef Strauss had hoped to work togeth­er with Paris. But Charles de Gaulle imme­di­ate­ly halt­ed the secret project as soon as he was elect­ed in 1958.

    Lat­er, two years after he got vot­ed out of office, for­mer Ger­man Chan­cel­lor Hel­mut Schmidt of the cen­ter-left Social Democ­rats (SPD) also pro­posed a deal. He sug­gest­ed that France expand its nuclear deter­rent to include Ger­many. In exchange, West Ger­many would offer its “cap­i­tal and finan­cial strength” in order to help finance the French nuclear weapons pro­gram.

    France Shunned Ger­many

    Hel­mut Kohl, who was chan­cel­lor at the time, dis­missed the idea as an “intel­lec­tu­al gim­mick.” A secret pro­to­col dat­ing from Decem­ber 1985 — and only made pub­lic at the begin­ning of this year — showed why Kohl’s dis­trust had been jus­ti­fied. In it, French Pres­i­dent François Mit­ter­rand admits to Kohl that France would be unwill­ing to “pro­vide Ger­many with nuclear pro­tec­tion.” He said France’s nuclear poten­tial could only serve to pro­tect “a small ter­ri­to­ry” — in oth­er words, France. If Paris were to extend its pro­tec­tion, the French leader said, it would expose his coun­try to a “lethal threat.” In oth­er words, Mit­ter­rand did not want to risk dying to defend Ger­many.

    Even if France were to change its posi­tion, it would be tricky under inter­na­tion­al law for Ger­many to par­tic­i­pate mil­i­tar­i­ly in a Euro­pean nuclear shield. Whether or not Ger­many’s par­tic­i­pa­tion in NATO’s nuclear shield is per­mit­ted under inter­na­tion­al law has already been the sub­ject of con­sid­er­able debate. An actu­al Ger­man bomb would vio­late the terms of both the Nuclear Non-Pro­lif­er­a­tion Treaty (NPT) and the Two Plus Four Agree­ment, the treaty which result­ed in Ger­many’s reuni­fi­ca­tion.

    By becom­ing a sig­na­to­ry to the NPT in 1975, the Ger­mans com­mit­ted “not to receive the trans­fer from any trans­fer­or of nuclear weapons or oth­er nuclear explo­sive devices or of con­trol over such weapons or explo­sive devices direct­ly, or indi­rect­ly.” Dur­ing nego­ti­a­tions over Ger­man reuni­fi­ca­tion in 1990, then-Chan­cel­lor Kohl also affirmed Ger­many’s “renun­ci­a­tion” of the man­u­fac­ture, pos­ses­sion and con­trol of nuclear weapons. The pro­vi­sion became an inte­gral part of the Two Plus Four Agree­ment.

    A Euro­pean Nuclear Pow­er?

    But the Ger­mans always left a few loop­holes open. In diplo­mat­ic notes attached to Ger­man NPT rat­i­fi­ca­tion doc­u­ments, the gov­ern­ment in Bonn stat­ed at the time it had signed it “con­vinced that no stip­u­la­tion in the treaty can be con­strued to hin­der the fur­ther devel­op­ment Euro­pean uni­fi­ca­tion, espe­cial­ly the cre­ation of a Euro­pean Union with appro­pri­ate capa­bil­i­ties.” Wolf­gang Mis­chnick, par­lia­men­tary floor leader of the Free Demo­c­ra­t­ic Par­ty, which shared pow­er with Kohl’s Chris­t­ian Democ­rats at the time of reuni­fi­ca­tion, pub­licly clar­i­fied what that meant dur­ing a ses­sion of the Bun­destag on Feb­ru­ary 20, 1974: “It is still pos­si­ble to devel­op a Euro­pean nuclear pow­er,” he said.

    Forty years lat­er the issue is actu­al­ly now being raised for the first time. With it also comes the ques­tion of the degree to which Euro­peans actu­al­ly trust each oth­er. The real test will come if the Unit­ed States decides to with­draw its nuclear sup­port from Europe. Then Euro­peans would be forced to ask whether Paris and Lon­don were pre­pared to guar­an­tee secu­ri­ty for Ger­many and oth­er Euro­peans. And also: Would Ger­mans place their trust in a nuclear shield pro­vid­ed by their Euro­pean part­ners?

    For France, which always found Europe’s reliance on NATO to be sus­pect, a Euro­pean nuclear shield could also present an oppor­tu­ni­ty. A nuclear arse­nal under French lead­er­ship, but large parts of which were financed by the Ger­mans, would place the eco­nom­i­cal­ly weak­ened coun­try in a dom­i­nant posi­tion in terms of Euro­pean secu­ri­ty.

    “An essay in the Novem­ber issue of For­eign Affairs argues that if Trump seri­ous­ly ques­tions the Amer­i­can guar­an­tees, Berlin will have to con­sid­er estab­lish­ing a Euro­pean nuclear deter­rent on the basis of the French and British capa­bil­i­ties. Ger­many’s respect­ed Frank­furter All­ge­meine Zeitung news­pa­per, mean­while, even con­tem­plat­ed the “unthink­able” in an edi­to­r­i­al: a Ger­man bomb.

    So over­all it does­n’t sound like France or the UK would be super enthu­si­as­tic about extend­ing their own nuclear umbrel­la’s to the rest of Europe, which is a big rea­son that edi­to­r­i­al in Frank­furter All­ge­meine Zeitung call­ing for Ger­man nukes prob­a­bly should­n’t be dis­missed out of hand despite the over­whelm­ing Ger­man pub­lic opin­ion against a Ger­man bomb.

    But also keep in mind that this is all hap­pen­ing in the con­text of grow­ing talk of an EU army with its own mil­i­tary head­quar­ters and com­mand struc­ture. So if Trump real­ly does with­draw the US’s implied nuclear deter­rence and France and the UK refuse to extend their own umbrel­las, that does­n’t nec­es­sar­i­ly mean a shared Euro­pean nuclear deter­rence would have to be devel­oped by some oth­er spe­cif­ic coun­try like Ger­many. We could see a shared pro­gram that involves Ger­many but isn’t exclu­sive­ly run by Ger­many (a fun nuclear time­share).

    Is that a pos­si­bil­i­ty and would it pro­vide the psy­cho­log­i­cal trick that over­comes pop­u­lar oppo­si­tion to a Ger­man nuclear pro­gram? Who knows, but with an EU army now on the agen­da along side this sud­den nuclear ques­tion, a new multi­na­tion­al Euro­pean nuclear pro­gram is cer­tain­ly look­ing more pos­si­ble than it has been in the past. It may not be prob­a­ble at this point but it’s more pos­si­ble than it was before. Kind of like nuclear pro­lif­er­a­tion and anni­hi­la­tion in the age of Trump.

    Posted by Pterrafractyl | December 22, 2016, 4:03 pm
  7. In in a pre­view for what is bound to be a typ­i­cal day for the Trump admin­is­tra­tion, Don­ald Trump’s spokes­men spent much of today in dam­age con­trol mode fol­low­ing Trump’s tweet about expand­ing the US’s nuclear capa­bil­i­ties. And in anoth­er pre­view for what is bound to be a typ­i­cal day for the Trump admin­is­tra­tion, Don­ald Trump pro­ceed­ed to dou­ble down on the dam­age:

    Bloomberg Pol­i­tics

    Trump Exhibits Lit­tle Con­cern About Nuclear Arms Race

    by Mar­garet Talev
    Decem­ber 23, 2016, 9:57 AM CST

    * His remarks came after a tweet that rat­tled Moscow and Bei­jing
    * Trump’s new press sec­re­tary tried to walk back the tweet

    Don­ald Trump esca­lat­ed his remarks about the U.S. nuclear arse­nal on Fri­day, telling a tele­vi­sion host off-air that he isn’t con­cerned about trig­ger­ing an arms race with Rus­sia or oth­er adver­saries, a day after a tweet that appeared to reset the nation’s pos­ture on atom­ic weapons.

    The pres­i­dent-elect told his 17.8 mil­lion Twit­ter fol­low­ers on Thurs­day that the U.S. must “great­ly strength­en and expand its nuclear capa­bil­i­ty,” draw­ing rebut­tals from Moscow and Bei­jing.

    Russ­ian Pres­i­dent Vladimir Putin vowed on Fri­day that he would respond to a fresh U.S. nuclear weapons build-up, and a spokes­woman for China’s for­eign min­istry said that the U.S. and Rus­sia, which hold the world’s largest arse­nals, bear respon­si­bil­i­ty for lead­ing the world toward denu­cleariza­tion.

    Sean Spicer, named Thurs­day as Trump’s White House press sec­re­tary, attempt­ed a round of dam­age con­trol on morn­ing news shows Fri­day, yet his efforts were under­cut by the pres­i­dent-elect him­self.

    “Let it be an arms race; we will out­match them at every pass and out­last them all,” Trump told Mika Brzezin­s­ki of MSNBC’s “Morn­ing Joe” in an off-air tele­phone con­ver­sa­tion, accord­ing to accounts by her and her co-host Joe Scar­bor­ough.

    Dam­age Con­trol

    Spicer said in inter­views on MSNBC, NBC, Fox and CNN that Trump’s tweet was intend­ed to sig­nal to Rus­sia, Chi­na and oth­er coun­tries that the U.S., while not look­ing for a fight, would not be intim­i­dat­ed, and that the pro­jec­tion of strength would in an of itself be a deter­rent. Trump’s tweet was appar­ent­ly pro­voked by a Putin speech on Thurs­day in which he said the Russ­ian nuclear arse­nal should be improved in order to defeat anti-mis­sile defens­es.

    “Oth­er coun­tries need to under­stand that if they expand their nuclear capa­bil­i­ties, this president’s not going to sit back,” Spicer said on MSNBC before Trump’s off-air remark to Brzezin­s­ki, and that “the Unit­ed States is going to reassert its posi­tion in the globe.”

    Spicer sep­a­rate­ly told NBC that “the pres­i­dent isn’t say­ing we’re going to do this” and that “there’s not going to be” an arms race because oth­er coun­tries would back down.

    “They will come to their sens­es and we will be just fine,” he said. Trump, he told CNN, was “absolute­ly not” esca­lat­ing the sit­u­a­tion.

    Putin, at his annu­al end-of-year news con­fer­ence, said that if there is an arms race “it was not start­ed by us” but “we have to respond.”

    Nuclear Diplo­ma­cy

    While Trump’s com­ments have raised alarm among pro­po­nents of nuclear non-pro­lif­er­a­tion, they may serve as a coun­ter­point to crit­ics who have said Trump is too cozy toward Putin and Rus­sia.

    It isn’t the first time Trump has toyed with nuclear diplo­ma­cy, a field in which the slight­est deriva­tion from estab­lished pol­i­cy can cause anx­i­ety among both U.S. allies and adver­saries. Dur­ing his cam­paign, Trump sug­gest­ed that coun­tries includ­ing Japan and South Korea should con­sid­er build­ing their own nuclear arse­nals — remarks he lat­er insist­ed he nev­er said.

    ...

    A sec­ond Trump spokesman, Jason Miller, attempt­ed to walk back Trump’s tweet on Thurs­day, ascrib­ing mean­ing to the remark that was not evi­dent in the lone tweet.

    “Pres­i­dent-elect Trump was refer­ring to the threat of nuclear pro­lif­er­a­tion and the crit­i­cal need to pre­vent it — par­tic­u­lar­ly to and among ter­ror­ist orga­ni­za­tions and unsta­ble and rogue regimes,” Miller said in an e‑mailed state­ment. “He has also empha­sized the need to improve and mod­ern­ize our deter­rent capa­bil­i­ty as a vital way to pur­sue peace through strength.”

    ““Pres­i­dent-elect Trump was refer­ring to the threat of nuclear pro­lif­er­a­tion and the crit­i­cal need to pre­vent it — par­tic­u­lar­ly to and among ter­ror­ist orga­ni­za­tions and unsta­ble and rogue regimes,” Miller said in an e‑mailed state­ment. “He has also empha­sized the need to improve and mod­ern­ize our deter­rent capa­bil­i­ty as a vital way to pur­sue peace through strength.””

    Get ready to hear a lot more talk about “Peace through strength” from the Trump team. As long as the Trump admin­is­tra­tion can rede­fine strength as the errat­ic ratch­et­ing up of ten­sions and a casu­al dis­missal of things like nuclear non-pro­lif­er­a­tion (because nuclear non-pro­lif­er­a­tion is for wuss­es), “peace through strength” does kind of work the­mat­i­cal­ly for Trump.

    But despite the assur­ances from Trump’s peo­ple that this was all just some sort of reverse psy­chol­o­gy employed to dis­suade Rus­sia from expand­ing its own arse­nal, let’s keep in mind what just hap­pened: Putin declared that Rus­sia was expand­ing its nuclear capa­bil­i­ty, it’s clear­ly some­thing Rus­sia sees in its best inter­est, and Trump respond­ed in a man­ner that com­plete­ly jus­ti­fies what­ev­er expan­sion Putin choos­es. Heck, Putin could declare tomor­row that he’s decid­ed to dou­ble Rus­si­a’s plans for expand­ing its nuclear capa­bil­i­ties and there’s basi­cal­ly noth­ing the US gov­ern­ment could say in response oth­er than “we’ll expand our capa­bil­i­ties even more!”. And this does­n’t just apply to Rus­sia. Now any cur­rent mem­ber of the globe’s nuclear club can feel free to expand away! Trump gave his pri­or approval. Along with his pri­or sug­ges­tions that maybe some new mem­bers like South Korea or Japan could join the nuclear club too:

    ...

    While Trump’s com­ments have raised alarm among pro­po­nents of nuclear non-pro­lif­er­a­tion, they may serve as a coun­ter­point to crit­ics who have said Trump is too cozy toward Putin and Rus­sia.

    It isn’t the first time Trump has toyed with nuclear diplo­ma­cy, a field in which the slight­est deriva­tion from estab­lished pol­i­cy can cause anx­i­ety among both U.S. allies and adver­saries. Dur­ing his cam­paign, Trump sug­gest­ed that coun­tries includ­ing Japan and South Korea should con­sid­er build­ing their own nuclear arse­nals — remarks he lat­er insist­ed he nev­er said.

    ...

    “While Trump’s com­ments have raised alarm among pro­po­nents of nuclear non-pro­lif­er­a­tion, they may serve as a coun­ter­point to crit­ics who have said Trump is too cozy toward Putin and Rus­sia.”

    Heh, yeah, Putin must be super upset that he’s been giv­ing a green light to do all the nuclear expan­sion he wants in com­ing years. Along with every oth­er coun­try that either has nukes and wants more or has none and wants some. They must all be super upset about this Trumpian green light too.

    So, with that in mind, here’s a hot stock tip: com­pa­nies like­ly to get gov­ern­ment con­tracts involv­ing the mod­ern­iza­tion, main­te­nance, and (hope­ful­ly) even­tu­al decomis­sion­ing of nuclear weapons are look­ing increas­ing­ly set to get a ‘Trump bump’ for the next 50 years or so ...on top of the bump they were already going to be get­ting from the tril­lion dol­lar price tag on the US’s exist­ing nuclear mod­ern­iza­tion plans (a future price tag that will be going up with Trump’s expan­sion plans)

    Busi­ness Insid­er

    Trump seemed to wel­come a new nuclear arms race — here’s what that could mean

    Alex Lock­ie
    12/23/2016

    Pres­i­dent-elect Don­ald Trump once again shook the inter­na­tion­al-rela­tions com­mu­ni­ty after tweet­ing Thurs­day that the “Unit­ed States must great­ly strength­en and expand its nuclear capa­bil­i­ty until such time as the world comes to its sens­es regard­ing nukes.”

    Trump then dou­bled down on his tweet Fri­day morn­ing, telling “Morn­ing Joe” co-host Mika Brzezin­s­ki off-air to “let it be an arms race” after she asked if a US nuclear buildup would spur oth­er nations to fur­ther devel­op their own nuclear pro­grams.

    Trump’s com­ments come at a time when oth­er nations, par­tic­u­lar­ly Rus­sia and North Korea, are either upgrad­ing or devel­op­ing their own nuclear arse­nals. And Rus­sia still remains the No. 1 nuclear threat to the US, as Moscow does indeed have scari­er, more destruc­tive nukes.

    A Russ­ian ICBM can break apart in space and reen­ter the Earth­’s atmos­phere with 10 inde­pen­dent­ly tar­getable war­heads.

    US nukes are designed dif­fer­ent­ly. The US phi­los­o­phy on nukes puts pre­ci­sion first, and the US builds longer-last­ing nuclear plat­forms. The Russ­ian plat­forms are designed to be replaced, or “mod­ern­ized,” more often.

    Mod­ern­iz­ing the nuclear arse­nal means updat­ing the plat­forms that car­ry nukes: Bombers, inter­con­ti­nen­tal bal­lis­tic mis­siles (ICBMs), cruise mis­siles, and bal­lis­tic mis­sile sub­marines. The US’s nuclear-capa­ble sub­marines are old, and mod­ern­iz­ing them means build­ing new subs, a process that is already under­way. The US is already look­ing into procur­ing a new long-range nuclear bomber, the B‑21.

    ...

    Sev­er­al experts on nuclear weapons say they all favor deesca­la­tion and reduc­ing stock­piles, though no one real­is­ti­cal­ly expects the US or Rus­sia to dis­arm uni­lat­er­al­ly.

    “The cur­rent path that we’re on in terms of sus­tain­ing our arse­nal is exces­sive, and giv­en the costs and oppor­tu­ni­ty costs of modernization—it’s unsus­tain­able,” Kingston Reif, the direc­tor for dis­ar­ma­ment and threat reduc­tion pol­i­cy at the Arms Con­trol Asso­ci­a­tion, told Busi­ness Insid­er in a recent inter­view.

    The “real issue,” accord­ing to Reif, is not that the US does­n’t have enough nukes, or that we’re falling behind to com­peti­tors like Rus­sia and Chi­na.

    “Our arse­nal sec­ond to none,” Reif said.

    The Oba­ma admin­is­tra­tion, which set a goal of a world with­out nuclear weapons upon Pres­i­dent Barack Oba­ma’s ascen­dan­cy to the pres­i­den­cy, only made moves to reduce stock­piles — not out­right dis­arm.

    How­ev­er, “the Pen­ta­gon and Pres­i­dent Oba­ma deter­mined the US already have one third more than need­ed to deter threats,” Reif said.

    But dia­logue between the US and Rus­sia on dis­ar­ma­ment has great­ly dimin­ished. Moscow has with­drawn from a plu­to­ni­um-reduc­tion agree­ment. More broad­ly, most com­mu­ni­ca­tion between the world’s lead­ing nuclear pow­ers has become vir­tu­al­ly frozen.

    So while experts like Reif think that Oba­ma’s plans for nuclear mod­ern­iza­tion already exceed­ed glob­al needs, Trump’s tweet has seemed to sug­gest going above and beyond already unsta­ble and expen­sive needs.

    Most defense experts agree that the US nuclear arse­nal needs to be mod­ern­ized, but dis­agree to what extent. Trump’s own pick to be defense sec­re­tary, for­mer Marine Gen. James Mat­tis, has said the US can ditch ICBMs and go with a nuclear dyad. Trump’s tweet seemed to dif­fer from Mat­tis’ posi­tion.

    Mod­ern­iz­ing the US’s nuclear arse­nal is pro­ject­ed to cost hun­dreds of bil­lions in the 2020s and 2030s and close to $1 tril­lion in total. Dur­ing this time, a pletho­ra of oth­er expen­sive defense projects are on the dock­et. They are col­lec­tive­ly referred to as the “bow wave,” a hulk­ing cost of a hand­ful of defense projects that just can’t wait any longer.

    Reif has warned that the flur­ry of spend­ing on nukes great­ly threat­ens the US’s con­ven­tion­al, non-nuclear forces by ham­string­ing some of the defense spend­ing that would sup­port US mil­i­tary men and women around the world.

    Mod­ern­iz­ing the US’s nuclear arse­nal is pro­ject­ed to cost hun­dreds of bil­lions in the 2020s and 2030s and close to $1 tril­lion in total. Dur­ing this time, a pletho­ra of oth­er expen­sive defense projects are on the dock­et. They are col­lec­tive­ly referred to as the “bow wave,” a hulk­ing cost of a hand­ful of defense projects that just can’t wait any longer.”

    Yep, in the mid­dle of a glob­al nuclear spend­ing race that every­one knew the US was already sched­uled to win by a long-shot over the com­ing decades, Don­ald Trump decides to declare that he’s fine with every­one else increas­ing their nuclear spend­ing because he’s con­fi­dent the US will be able to increase its spend­ing enough to “beat” the US’s nuclear rival. And this is all appar­ent­ly part of some sort of psy­cho­log­i­cal strat­e­gy where, by mak­ing such a dec­la­ra­tion, Trump will psy­che out the rest of the world and the world will con­clude that the expan­sion of their own nuclear arse­nals is sud­den­ly not worth it...because they will have con­clud­ed that a nuclear arms race that they nev­er pos­si­bly could have won before (but decid­ed to par­tic­i­pate in any­way because “win­ning” the race was­n’t actu­al­ly the objec­tive) is now extra unwinnable.

    In oth­er words, Don­ald Trump has appar­ent­ly con­clud­ed that “win­ning” a nuclear arms race is the only rea­son a nation might want to expand its nuclear capa­bil­i­ty, and based on that assump­tion he’s appar­ent­ly sig­naled to the world that the US is total­ly fine with a net glob­al increase in nuclear capa­bil­i­ties because he’s super con­fi­dent that the US will “win” that race. Yes, Trump could actu­al­ly be plan­ning on “win­ning” a peri­od of glob­al nuclear pro­lif­er­a­tion that he helps start. So remem­ber how Trump was going on all those rants about how the US would start “win­ning” so much if he got elect­ed that Amer­i­cans might get sick of it. It turns out that could actu­al­ly hap­pen.

    Posted by Pterrafractyl | December 23, 2016, 5:03 pm
  8. Check out one of the lat­est con­se­quences of Don­ald Trump’s brand of bold lead­er­ship that must have ISIS quak­ing it its boots: After reit­er­at­ing his long-held view that the US should have stolen all of Iraq’s oil as part of the spoils of vic­to­ry for the Iraq inva­sion and then hint­ing that the US might “have anoth­er chance” to do exact­ly that, all of the Iraqi troops cur­rent­ly work­ing with the US on anti-ISIS cam­paigns now have very good rea­son to expect the US rein­vade Iraq to take all the oil. That should do won­ders for any anti-ISIS mil­i­tary coali­tions involv­ing US troops:

    New York Mag­a­zine

    Trump Says U.S. Should Have Stolen Iraq’s Oil, and ‘Maybe We’ll Have Anoth­er Chance’

    By Mar­garet Hart­mann
    Jan­u­ary 22, 2017 4:53 p.m.

    While address­ing the CIA on Sat­ur­day, Pres­i­dent Don­ald Trump took a break from lam­bast­ing the media to remind every­one that he thinks the U.S. should have stolen Iraq’s oil. He also sug­gest­ed that the U.S. might get anoth­er chance to vio­late inter­na­tion­al law.

    “Now I said it for eco­nom­ic rea­sons,” Trump said while intro­duc­ing Rep­re­sen­ta­tive Mike Pom­peo, his pick to lead the agency. “But if you think about it, Mike, if we kept the oil, you prob­a­bly wouldn’t have ISIS because that’s where they made their mon­ey in the first place, so we should have kept the oil. But, okay, maybe we’ll have anoth­er chance.”

    Nation­al Review has not­ed that Trump’s “odd fix­a­tion” with tak­ing Iraq’s oil dates back to at least 2011. He made the argu­ment numer­ous times on the cam­paign trail, sug­gest­ing that the U.S. could take Iraq’s oil while fight­ing ISIS. When Poli­ti­Fact exam­ined the claim in Sep­tem­ber, numer­ous experts said try­ing to seize Iraqi oil would not be legal, fea­si­ble, or desir­able. The idea is “so out of step with any plau­si­ble inter­pre­ta­tion of U.S. his­to­ry or inter­na­tion­al law that they should be dis­missed out of hand by any­one with even a rudi­men­ta­ry under­stand­ing of world affairs,” said Lance Jan­da, a mil­i­tary his­to­ri­an at Cameron Uni­ver­si­ty.

    It’s not clear what Trump meant by “maybe we’ll have anoth­er chance,” but when you’re pres­i­dent, peo­ple take even off­hand remarks about vio­lat­ing inter­na­tion­al law pret­ty seri­ous­ly. Buz­zFeed spoke with sev­er­al Iraqis on the front lines of the bat­tle against ISIS, and they said they were pre­pared to take up arms against Amer­i­cans if they attempt­ed to take their country’s nat­ur­al resources.

    “I par­tic­i­pat­ed in the attack against the Amer­i­cans by attack­ing them with mor­tars and road­side bombs, and I’m ready to do it again,” said Abu Luay, an Iraqi secu­ri­ty offi­cial using a nom de guerre, who is cur­rent­ly fight­ing the ter­ror­ist group in north­west Iraq. “We kept our ammu­ni­tion and weapons from the time the Amer­i­cans left for fight­ing ISIS. But once ISIS is gone we will save our weapons for the Amer­i­cans.”

    ...

    “It’s not clear what Trump meant by “maybe we’ll have anoth­er chance,” but when you’re pres­i­dent, peo­ple take even off­hand remarks about vio­lat­ing inter­na­tion­al law pret­ty seri­ous­ly. Buz­zFeed spoke with sev­er­al Iraqis on the front lines of the bat­tle against ISIS, and they said they were pre­pared to take up arms against Amer­i­cans if they attempt­ed to take their country’s nat­ur­al resources.

    Well, that was some real­ly, real­ly, real­ly dis­turb­ing lead­er­ship. And, of course, real­ly, real­ly, real­ly stu­pid lead­er­ship too:

    The Guardian

    Trump’s plan to seize Iraq’s oil: ‘It’s not steal­ing, we’re reim­burs­ing our­selves’

    Strat­e­gy of tak­ing oil in Iraq and from areas con­trolled by Isis presents huge issues from almost every angle and ‘would amount to a war crime’, experts say

    Julian Borg­er World affairs edi­tor

    Wednes­day 21 Sep­tem­ber 2016 06.00 EDT

    One of the recur­ring themes of Don­ald Trump’s nation­al secu­ri­ty strat­e­gy is his plan to “take the oil” in Iraq and from areas con­trolled by Islam­ic State (Isis) extrem­ists. It would drain Isis’s cof­fers and reim­burse the US for the costs of its mil­i­tary com­mit­ments in the Mid­dle East, the can­di­date insists.

    At a forum host­ed by NBC on 7 Sep­tem­ber, Trump sug­gest­ed oil seizure would have been a way to pay for the Iraq war, say­ing: “We go in, we spend $3tn, we lose thou­sands and thou­sands of lives, and then … what hap­pens is we get noth­ing. You know, it used to be to the vic­tor belong the spoils.”

    He added: “One of the ben­e­fits we would have had if we took the oil is Isis would not have been able to take oil and use that oil to fuel them­selves.”

    The idea pre­dates Trump’s pres­i­den­tial cam­paign. As far back as 2011, he was telling the Wall Street Jour­nal that this was his pol­i­cy for Iraq. “You heard me, I would take the oil,” he said. “I would not leave Iraq and let Iran take the oil.” And he insist­ed to ABC News that this did not amount to nation­al theft.

    “You’re not steal­ing any­thing,” Trump said. “We’re reim­burs­ing our­selves … at a min­i­mum, and I say more. We’re tak­ing back $1.5tn to reim­burse our­selves.”

    As a secu­ri­ty strat­e­gy, this presents huge prob­lems from almost every angle, accord­ing to mil­i­tary, strate­gic, legal and oil experts. First of all, there are issues of prin­ci­ple and legal­i­ty. Trump’s fre­quent invo­ca­tion of the “spoils of war” seems to hark back to a bygone age of con­quis­ta­dors and plun­der-based impe­ri­al­ism, ille­gal now under the laws of war.

    “In inter­na­tion­al law, you can’t take civil­ian goods or seize them. That would amount to a war crime,” Antho­ny Cordes­man, the Arleigh Burke chair in strat­e­gy at the Cen­tre for Strate­gic and Inter­na­tion­al Stud­ies. “Oil exports were almost the only Iraqi source of mon­ey. So you would have to pay for gov­ern­ment salaries, main­tain the army, and you have trig­gered a lev­el of nation­al ani­mos­i­ty far worse than we did. It would be the worst kind of neo-colo­nial­ism. Not even Britain did that.”

    Jay Hakes, the author of A Dec­la­ra­tion of Ener­gy Inde­pen­dence, about the rela­tion­ship between US nation­al secu­ri­ty and Mid­dle East­ern oil, was sim­i­lar­ly unspar­ing.

    “It is hard to over­state the stu­pid­i­ty of this idea,” he wrote on Real Clear Ener­gy. “Even our allies in the Mid­dle East regard oil in their lands as a gift from God and the only major source of income to devel­op their coun­tries. Seiz­ing Iraq’s oil would make our cur­rent allies against Isis our new ene­mies. We would like­ly, at the least, have to return to the mas­sive mil­i­tary expen­di­tures and deploy­ment of Amer­i­can troops at the war’s peak.”

    Hakes point­ed out that Gen Dou­glas MacArthur, who Trump pro­fess­es to admire, did the oppo­site when he over­saw the occu­pa­tion of Japan: MacArthur brought resources in to help fend off star­va­tion of the pop­u­la­tion.

    ...

    Trump may also have an exag­ger­at­ed notion of how much oil is at stake when he sug­gests it might have helped pay for the Iraq occu­pa­tion. The Iraqis he said “have among the largest oil reserves in the world, in the entire world”. Iraq is esti­mat­ed to have the fifth biggest reserves, but the bulk of that oil is not under Isis’s con­trol.

    “The ter­ri­to­ry that [Isis] holds just does not have much oil under it,” said Jim Krane, an ener­gy stud­ies fel­low at Rice University’s Bak­er Insti­tute for Pub­lic Pol­i­cy in Hous­ton. “In Iraq, most of the Iraq oil reserves are in the far south, around the Per­sian Gulf. There is some in the Kur­dish north, but the Kurds swept in and took that area near Kirkuk.

    “Syr­ia is not a big oil pro­duc­er,” Krane added. “It pro­duced 400,000 bar­rels a day before the war. And 27,000 bar­rels in 2015. That is minus­cule. There is not a lot of oil pro­duc­tion that [Isis] con­trols. When oil was $100 a bar­rel, that was one thing, but nowa­days it’s not a lucra­tive busi­ness.”

    The US mil­i­tary has already tar­get­ed Isis’s small-scale oil refiner­ies and oil con­voys as a way of cut­ting off that income, but Trump clear­ly has some­thing else in mind – actu­al­ly seiz­ing the oil fields with troops.

    “We would leave a cer­tain group behind and you would take var­i­ous sec­tions where they have the oil,” he said at the forum.

    That “cer­tain group” would have to be pret­ty big to hold and pro­tect the oil fields, accord­ing to Chris Harmer, a for­mer navy offi­cer and naval avi­a­tor, and now a mil­i­tary ana­lyst.

    “It would take close to 100,000 troops plus the equip­ment, the air­borne patrols, to secure the oil­fields and extract the oil,” Harmer said. “The­o­ret­i­cal­ly it would suck up all the deploy­able assets we have. For­get about the Pacif­ic, for­get about Africa. They would just have one pur­pose – suck­ing up oil assets in the Mid­dle East.”

    The mil­i­tary foot­print would have to be even larg­er to actu­al­ly get the oil out.
    “You’d have to occu­py most of Syr­ia to get the oil out of the coun­try, since the Syr­i­an export pipelines trav­el from the oil­fields in east­ern Syr­ia all the way to the Mediter­ranean coast, right across the cen­tral breadth of the coun­try,” Krane said.

    “It wouldn’t do you much good to just cap­ture the oil­fields. If you want­ed to steal the oil, it would take a full mil­i­tary occu­pa­tion of Syr­ia to con­trol the full length of the pipelines, so you could move the oil to mar­ket. At a min­i­mum, that would mean occu­py­ing the city of Homs in cen­tral Syr­ia, as well as the main Syr­i­an oil ter­mi­nals at Banias and Tar­tus. All that is in addi­tion to occu­py­ing rebel-held areas such as Deir ez-Zour where the oil­fields lie.”

    Nor would be it be an in-and-out deploy­ment. When he says “take the oil”, Trump clear­ly has the reserves in mind. That would take years.

    “There is no phys­i­cal way you can take oil reserves any faster than you can pump the oil,” Cordes­man said.

    The costs of the mil­i­tary oper­a­tions would far exceed any rev­enue that could be extract­ed.

    “If you com­man­deered every bit of it it wouldn’t be a very cost-effec­tive way to fund an occu­pa­tion,” Krane argued. “And that’s before you start get­ting peo­ple shot and send­ing them home in body bags.”

    ““We would leave a cer­tain group behind and you would take var­i­ous sec­tions where they have the oil,” he said at the forum.”

    That was Trump’s pro­pos­al back in Sep­tem­ber: just leaves some troops behind and let them take the oil. And how many troops would that be for how long?

    ...

    “It would take close to 100,000 troops plus the equip­ment, the air­borne patrols, to secure the oil­fields and extract the oil,” Harmer said. “The­o­ret­i­cal­ly it would suck up all the deploy­able assets we have. For­get about the Pacif­ic, for­get about Africa. They would just have one pur­pose – suck­ing up oil assets in the Mid­dle East.”

    The mil­i­tary foot­print would have to be even larg­er to actu­al­ly get the oil out.
    “You’d have to occu­py most of Syr­ia to get the oil out of the coun­try, since the Syr­i­an export pipelines trav­el from the oil­fields in east­ern Syr­ia all the way to the Mediter­ranean coast, right across the cen­tral breadth of the coun­try,” Krane said.

    “It wouldn’t do you much good to just cap­ture the oil­fields. If you want­ed to steal the oil, it would take a full mil­i­tary occu­pa­tion of Syr­ia to con­trol the full length of the pipelines, so you could move the oil to mar­ket. At a min­i­mum, that would mean occu­py­ing the city of Homs in cen­tral Syr­ia, as well as the main Syr­i­an oil ter­mi­nals at Banias and Tar­tus. All that is in addi­tion to occu­py­ing rebel-held areas such as Deir ez-Zour where the oil­fields lie.”

    Nor would be it be an in-and-out deploy­ment. When he says “take the oil”, Trump clear­ly has the reserves in mind. That would take years.

    “There is no phys­i­cal way you can take oil reserves any faster than you can pump the oil,” Cordes­man said.

    The costs of the mil­i­tary oper­a­tions would far exceed any rev­enue that could be extract­ed.
    ...

    ““It would take close to 100,000 troops plus the equip­ment, the air­borne patrols, to secure the oil­fields and extract the oil,” Harmer said. “The­o­ret­i­cal­ly it would suck up all the deploy­able assets we have. For­get about the Pacif­ic, for­get about Africa. They would just have one pur­pose – suck­ing up oil assets in the Mid­dle East.”

    So the Trump’s big plan to steal Iraq’s oil, and pre­sum­ably Syr­i­a’s oil too, would prob­a­bly cost more than it would make, not even count­ing the lives lost. Yeah, that sounds like a Trump plan.

    We’ll see if Trump’s tongue ends up shred­ding the remain­ing rela­tion­ship between US and Iraqi troops as they fight to take back ter­ri­to­ry for ISIS. But on the plus side, it’s worth not­ing that if Trump is plan­ning on steal­ing all the oil in a coun­try at least he’s less like­ly to nuke the place. So that’s kind of nice.

    Posted by Pterrafractyl | January 24, 2017, 3:49 pm
  9. Don­ald Trump is back in the US tweet­ing away dur­ing this Memo­r­i­al Day week­end fol­low­ing his big first over­seas trip. And while the bar was incred­i­bly low in terms of what con­sti­tutes a suc­cess­ful trip (basi­cal­ly, as long as he does­n’t break any­thing it will be con­sid­ered a suc­cess), at least we can say that Don­ald Trump did­n’t break any­thing it looks like he broke NATO:

    The Wash­ing­ton Post

    Fol­low­ing Trump’s trip, Merkel says Europe can’t rely on ‘oth­ers.’ She means the U.S.

    By Michael Birn­baum and Rick Noack
    May 28, 2017 at 2:47 PM

    LONDON — Ger­man Chan­cel­lor Angela Merkel on Sun­day declared a new chap­ter in U.S.-European rela­tions after con­tentious meet­ings with Pres­i­dent Trump last week, say­ing that Europe “real­ly must take our fate into our own hands.”

    Offer­ing a tough review in the wake of Trump’s trip to vis­it E.U., NATO and Group of Sev­en lead­ers last week, Merkel told a packed Bavar­i­an beer hall ral­ly that the days when Europe could rely on oth­ers was “over to a cer­tain extent. This is what I have expe­ri­enced in the last few days.”

    It was a stark dec­la­ra­tion from the leader of Europe’s most pow­er­ful econ­o­my, and a grim take on the transat­lantic ties that have under­pinned West­ern secu­ri­ty in the gen­er­a­tions since World War II. Although rela­tions between Wash­ing­ton and Europe have been strained dur­ing peri­ods since 1945, before Trump there has rarely been such a strong feel­ing from Euro­pean lead­ers that they must turn away from Wash­ing­ton and pre­pare to face the world alone.

    Merkel said that Europe’s need to go it alone should be done “of course in friend­ship with the Unit­ed States of Amer­i­ca, in friend­ship with Great Britain and as good neigh­bors wher­ev­er that works.”

    But it was a clear repu­di­a­tion of Trump’s trou­bled few days with Euro­pean lead­ers, even as she held back from men­tion­ing the U.S. pres­i­dent by name. On Thurs­day, Trump had stern words for Ger­man trade behind closed doors. Hours lat­er, he blast­ed Euro­pean lead­ers at NATO for fail­ing to spend enough on defense, while hold­ing back from offer­ing an uncon­di­tion­al guar­an­tee for Euro­pean secu­ri­ty. Then, at the Group of Sev­en sum­mit of lead­ers of major world economies on Fri­day and Sat­ur­day, he refused to endorse the Paris agree­ments on com­bat­ing cli­mate change, punt­ing a deci­sion until next week.

    Merkel’s com­ments were sim­i­lar to some she made short­ly after Trump’s Novem­ber elec­tion. But they car­ry extra heft now that Trump is actu­al­ly in office – and after Trump had a days-long oppor­tu­ni­ty to reset rela­tions with Washington’s clos­est allies. Instead, by most Euro­pean accounts he strained them even more.

    Trump – who returned from his nine-day inter­na­tion­al trip on Sat­ur­day – had a dif­fer­ent take.

    “Just returned from Europe. Trip was a great suc­cess for Amer­i­ca. Hard work but big results!” Trump wrote on Sun­day, reviv­ing a pro­lif­ic Twit­ter habit that had slack­ened dur­ing his days on the road.

    But many Euro­pean lead­ers emerged from their meet­ings with Trump filled with fresh wor­ry that an earth­quake tru­ly had hit transat­lantic rela­tions. Trump was far more solic­i­tous toward the auto­crat­ic king of Sau­di Ara­bia ear­li­er in the week, telling him and oth­er lead­ers of Mus­lim-major­i­ty coun­tries – many of them not demo­c­ra­t­i­cal­ly elect­ed – that he was not “here to lec­ture.” Days lat­er in Brus­sels he offered a scathing assess­ment of Washington’s clos­est allies, say­ing they were being “unfair” to Amer­i­can tax­pay­ers.

    “The belief in shared val­ues has been shat­tered by the Trump admin­is­tra­tion,” said Stephan Bier­ling, an expert on transat­lantic rela­tions at Germany’s Uni­ver­si­ty of Regens­burg. “After the inau­gu­ra­tion, every­one in Europe was hope­ful that Trump would become more mod­er­ate and take into account the posi­tions of the G‑7 and of NATO. But the oppo­site has hap­pened. It’s as if he is still try­ing to win a cam­paign.”

    The Unit­ed States remains the largest econ­o­my in the world, and its mil­i­tary is indis­pens­able for Euro­pean secu­ri­ty, putting a clear lim­it on Europe’s abil­i­ty to declare inde­pen­dence. Amer­i­can con­sumers also form an impor­tant mar­ket for Euro­pean prod­ucts – includ­ing the Ger­man BMWs that Trump com­plained about in closed-door meet­ings in Brus­sels, accord­ing to Ger­man press accounts.

    But Merkel has expressed will­ing­ness to jolt her nation’s mil­i­tary spend­ing upwards, a first step both to answer­ing Amer­i­can crit­i­cism that it falls far short of NATO pledges and to less­en­ing its depen­dence on the U.S. secu­ri­ty blan­ket. Ger­many hiked its mil­i­tary spend­ing by $2.2 bil­lion this year, to $41 bil­lion, but it remains far from being able to stand on its own mil­i­tar­i­ly.

    ...

    ———-
    “Fol­low­ing Trump’s trip, Merkel says Europe can’t rely on ‘oth­ers.’ She means the U.S.” by Michael Birn­baum and Rick Noack; The Wash­ing­ton Post; 05/28/2017;

    “Offer­ing a tough review in the wake of Trump’s trip to vis­it E.U., NATO and Group of Sev­en lead­ers last week, Merkel told a packed Bavar­i­an beer hall ral­ly that the days when Europe could rely on oth­ers was “over to a cer­tain extent. This is what I have expe­ri­enced in the last few days.”

    So long transat­lantic rela­tion­ship, hel­lo EU army hel­lo multi­na­tion­al Bun­deswehr:

    For­eign Pol­i­cy

    Ger­many Is Qui­et­ly Build­ing a Euro­pean Army Under Its Com­mand

    Berlin is using a bland name to obscure a dra­mat­ic shift in its approach to defense: inte­grat­ing brigades from small­er coun­tries into the Bun­deswehr.

    By Elis­a­beth Braw
    May 22, 2017

    Every few years, the idea of an EU army finds its way back into the news, caus­ing a ker­fuf­fle. The con­cept is both fan­ta­sy and bogey­man: For every fed­er­al­ist in Brus­sels who thinks a com­mon defense force is what Europe needs to boost its stand­ing in the world, there are those in Lon­don and else­where who recoil at the notion of a poten­tial NATO rival.

    But this year, far from the head­lines, Ger­many and two of its Euro­pean allies, the Czech Repub­lic and Roma­nia, qui­et­ly took a rad­i­cal step down a path toward some­thing that looks like an EU army while avoid­ing the messy pol­i­tics asso­ci­at­ed with it: They announced the inte­gra­tion of their armed forces.

    Romania’s entire mil­i­tary won’t join the Bun­deswehr, nor will the Czech armed forces become a mere Ger­man sub­di­vi­sion. But in the next sev­er­al months each coun­try will inte­grate one brigade into the Ger­man armed forces: Romania’s 81st Mech­a­nized Brigade will join the Bundeswehr’s Rapid Response Forces Divi­sion, while the Czech 4th Rapid Deploy­ment Brigade, which has served in Afghanistan and Koso­vo and is con­sid­ered the Czech Army’s spear­head force, will become part of the Ger­mans’ 10th Armored Divi­sion. In doing so, they’ll fol­low in the foot­steps of two Dutch brigades, one of which has already joined the Bundeswehr’s Rapid Response Forces Divi­sion and anoth­er that has been inte­grat­ed into the Bundeswehr’s 1st Armored Divi­sion. Accord­ing to Car­lo Masala, a pro­fes­sor of inter­na­tion­al pol­i­tics at the Uni­ver­si­ty of the Bun­deswehr in Munich, “The Ger­man gov­ern­ment is show­ing that it’s will­ing to pro­ceed with Euro­pean mil­i­tary inte­gra­tion” — even if oth­ers on the con­ti­nent aren’t yet.

    Euro­pean Com­mis­sion Pres­i­dent Jean-Claude Junck­er has repeat­ed­ly float­ed the idea of an EU army, only to be met with either ridicule or awk­ward silence. That remains the case even as the U.K., a peren­ni­al foe of the idea, is on its way out of the union. There’s lit­tle agree­ment among remain­ing mem­ber states over what exact­ly such a force would look like and which capa­bil­i­ties nation­al armed forces would give up as a result. And so progress has been slow going. This March, the Euro­pean Union cre­at­ed a joint mil­i­tary head­quar­ters — but it’s only in charge of train­ing mis­sions in Soma­lia, Mali, and the Cen­tral African Repub­lic and has a mea­ger staff of 30. Oth­er multi­na­tion­al con­cepts have been designed, such as the Nordic Bat­tle Group, a small 2,400-troop rapid reac­tion force formed by the Baltic states and sev­er­al Nordic coun­tries and the Nether­lands, and Britain’s Joint Expe­di­tionary Force, a “mini-NATO” whose mem­bers include the Baltic states, Swe­den, and Fin­land. But in the absence of suit­able deploy­ment oppor­tu­ni­ties, such oper­a­tions-based teams may as well not exist.

    But under the bland label of the Frame­work Nations Con­cept, Ger­many has been at work on some­thing far more ambi­tious — the cre­ation of what is essen­tial­ly a Bun­deswehr-led net­work of Euro­pean miniarmies. “The ini­tia­tive came out of the weak­ness of the Bun­deswehr,” said Justy­na Gotkows­ka, a North­ern Europe secu­ri­ty ana­lyst at Poland’s Cen­tre for East­ern Stud­ies think tank. “The Ger­mans real­ized that the Bun­deswehr need­ed to fill gaps in its land forces … in order to gain polit­i­cal and mil­i­tary influ­ence with­in NATO.” An assist from junior part­ners may be Germany’s best shot at bulk­ing out its mil­i­tary quick­ly — and Ger­man-led miniarmies may be Europe’s most real­is­tic option if it’s to get seri­ous about joint secu­ri­ty. “It’s an attempt to pre­vent joint Euro­pean secu­ri­ty from com­plete­ly fail­ing,” Masala said.

    “Gaps” in the Bun­deswehr is an under­state­ment. In 1989, the West Ger­man gov­ern­ment spent 2.7 per­cent of GDP on defense, but by 2000 spend­ing had dropped to 1.4 per­cent, where it remained for years. Indeed, between 2013 and 2016 defense spend­ing was stuck at 1.2 per­cent — far from NATO’s 2 per­cent bench­mark. In a 2014 report to the Bun­destag, the Ger­man par­lia­ment, the Bundeswehr’s inspec­tors-gen­er­al pre­sent­ed a woe­ful pic­ture: Most of the Navy’s heli­copters were not work­ing, and of the Army’s 64 heli­copters, only 18 were usable. And while the Cold War Bun­deswehr had con­sist­ed of 370,000 troops, by last sum­mer it was only 176,015 men and women strong.

    Since then the Bun­deswehr has grown to more than 178,000 active-duty troops; last year the gov­ern­ment increased fund­ing by 4.2 per­cent, and this year defense spend­ing will grow by 8 per­cent. But Ger­many still lags far behind France and the U.K. as a mil­i­tary pow­er. And boost­ing defense spend­ing is not uncon­tro­ver­sial in Ger­many, which is wary of its his­to­ry as a mil­i­tary pow­er. For­eign Min­is­ter Sig­mar Gabriel recent­ly said it was “com­plete­ly unre­al­is­tic” to think that Ger­many would reach NATO’s defense spend­ing bench­mark of 2 per­cent of GDP — even though near­ly all of Germany’s allies, from small­er Euro­pean coun­tries to the Unit­ed States, are urg­ing it to play a larg­er mil­i­tary role in the world.

    Ger­many may not yet have the polit­i­cal will to expand its mil­i­tary forces on the scale that many are hop­ing for — but what it has had since 2013 is the Frame­work Nations Con­cept. For Ger­many, the idea is to share its resources with small­er coun­tries in exchange for the use of their troops. For these small­er coun­tries, the ini­tia­tive is a way of get­ting Ger­many more involved in Euro­pean secu­ri­ty while side­step­ping the tricky pol­i­tics of Ger­many mil­i­tary expan­sion. “It’s a move towards more Euro­pean mil­i­tary inde­pen­dence,” Masala said. “The U.K. and France are not avail­able to take a lead in Euro­pean secu­ri­ty” — the U.K. is on a col­li­sion course with its EU allies, while France, a mil­i­tary heavy­weight, has often been a reluc­tant par­tic­i­pant in multi­na­tion­al efforts with­in NATO. “That leaves Ger­many,” he said. Oper­a­tional­ly, the result­ing bina­tion­al units are more deploy­able because they’re per­ma­nent (most multi­na­tion­al units have so far been ad hoc). Cru­cial­ly for the junior part­ners, it also ampli­fies their mil­i­tary mus­cle. And should Ger­many decide to deploy an inte­grat­ed unit, it could only do so with the junior partner’s con­sent.

    Of course, since 1945 Ger­many has been extra­or­di­nar­i­ly reluc­tant to deploy its mil­i­tary abroad, until 1990 even bar­ring the Bun­deswehr from for­eign deploy­ments. Indeed, junior part­ners — and poten­tial junior part­ners — hope that the Frame­work Nations arrange­ment will make Ger­many take on more respon­si­bil­i­ty for Euro­pean secu­ri­ty. So far, Ger­many and its multi­na­tion­al miniarmies remain only that: small-scale ini­tia­tives, far removed from a full-fledged Euro­pean army. But the ini­tia­tive is like­ly to grow. Germany’s part­ners have been tout­ing the prac­ti­cal ben­e­fits of inte­gra­tion: For Roma­nia and the Czech Repub­lic, it means bring­ing their troops to the same lev­el of train­ing as the Ger­man mil­i­tary; for the Nether­lands, it has meant regain­ing tank capa­bil­i­ties. (The Dutch had sold the last of their tanks in 2011, but the 43rd Mech­a­nized Brigade’s troops, who are par­tial­ly based with the 1st Armored Divi­sion in the west­ern Ger­man city of Old­en­burg, now dri­ve the Ger­mans’ tanks and could use them if deployed with the rest of the Dutch army.) Col. Antho­ny Leu­ver­ing, the 43rd Mechanized’s Old­en­burg-based com­man­der, told me that the inte­gra­tion has had remark­ably few hic­cups. “The Bun­deswehr has some 180,000 per­son­nel, but they don’t treat us like an under­dog,” he said. He expects more coun­tries to jump on the band­wag­on: “Many, many coun­tries want to coop­er­ate with the Bun­deswehr.” The Bun­deswehr, in turn, has a list of junior part­ners in mind, said Robin Allers, a Ger­man asso­ciate pro­fes­sor at the Nor­we­gian Insti­tute for Defence Stud­ies who has seen the Ger­man military’s list. Accord­ing to Masala, the Scan­di­na­vian coun­tries — which already use a large amount of Ger­man-made equip­ment — would be the best can­di­dates for the Bundeswehr’s next round of inte­gra­tion.

    So far, the low-pro­file and ad hoc approach of the Frame­work Nations Con­cept has worked to its advan­tage; few peo­ple in Europe have object­ed to the inte­gra­tion of Dutch or Roman­ian units into Ger­man divi­sions, part­ly because they may not have noticed. Whether there will be polit­i­cal reper­cus­sions should more nations sign up to the ini­tia­tive is less clear.

    ...

    ———-

    “Ger­many Is Qui­et­ly Build­ing a Euro­pean Army Under Its Com­mand” by Elis­a­beth Braw; For­eign Pol­i­cy; 05/22/2017

    “Of course, since 1945 Ger­many has been extra­or­di­nar­i­ly reluc­tant to deploy its mil­i­tary abroad, until 1990 even bar­ring the Bun­deswehr from for­eign deploy­ments. Indeed, junior part­ners — and poten­tial junior part­ners — hope that the Frame­work Nations arrange­ment will make Ger­many take on more respon­si­bil­i­ty for Euro­pean secu­ri­ty. So far, Ger­many and its multi­na­tion­al miniarmies remain only that: small-scale ini­tia­tives, far removed from a full-fledged Euro­pean army. But the ini­tia­tive is like­ly to grow. Germany’s part­ners have been tout­ing the prac­ti­cal ben­e­fits of inte­gra­tion: For Roma­nia and the Czech Repub­lic, it means bring­ing their troops to the same lev­el of train­ing as the Ger­man mil­i­tary; for the Nether­lands, it has meant regain­ing tank capa­bil­i­ties. (The Dutch had sold the last of their tanks in 2011, but the 43rd Mech­a­nized Brigade’s troops, who are par­tial­ly based with the 1st Armored Divi­sion in the west­ern Ger­man city of Old­en­burg, now dri­ve the Ger­mans’ tanks and could use them if deployed with the rest of the Dutch army.) Col. Antho­ny Leu­ver­ing, the 43rd Mechanized’s Old­en­burg-based com­man­der, told me that the inte­gra­tion has had remark­ably few hic­cups. “The Bun­deswehr has some 180,000 per­son­nel, but they don’t treat us like an under­dog,” he said. He expects more coun­tries to jump on the band­wag­on: “Many, many coun­tries want to coop­er­ate with the Bun­deswehr.” The Bun­deswehr, in turn, has a list of junior part­ners in mind, said Robin Allers, a Ger­man asso­ciate pro­fes­sor at the Nor­we­gian Insti­tute for Defence Stud­ies who has seen the Ger­man military’s list. Accord­ing to Masala, the Scan­di­na­vian coun­tries — which already use a large amount of Ger­man-made equip­ment — would be the best can­di­dates for the Bundeswehr’s next round of inte­gra­tion.”

    Let’s see...we have Roma­nia, the Czech Repub­lic, the Nether­lands already inte­grat­ing under the Bun­deswehr’s com­mand, with many more states like­ly to fol­low. Specif­i­cal­ly the Scan­di­na­vian states. At least those are the states Ger­many real­ly wants under its com­mand. And that whole process just got a mas­sive boost thanks to Don­ald Trump’s gen­er­al trash talk­ing of NATO cul­mi­nat­ing in a refusal to reaf­firm the US’s com­mit­ment to NATO’s arti­cle 5.

    And that was just Trump’s first trip around the world.

    Posted by Pterrafractyl | May 28, 2017, 1:24 pm
  10. Here’s a reminder that when Don­ald Trump pub­licly fights with Angela Merkel he’s not just weak­en­ing NATO and the trans-Atlantic alliance. He’s also inval­i­dat­ing any valid crit­i­cisms of Ger­man pol­i­cy. How so? By sim­ply by very, very unlik­able to Euro­peans in gen­er­al. So when you con­sid­er­ing that Angela Merkel is in the mid­dle of a reelec­tion cam­paign and fight­ing with Trump only helps her in the polls, we should prob­a­bly con­sid­er quite a few more trans-Atlantic spats over the com­ing months. They’re just too polit­i­cal­ly help­ful for Angela to pass up:

    Slate

    Thanks to Trump, Ger­many Has a Free Pass to Keep Wreck­ing Europe’s Econ­o­my

    By Jor­dan Weiss­mann
    May 30 2017 8:07 PM

    One down­side to hav­ing a wit­less howler mon­key for a pres­i­dent is that, even on the rare occa­sions when Don­ald Trump is fun­da­men­tal­ly right about an issue, he still makes a hash of it.

    Con­sid­er his recent squab­bles with Ger­many over trade. After deliv­er­ing an awk­ward speech at NATO head­quar­ters last week in which he lec­tured our Euro­pean allies for fail­ing to spend enough on their own mil­i­tary defense, Trump report­ed­ly griped to a room full of lead­ers that the Ger­mans were “very bad” (or pos­si­bly, depend­ing on your trans­la­tion, “very evil”) for run­ning a large trade sur­plus. “Look at the mil­lions of cars they sell in the U.S. We’ll stop that,” he report­ed­ly said. These com­ments were wide­ly mocked—Ger­man com­pa­nies already make many of their cars in the U.S.—but Trump nonethe­less dou­bled down pub­licly on his posi­tion Tues­day morn­ing on Twit­ter.

    We have a MASSIVE trade deficit with Ger­many, plus they pay FAR LESS than they should on NATO & mil­i­tary. Very bad for U.S. This will change— Don­ald J. Trump (@realDonaldTrump) May 30, 2017

    And you know what? He has a point. As usu­al, Trump’s com­ments lack any sem­blance of nuance, and he may only bare­ly under­stand that of which he tweets. But econ­o­mists have crit­i­cized Ger­many for years over an approach to trade that has pun­ished its Euro­pean neigh­bors, desta­bi­lized the euro­zone, and sapped glob­al growth. The president’s basic intu­ition that Berlin is a bad actor on this issue is cor­rect.

    ...

    There is arguably no coun­try that does a bet­ter job gam­ing glob­al trade right now than Ger­many. The country’s exports have topped its imports year after year, and in 2016 it piled up the world’s largest cur­rent account surplus—dwarfing even China’s both as a total dol­lar fig­ure and as a per­cent­age of its econ­o­my. Ger­mans have not accom­plished this feat sole­ly because they have a knack for design­ing sports cars. Rather, they’ve done it by being thrifty to a fault, sav­ing far more than they spend—which by the rules of eco­nom­ics ulti­mate­ly leads to a trade sur­plus. House­holds in Stuttgart and Munich sim­ply don’t buy enough import­ed mer­chan­dise to bal­ance out the road­sters and tur­bines and pre­scrip­tion drugs Ger­man com­pa­nies ship to the world.

    You can’t blame Ger­man fam­i­lies for stow­ing mon­ey away. They’re a proud­ly fru­gal peo­ple who regard a pen­ny-pinch­ing house­wife as a sym­bol of their nation­al char­ac­ter, after all. The coun­try’s pop­u­la­tion is also aging, and old folks need their nest eggs. But the sav­ings glut that fuels Germany’s trade sur­plus is also a prod­uct of pub­lic-pol­i­cy choic­es that have pit­ted its well-being against the world’s. Angela Merkel’s gov­ern­ment has insist­ed on run­ning a bud­get surplus—which this year hit a record high—which con­tributes to the nation­al sav­ings rate. Mean­while, work­ers’ pay has been kept down by a com­bi­na­tion of con­ces­sions made by labor unions and labor mar­ket reforms from the ear­ly 2000s that made it eas­i­er for com­pa­nies to hire inex­pen­sive tem­po­rary employ­ees. Those low wages have allowed Ger­man com­pa­nies to be more com­pet­i­tive abroad while also dis­cour­ag­ing con­sumer spend­ing at home.

    None of this would be a prob­lem if Ger­many still had its own free-float­ing cur­ren­cy. If it did, ris­ing exports would dri­ve up the Deutsche mark’s val­ue, lead­ing Ger­mans to sell less and buy more from over­seas. But instead it shares the euro with eco­nom­i­cal­ly weak­er com­pa­tri­ots like Spain and Italy, which keeps the cost of Ger­man wares arti­fi­cial­ly cheap both inside and out­side Europe.

    Not coin­ci­den­tal­ly, Germany’s trade sur­plus­es have been most dev­as­tat­ing to oth­er mem­bers of the cur­ren­cy union. It’s not mere­ly that these oth­er coun­tries’ man­u­fac­tur­ers were out­com­pet­ed by Ger­man com­pa­nies. It’s that coun­tries like Greece financed their own trade sur­plus­es with debt—often bor­rowed from Ger­man banks rein­vest­ing their country’s trade bounty—that required bailouts after the finan­cial cri­sis. These bailouts were approved by mor­al­iz­ing Ger­man offi­cials only on the con­di­tion of an eco­nom­i­cal­ly crush­ing cycle of aus­ter­i­ty. Before right-wing nation­al­ists like Don­ald Trump and the Brex­i­teers became ascen­dent, it seemed the sin­gle largest threat to Europe’s future was Ger­man-accent­ed eco­nom­ics—67 per­cent of econ­o­mists polled by the Cen­tre for Macro­eco­nom­ics and CEPR, for instance, said they agreed the country’s sur­plus­es were desta­bi­liz­ing the euro zone.

    But job­less work­ers in Athens and Andalu­cia haven’t been the only vic­tims. Econ­o­mists such as for­mer Fed­er­al Reserve Chair Ben Bernanke and New York Times colum­nist Paul Krug­man (who won his Nobel prize for work on trade) have argued that Germany’s sur­plus­es were a drag on the entire glob­al econ­o­my in the post-reces­sion years. “We are still in a world ruled by inad­e­quate demand, and very much sub­ject to the para­dox of thrift,” Krug­man wrote in late 2013. “By run­ning inap­pro­pri­ate large sur­plus­es, Ger­many is hurt­ing growth and employ­ment in the world at large. Ger­mans may find this incom­pre­hen­si­ble, but it’s just macro­eco­nom­ics 101.” Even the U.S. Trea­sury got in on the act, crit­i­ciz­ing “Germany’s ane­mic pace of domes­tic demand growth and depen­dence on exports” for dri­ving up the risk of defla­tion in “the euro area, as well as for the world econ­o­my.”

    In short, crit­i­ciz­ing Ger­many on trade is not some sort of fringe posi­tion. It’s been stan­dard among sane econ­o­mists for years.

    But that brings us back to Trump. The pres­i­dent may not even real­ize it, but the two things that frus­trate him about Germany—its trade bal­ance and its mil­i­tary budget—are con­nect­ed. Ger­many needs to spend more to reduce its trade bal­ance. The most obvi­ous way to do that is through a project like mass infra­struc­ture invest­ment, as Merkel’s polit­i­cal oppo­nents sup­port (her par­ty prefers tax cuts). But lav­ish­ing more mon­ey on the mil­i­tary, as Trump would like, would like­ly work as well. It’s a posi­tion that a diplo­mat­i­cal­ly adroit White House could push in pri­vate and per­haps not be laughed from the room.

    Don­ald Trump, though, is not adroit. Since the inau­gu­ra­tion, Euro­peans have been apt to laugh off the Trump administration’s crit­i­cisms of Ger­many as ill-informed blus­ter, even when they were basi­cal­ly valid. By waf­fling on NATO while attempt­ing to bul­ly our Euro­pean allies, he’s stiff­ened their resis­tance to him and allowed Merkel to cast her­self as the defend­er of Europe in an age when Wash­ing­ton can’t be trust­ed. “We have to know that we must fight for our future on our own, for our des­tiny as Euro­peans,” Merkel said on the cam­paign trail after Trump’s Euro jaunt. New French Pres­i­dent Emmanuel Macron is join­ing along, cozy­ing up to Merkel while mak­ing a the­atri­cal dis­play of try­ing to destroy Trump’s knuck­les. By mak­ing him­self the ene­my, Trump’s tak­en the heat off Ger­many and made real eco­nom­ic reforms there that much less like­ly.

    ———-

    “Thanks to Trump, Ger­many Has a Free Pass to Keep Wreck­ing Europe’s Econ­o­my” by Jor­dan Weiss­mann; Slate; 05/30/2017

    “In short, crit­i­ciz­ing Ger­many on trade is not some sort of fringe posi­tion. It’s been stan­dard among sane econ­o­mists for years.”

    Yep, Trump acci­den­tal­ly tweet­ed some­thing sane. But since he framed it all from an ‘Amer­i­ca First’ stand­point — ignor­ing that Ger­many’s trade imbal­ance and pro-aus­ter­i­ty stances have a much, much greater neg­a­tive impact on Ger­many’s Euro­pean neigh­bors than it does the US — the world got to laugh it off and turned it into an oppor­tu­ni­ty to mock Trump. It’s the kind of expe­ri­ence that prob­a­bly left Merkel’s advi­sors scram­bling try­ing to fig­ure out how to goad Trump into more of these tiffs.

    But also note the pos­si­ble ‘solu­tion’ to Trump’s duel crit­i­cisms — that Ger­many does­n’t spend enough on its mil­i­tary and it’s not import­ing enough US goods — and how this plays into Merkel’s own goal of con­vinc­ing the Ger­man pub­lic to spend more on the mil­i­tary: if Ger­many buys a bunch of US mil­i­tary hard­ware that would address both of Trump’s com­plaints:

    ...
    But that brings us back to Trump. The pres­i­dent may not even real­ize it, but the two things that frus­trate him about Germany—its trade bal­ance and its mil­i­tary budget—are con­nect­ed. Ger­many needs to spend more to reduce its trade bal­ance. The most obvi­ous way to do that is through a project like mass infra­struc­ture invest­ment, as Merkel’s polit­i­cal oppo­nents sup­port (her par­ty prefers tax cuts). But lav­ish­ing more mon­ey on the mil­i­tary, as Trump would like, would like­ly work as well. It’s a posi­tion that a diplo­mat­i­cal­ly adroit White House could push in pri­vate and per­haps not be laughed from the room.
    ...

    And that’s part of the weird sit­u­a­tion the Merkel gov­ern­ment is in regard­ing how to han­dle Trump’s boor­ish­ness on these issues: if they mock Trump, they can score some good pub­lic rela­tions points in terms of dis­miss­ing crit­i­cisms of Ger­many’s chron­i­cal­ly high trade sur­plus. And score good pub­lic rela­tions points in gen­er­al just from mock­ing Trump because that’s pop­u­lar in Ger­many. But if they pub­licly take Trump’s cri­tiques seri­ous­ly, that gives the Ger­man gov­ern­ment a good excuse to increase mil­i­tary spend­ing over long-held pub­lic oppo­si­tion. On the oth­er hand, the more Trump dam­ages US/German rela­tions, the more com­pelling Merkel’s calls for an EU Army only get.

    It’s a strange tightrope of respect­ful deri­sion that needs to be walked. To mock, or not to mock. Trump. That is the ques­tion fac­ing Angela Merkel. With the answer prob­a­bly hav­ing a lot to do with how tight her race gets. She’s prob­a­bly going to want to mock Trump, just not too much...unless the race is real­ly close in which case look out US-Ger­man rela­tions!

    Posted by Pterrafractyl | May 30, 2017, 7:47 pm

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