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Cardinal Zen Presents Letter To Pope Francis Warning Him On China

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Cardinal Joseph Zen Ze-kiun flew to Rome and handed a seven-page letter to Pope Francis appealing for him to pay attention to the crisis facing the underground church in China.

The Hong Kong emeritus bishop on Nov. 8 told ucanews.com that underground clerics have cried to him since the Vatican-China deal on the appointment of bishops.

“They said officials have forced them to become open, to join the Chinese Catholic Patriotic Association and to obtain a priest’s certificate with the reason that the pope has signed the Sino-Vatican provisional agreement,” said Cardinal Zen.

He said some parts of the agreement had not been made public, meaning that brothers and sisters of the underground church did not know what they should do.

“Some priests have escaped, and some have disappeared because they do not know what to do and are annoyed. The agreement is undisclosed, and they do not know if what officials say is true or not,” he said.

Cardinal Zen said the China Church was facing new persecution and the Holy See was helping the Chinese Communist Party suppress the underground community.

He flew to Rome from Oct. 29 to Nov. 1 to hand his letter to the pope. “I want to talk to the pope again and hope he will consider again, but this may be the last time,” he said.

In his letter he described how the underground church had seen money confiscated, with clergy having relatives disturbed by the authorities, going to jail or even losing their lives for the faith.

“But the Holy See does not support them and regards them as trouble, referring to them causing trouble and not supporting unity. This is what makes them most painful,” said Cardinal Zen.

The letter also stated that the Chinese Church did not have the freedom to elect bishops.

“The pope has said that members of the Chinese Church should be the prophets and sometimes criticize the government. I feel very surprised that he does not understand the situation of the Chinese Church,” Cardinal Zen said.

On Sept. 26, four days after the provisional agreement was signed, the pope wrote a message to Chinese Catholics and the universal church explaining the reasons for signing the agreement: to promote the proclamation of the Gospel, and to establish unity in the Catholic community in China.

In addition, after his pastoral visit to Lithuania, Latvia and Estonia from Sept. 2-25, the pope told the media on his flight home that people should “pay tribute to those who suffered for faith,” especially in those three countries brutally trampled by the Nazis and the Communist Party.

Cardinal Zen told ucanews.com that the pope’s words made him feel that “he does not seem to know that their history is also the history of the Chinese Church and the current situation.” He suspects the pope was deceived by people around him who did not tell him the real situation faced by the Chinese church.

Cardinal Zen criticized the Vatican secretary of state, Cardinal Pietro Parolin, who negotiated with the Chinese government.

“He is very experienced. He also sees China’s ugly face and knows they are not reasonable. In fact, he does not trust the Chinese side. He only uses them to achieve the purpose of establishing diplomatic relations,” he said.

Cardinal Zen reiterated that the letters written to the Chinese Church during the reign of Pope Benedict XVI were taken out of context, especially about the existence of the underground church.

He said: “Pope Benedict XVI was not talking about the abnormality of the underground church itself, but the situation in China is not normal. The government’s intervention means that the church cannot be pure and leads to abnormality, so the bishops, priests and faithful are going to the underground.”

As the Chinese government still interferes with the church, and church members want to keep their faith pure, it is impossible to ask for the official and underground churches to unite, Cardinal Zen said.

“Our bottom line is the pope. We cannot attack him. If the pope is wrong this time, I hope he will admit the mistake; if he does not admit, I hope that the future pope will point out the mistake. But in the end, it is still the pope’s final decision. If you don’t follow, then there is no principle, so the mainland’s brothers must not rebel,” he said.

Cardinal Zen made an earlier trip to Rome during January where he also handed the pope a letter, this time about concerns over the Holy See asking two recognized bishops in China to step aside and make way for illicit bishops.


Rouhani Says US Sanctions Targeting Iranian People

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Contrary to what the US government claims, Washington’s sanctions and pressures are aimed at harming the people of Iran, Iranian President Hassan Rouhani said Saturday.

Speaking to reporters in Tehran after a meeting with the Parliament speaker and Judiciary chief, Rouhani said the US government is after pressure and cruelty to the Iranian nation.

The claim that the US is seeking to mount pressure on the Iranian government and not on the people is totally wrong, he said, adding, “With their inappropriate and wrong sanctions and by targeting (Iran’s) banking system and oil exports… Americans want to negatively impact the life and daily livelihood of the people.”

He also said the US claim that medicine, foodstuff and medical equipment are exempted from the anti-Iran sanctions is untrue, because imposing sanctions on Iran’s banking system would affect trade in all areas.

The president assured the Iranian nation that the administration has made arrangements to secure the steady supply of basic goods for many months.

As regards the meeting of heads of the three branches of power, Rouhani said the latest status of Iran’s economy and a road map for the coming months were discussed in the gathering.

Last week, Rouhani said Iran will proudly circumvent the US sanctions, which he branded as cruel and illegal.

The US government imposed a new round of sanctions on Iran on November 4.

On May 8, the US president pulled his country out of the Joint Comprehensive Plan of Action (JCPOA), the nuclear deal that was achieved in Vienna in 2015 after years of negotiations among Iran and the Group 5+1 (Russia, China, the US, Britain, France and Germany).

The US had announced plans to drive Iran’s oil exports down to zero, but backed off from its policy and granted waivers to at least 8 countries that import Iranian oil

Macron Hosts Trump, Putin, Merkel On 11th Hour, 11th Day, 11th Month

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(RFE/RL) — French President Emmanuel Macron is hosting some 70 world leaders in Paris to commemorate the centenary of the armistice that brought an end to World War I on the 11th hour, of the 11th day, of the 11th month.

Guns fell silent on November 11, 1918, ending the four-year war that killed at least 10 million soldiers and millions of civilians.

Macron will pay tribute to the fallen soldiers in a speech at the Arc de Triomphe, where an unknown soldier killed in the war is buried.

U.S. President Donald Trump, German Chancellor Angela Merkel, Russian President Vladimir Putin, and Turkey’s Recep Tayyip Erdogan are among the leaders scheduled to participate, then attend a lunch with the French presdent at the Elysee Palace.

In a dinner late on November 10 with many of the visiting leaders, Macron warned against taking peace for granted.

“Some of us were on opposite sides at the time [of WWI], and we are reunited tonight. That is the greatest homage we can pay” to the fallen soldiers,” he said.

Macron on November 11 will also host the first Paris Peace Forum, which seeks to promote a multilateral approach to security and governance.

Merkel said the forum showed that “today there is a will, and I say this on behalf of Germany with full conviction, to do everything to bring a more peaceful order to the world, even though we know we still have much work to do.”

Trump is not expected to attend the forum ceremony, although Putin is.

Trump has said he will not hold a bilateral summit with Putin in Paris, with the White House saying he did not want to overshadow the WWI ceremonies.

They are likely to meet at the G-20 summit in Buenos Aires later in the month.

Oil Prices Tumble On ‘Gloomy’ Reports Of Stocks Oversupply – OpEd

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By Faisal Mrza*

Oil markets were disappointing last week, as reports of stocks oversupply and poor economic numbers sent prices tumbling.

The International Energy Agency (IEA) has succeeded in paving the way for a low oil price environment by promoting poor oil demand growth globally with unjustified pessimism and weak arguments. The IEA’s gloomy outlook managed to set the stage for Brent to hover near $70 per barrel and WTI to flirt with $60 per barrel (the lowest levels since April 2018).

By the weekend, prices fell about 20 percent from their October highs, with Brent at $70.18 per barrel and WTI down to $60.19 per barrel. The drop in WTI prices for a tenth day is the longest losing streak in at least three decades. It is the fifth straight week of losses for crude futures.

Crude prices took a nosedive as waivers on Iranian sanctions and rising supplies offset export- cut concerns. The oil market is delinking somewhat from equities, which have largely been rebounding since early November. The surge in supplies has helped to drive bullish speculators out of the paper market. This in turn has weakened the underlying structure of oil futures, creating a discount for near-term contracts compared to longer-dated ones. Consequently, the bulls are challenged to prove themselves correct in such unpredictable times.

US crude stocks increased for the seventh consecutive week. This left domestic crude stocks nearly 37 million barrels higher than they were in mid-September as a result of US weekly crude oil production that jumped to the highest on record. Also, the global supply outlook has improved with the restart of Libya’s oil production to 1.25 million barrels per day. All Libya’s oil fields and ports are operating, although protesters are once again threatening a shutdown of El Sharara, the largest producing field. All these bearish developments have put massive downward pressure on oil prices.

Other developments in the physical market that sent the oil-market bears into a frenzy are soaring freight rates, amid rising shipments from the Arabian Gulf to China. Refining margins also slumped further across all regions in October. Light products contributed to the weak margin, as Naphtha and LPG crack spreads fell throughout the month and undermined rises in middle distillate and fuel oil crack spreads.

Gasoline was predominantly responsible for much of this weakness. Gasoline crack spreads in the US Gulf coast, Northwest Europe and the Mediterranean have fallen steadily since August and by the end of October hit their lowest level since mid-2014. Gasoline margins turned negative in China, but diesel demand remains robust and expectations are for exports of both products to increase, which could weigh on Singapore prices.

US gasoline prices have come under pressure from rising stocks, slow demand and a looming switch to winter-grade products. Weak gasoline margins kept Naphtha prices soft amid slackening demand, while high freight rates pressured export interest.

It appears that the weakness in gasoline markets may partly be a result of US President Donald Trump’s intention to allow a higher ethanol blend in the national specification for summer gasoline.

The key motive for allowing an E15 ethanol blend in the summer appears to be to try to push down the price of gasoline at the pump by adding about 400,000 to 500,000 barrels per day of a cheaper product to the US gasoline pool. This change would have been ineffective after the summer high gasoline demand season and will leave some additional unwanted volumes of gasoline in the US upon the upcoming winter season and the low demand for gasoline.

With the start of the Iranian sanctions, and a month prior to the critical 175th meeting of the OPEC Conference, due to be held on Dec. 6, there will be many considerations for the new oil output strategy in order not to flood the market while keeping it well balanced. This comes at a time when Goldman Sachs emphasized that there will be an oil shortage in 2020 as a result of a lack of upstream investment.

The OPEC/non-OPEC Joint Ministerial Monitoring Committee (JMMC), chaired by Saudi Arabia, will meet today in Abu Dhabi to assess market conditions and discuss next steps. In its October meeting, the JMMC has already directed its Joint Technical Committee (JTC) to continue to study the 2019 outlook and present options on 2019 production levels to prevent the reemergence of a market imbalance.

* Faisal Mrza is an energy and oil market adviser. He was formerly with OPEC and Saudi Aramco. Reach him on Twitter: @faisalmrza

Florida Orders Recount Of Senate And Governor Races

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Florida is officially holding a recount of votes in its Senate and governor races, where Republicans Rick Scott and Ron DeSantis have led over their Democratic rivals, Bill Nelson and Andrew Gillum, both by a small margin.

With the results of both races falling within the margin of triggering a recount, Florida secretary of state Ken Detzner ordered just that on Saturday.

A machine recount of ballots will be required in the case of DeSantis, who led Tallahassee Mayor Gillum by less than 0.5 percentage points, while the Senate race saw an even smaller margin of 0.25 percentage points. Scott’s lead over Nelson will thus require a hand recount of ballots from tabulation machines.

It didn’t take long for Gillum to walk back on his concession to DeSantis in the wake of the vote recount, with him announcing that “I am replacing my words of concession with an uncompromised and unapologetic call that we count every single vote.”

With accusations of fraud and lawsuits surrounding the tight contests, many drew parallels to the state’s 2000 presidential recount, which delayed the results of the race between George W. Bush and Al Gore for five weeks before the US Supreme Court intervened.

President Donald Trump promptly reacted to the decision, likely to drag on the highly-polarized race, by tweeting that some – the Democrats, apparently – have been “trying to STEAL two big elections in Florida!”

Good News, The Stock Market Is Plunging: Thoughts On Wealth – OpEd

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Several people on my Twitter feed touted the drop in the stock market last month as evidence of the failure of Donald Trump’s economic policy. I responded by pointing out that he was reducing wealth inequality. I was being only half facetious.

I have always been less concerned about wealth than income both because I think wealth is less well-defined and because income is the more important determinant of living standards. In the case of the stock market plunge, the vast majority of the losses go to the richest 10 percent of the population and close to half go to the richest 1 percent, for the simple reason that this is distribution of stock ownership.

When people decry the rise in inequality in wealth over the last decade, they are basically complaining about the run-up in the stock market. The real value of the stock market has roughly tripled from its recession lows. With the richest one percent holding close to 40 percent of stock wealth and the richest 10 percent holding more than 80 percent, a tripling in the value of the stock market pretty much guarantees a big increase in wealth inequality. If we think this increase is bad, then why would we not think a drop in the stock market is good?

There is a correlation between the stock market and economic growth. The market generally rises when the economy is strong and falls in recessions, but this link is weak. Remember the recession of 1988?

I hope not, because the economy continued to grow at a healthy pace until the summer of 1990. This is in spite of stock market’s largest one-day drop ever in October of 1987. (It did recovery half of its value by the end of the year.)

In short, the recent plunge in the market tells us little about the future direction of the economy. If we are troubled by wealth inequality then we should be happy, rich people now have substantially less wealth.

This is not the only case where our thinking about wealth may be problematic. The value of a bond is inversely related to interest rates. To over-simply slightly, a very long-term bond has roughly twice the value when prevailing long-term interest rate is 2.5 percent than when it is 5.0 percent. This fact means that, other things equal, when interest rates fall, wealth inequality increases (because rich people own most of the bonds). So should we be upset about the rise in inequality when interest rates drop?

Bonds are an interesting case since the payout is fixed independent of the bond’s value. With lower rates, rich bondholders have more wealth, but no more annual income.

The situation is actually similar with stocks. Stock returns come from either dividends or capital gains. When price to earnings ratios high, dividend yields will be low. In the Golden Age following World War II, dividend yields averaged more than 4.0 percent annually, since price to earnings ratios were generally under fifteen. In recent years, with the price to earnings ratios well over twenty, dividend yields have been close to 2.0 percent annually.

As a result of lower dividend yields in recent years, stock returns were actually much higher in the Golden Age than in the last two decades. From 1947 to 1973, real returns averaged 8.4 percent. In the last two decades they have averaged just 4.7 percent.

In effect, the rise in stock prices has meant that stockholders are getting lower returns for each dollar of stock they hold. The rich do have more wealth as a result of higher stock prices, but it doesn’t necessarily mean they will have more income. In any case, if we are really bothered by this wealth, then we should see a lower stock market as good news.

Wealth and Middle Income Families

For middle income families, wealth largely means owning a home. For the vast majority of middle income families their house is their main source of wealth. Median family wealth in 2016 was just under $100,000, a bit less than twice the median family, as measured by Survey of Consumer Finance.[1] There are large difference in wealth by race, with the median for whites at $171,000, for blacks $17,600, and for Hispanics $20,700.  This largely reflects the fact that the median white family is a homeowner, with homeownership rates of more than 70 percent. By contrast, the homeownership rate for blacks is just over 40 percent and for Hispanics it is a bit over 45 percent.

There has been much made of the fact that median wealth has not recovered to its 2007 levels. This is a bit misleading. The levels of 2007 were inflated by the housing bubble. Even though there was a sharp drop in the equity share of most homeowners (the share of the house’s value they had paid off), there was an increase in homeowner equity due to the run up in prices. Since this run-up was ephemeral, it was inevitable that homeowners’ equity would plunge when the bubble burst.

The more serious concern than the comparison to 2007 is the longer term trend in the wealth of middle class households. The wealth of families between the ages of 55 and 65 in the middle quintile of the distribution is essentially unchanged from where it was in 1989. For families between the ages of 45 to 54 it is actually down by almost 30 percent from its 1989 level.

This is a big deal, not only because we should expect the wealth of these households to increase more or less in step with the rate of growth of productivity in the economy (more than 80 percent since 1989), but also because we have seen traditional defined benefit pensions largely disappear over this period. While most workers nearing retirement age could count on getting a defined benefit pension in their retirement in 1989, this is much less the case today. In fact, less than 25 percent of the families who were between the ages of 45 and 54 in 2016 had a defined benefit pension. This means that middle income families will be much more dependent on the wealth they have accumulated over their working lifetimes to support themselves in retirement than had been the case in prior decades.

Making matters worse, these younger cohorts will also be seeing lower Social Security benefits relative to their earnings since the increase in the retirement age between 2002 and 2022 effectively amounted to a 12 percent reduction in scheduled benefits. Changes in the calculation of the consumer price index (CPI) also have reduced benefits by close to 5 percent. (Benefits after retirement are tied to the CPI.) Also, retirees are looking at much larger health care expenditures, as the out of pocket bills left over after Medicare are considerably larger relative to their income than was the case three decades ago.

The role of pensions, Social Security, and Medicare show the trade-off between the need for wealth and the access to social programs or a regular source of income, in the case of traditional defined benefit pensions. In a context where a combination of Social Security and a defined benefit pension provided a livable retirement income, and Medicare covered the bulk of health care costs, retirees did not have a need for large amounts of wealth. However, when few people have pensions, and Social Security benefits are not large enough to sustain a middle class living standard, retirees who have not accumulated substantial wealth can expect to face serious financial difficulties in retirement.

Wealth and Lower Income Families

If middle income families don’t have enough wealth, for practical purposes lower income families have none. The Federal Reserve Board did a survey last year that found that 40 percent of households could not come up with $400 if they needed it in an emergency. This is dire situation for these families, but one that may not be best addressed through trying to ensure that these families have some wealth. After all, if they had a small amount of wealth and then faced inevitable emergencies, the wealth will be quickly dissipated.

As a practical matter, it might make more sense to deal with the emergencies that are likely to create the unexpected need for $400. At the top of this list would be medical expenses. If we had a good national health insurance system that covered most of health costs for the public (and pretty much all the costs for low and moderate income households) a major source of unexpected expenses will be eliminated. In addition, when someone is dealing with their own illness or that of a family member, it is not good a time to impose an additional burden.

Another source of unexpected costs is a car repair. Since many people need a car for work, facing a $1,000 repair bill and being unable to pay it, is a very serious issue. This highlights our neglect of mass transit. We have starved big city transit systems for funds, causing many to provide poor services and charge high fares. This is a case where a relatively small amount of money could go a long way, especially if it goes to provide bus service, which ramped up quickly, as opposed to various types of light-rail systems which take many years to put in place and typically come at very high cost.

Bail is also an unexpected emergency for many families. The simple story here is to eliminate cash bail in most instances. People should not face the prospect of spending months or even years in jail simply because they or their family cannot afford the bail set by a judge. The point here is make sure people show up for trial, not to punish them before they have had a trial.

Housing expenses are a fourth common cause of unexpected expenses. This could be a needed repair in a home that is owned, or unexpected rent increase or other expense in a rented unit. We can’t protect people from needed repairs on their homes, but we can limit the ability of landlords to raise rents. Our housing policy has been hugely tilted towards promoting homeownership. This is unfortunate since roughly one-third of the population has been renters and that is likely to remain the case, even as we have modest fluctuations in share of homeowners over time.

Some cities do have laws that protect tenants against excessive rent increases or arbitrary evictions, but these are the exceptions. While rent control can pose serious problems if poorly implemented, limiting rent increases for incumbent tenants can provide considerable security for renters.

The Quick Summary on Wealth

First, the inequality measure is primarily a measure of the stock market. I’m more troubled by income inequality than wealth inequality, but if the latter really bothers you, then you need to be rooting for a drop in stock market.

Wealth has become more important for the middle class because of the disappearance of defined benefit pensions. These pensions allowed most middle class people to maintain a reasonable standard of living in retirement. Most middle class workers are not accumulating substantial wealth in 401(k) type accounts both because they tend to change jobs frequently and also the high fees charged by the financial industry.

One solution to this problem is the state level 401(k) plans that are being put in place by Illinois, Oregon, California, New York, and a number of other states. These plans will minimize the administrative costs and will also be portable so that workers will be able to keep the same plan as they change jobs within the state.

Ideally, these plans will also have a default annuity so that people will effectively end up with something very similar to a defined benefit pension. All the states have people participating in these plans as a default option. This means that they will contribute unless they choose not to.

It will take time for these accounts to build up any substantial amount of assets and there is a real risk that many baby boomers and Gen-Xers will retire without traditional defined benefit plans and little savings in their 401(k)s and little equity in their homes.

For lower income families, it seems more reasonable to try to shore up the safety net so that they don’t suffer great hardship by virtual of the fact that they don’t have a substantial amount of wealth they can rely upon. Efforts to build wealth among lower income families have often meant more money for the financial industry than the families. If we instead focus on ensuring that all people have access to health care, good public transportation, and secure housing, then the lack of wealth in low income households will be less of a problem.

Notes.

[1] The Survey of Consumer Finances (SCF) defines “family” to include a single person household. The more common definition requires at least two related individuals living together. This is why the SCF has a somewhat lower measure of median family income than is usually reported.

This article originally appeared on Dean Baker’s blog.

Not A Blue Wave, But Perhaps A Foreshock – OpEd

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The 2018 election looks at first glance like a wash: Republicans gained seats in the Senate and Democrats regained control of the House with enough of a margin to ensure that they can put some limits on presidential power.

But longer term impacts of 2018 are, I believe, more significant. In this election, with President Trump as party leader pushing a rabidly racist claim that immigrants fleeing from the largely US-caused poverty, chaos and violence in Honduras hoping for a better life for their kids in the US were actually an “invasion” of the US that would bring across the border everything from disease to Arab terrorists, gangs and dark-skinned rapists, and with his claiming that Democrats were behind what he labeled a “caravan” of tens of thousands (it is really just several thousand mostly young people and parents with children and babies), Republicans have hit bottom.

By having accepted Trump’s malignant campaign assistance and his anti-semitic and evidence-free hints that the Jewish immigrant investor George Soros has been funding the Honduran march, Republicans are now clearly self-identified as the party of paranoid racist and sexist white older and often evangelical Christian males (and their wives), of people with a limited education, and of rural voters with little knowledge of or interest in the larger world. Democrats by default, are the party of educated white people who oppose racism, of non-whites, and increasingly, of the young or all races, and clearly too of women, as the large number of women elected to office in this latest election dramatically attests. Since Trump’s racist campaigning obviously worked in some races — notably in Texas, Arizona, Florida, Georgia and several other states where the margin between candidates for Senate and Governor were narrow to begin with — this reprehensible tactic will likely be adopted by the party’s candidates in 2020 and future election cycles.

Clarifying how loathsome the already awful Republican Party has become is a good thing. But on the downside, the Nov. 6 election also showed that the percentage of Americans who will reflexively respond to racist dog-whistle campaigns is frighteningly high. President Trump’s bald-faced lie about Hondurans heading north through Mexico being “invaders” may be ludicrous to rational beings, but it was believed by millions of credulous and irrational racist, anti-semitic, anti-Latino and white supremacist Republicans and independents who flocked to the polls to “defend America” from this pathetic “invasion.”

Meanwhile, on the Democratic side, the positive news for progressive Democrats is that candidates who openly professed to being “socialist” like the victorious new Congressmember from a Bronx-Queens district, Anastasia Osario-Cortez, or who advocated socialist-style reforms like a Medicare-for-all health care system similar to what people in Canada have had now since 1971, as did the marrowly defeated candidate for Senator in Texas, Beto O’Rourke, did well and in many cases won their races. Openly leftist Democratic candidates helped flip control of the House and also of six state legislatures from Republican to Democratic, including New York State. They also took away at least one of two houses in another dozen or so state legislatures. In others, they ended Republican super majorities needed to override Democratic governors’ vetos of their most pernicious legislation. All this, and the replacement of several Republican governors by Democrats, is hugely important because it is state governments that will redraw congressional and state legislative district lines after the 2020 census. Divided governments prevent gerrymandering of district lines — something Republican-only state governments did after the 2010 census with enormous impact on a decade of subsequent elections.

O’Rourke’s dramatic success in coming out of nowhere as a first-term congressman from El Paso with no money and eschewing PACs and professional campaign managers, and then almost knocking out the well-funded far-right Tea-Party Republican incumbent Senator Ted Cruz, is a harbinger of a coming tidal change in US politics. The electrifying O’Rourke-Cruz race, which caught national attention, boosted turnout in Texas beyond the 2012 presidential race total. It provides dramatic evidence that an unapologetic progressive — someone who questioned the rationale for the US’s $717-billion military budget and its myriad endless wars around the globe, and who called for Medicaid-for-all, while denouncing Trump for his Mexico border wall and his demonization of immigrants — has a shot at winning even in Texas. In the end, O’Rourke came up 2.6% short of defeating Cruz, but he clearly captured the hearts of many of that state’s voters. It should be noted that in Republican-governed Texas, all the stops were pulled out in using voter suppression methods to keep young people and especially Latinos from voting this year. Efforts were made in college towns to make student voting hard, voting places and machines were limited in Latino neighborhoods and there were even widespread reports of voting machines that were automatically switching votes. These tactics, taken together, may have been enough to let Cruz squeak into a second term this time, but it seems clear that it won’t be long before the number of Democratic and Democratic-leaning independent voters in the Lone Star State will overwhelm such dirty tricks.

Already the largest minority in Texas, Latinos — overwhelmingly Mexican-Americans — are projected to become the majority in Texas in 2020. That, of course, happens to be a presidential election year when Trump (unless his appetite for Big Macs does him in first), will presumably be running for a second term and will need to win Texas. The Mexican-American population in Texas is growing by about 200,000-250,000 a year in Texas, which is roughly double the 213,000 margin by which Cruz just bested O’Rourke.

Between larger numbers and a trend towards increased Latino voting (there was a record 24% Latino voter turnout this year in Texas), O’Rourke or other future Democratic candidates will likely do significantly better in coming state elections in the state — though Democratic candidates will have to get that Latino turnout rate higher still.

Republican dominance of Texas is going to end, probably sooner than later. And when the Lone Star State flips, it will, like California before it, be for good. And when the country’s second most populous state, with a population already 75% as great as California’s, goes Democratic, it will have profound impact on national politics.

Of course, the US political system is hopelessly corrupted and will for some time continue to be so. Corporate money will continue to fund both parties. Third parties will continue to be blocked from growing by an ongoing conspiracy of the two existing parties to keep them off of ballots and out of the media and publicly broadcast debates. And the national electoral system will remain rigged the way our aristocratic and slave-owning founding fathers intended, with a Senate that gives equal power to states with populations numbering in the hundreds of thousands and states with populations in the tens of millions, and an Electoral College that does the same thing in the selection of presidents.

That said, as Latinos have become major parts of state electorates, we can observe that the politics of those states inexorably shift to the left. This has already happened in California and Colorado, both now reliably Democratic and progressive. It’s happening increasingly in New Mexico and Nevada too, and it’s starting to happen in Arizona and Texas.

As younger voters become a bigger part of state electorates, such shifts are happening too in what have long been hard-right Republican states. Look at Oklahoma, a state where Latinos only represent 11% of a population that’s 72% white. Oklahoma just elected Kendra Horn, a Democrat, to Congress, the first Democrat elected to a national office in that state since the 1970s. And then there’s Kansas, long characterized as the “reddest of red” states in the US. Its voters just handed a win to Democrat Laura Kelly, who defeated that Darth Vader of voter suppression, Kansas Secretary of State Kris Kobach, for the governorship. Kobach is the racist creep who conceived of and promoted the insidious scheme — adopted by many Republican-led states — to minimize black voting by erasing from voter lists all names that even remotely resembled names on a national list of convicted felons. Since so many blacks are descended from slaves whose owners gave them common names like Jones, James, Smith, Jackson, etc., this tactic ended up depriving millions of African Americans in states like Florida, Georgia, South Carolina, Texas and the Deep South of the right to vote.

Kansans this year also elected another Democratic woman, Sharice Davids. She is a lesbian Native American and will now be one of their state’s four members of Congress. A third Democratic woman in Kansas, running against a Republican incumbent, lost her bid for a second of the state’s Congressional districts by just 2%.

There are limits to what we on the left can expect from a Democratic Party that remains as deeply corrupted by corporate cash (legal bribes) as the Republicans, but on the margins these progressive victories and near victories, and the rise of Latino and young voters as significant voting blocs, both groups being quite interested in or at least open to socialist or progressive ideas, are bound to have a profound influence on the Democrats going forward, particularly as their favored candidates start winning.

Leftists outside of the Democratic Party fret about voting for Democrats instead of honest Third Party candidates, but the reality is that progressives cannot ignore the importance of winning national and state elections, particularly as fascism’s influence grows across the country. The reality is there is no chance of a powerful labor or socialist party rising up in two years or even six, if ever, to contest with the Democrats for power. If a mass movement like the Civil Rights movement of the late ‘50s and early ‘60s, or the anti-war movement of the late ‘60s and ‘70s should develop — and we should all be working towards that — it could perhaps shatter the Democratic Party and provide an opening for a genuine new left party, but until then electing progressive Democrats matters.

Meanwhile, contemplating the usual list of sorry Democratic presidential prospects (Hillary Clinton, Joe Biden, Andrew Cuomo, or perhaps Amy Klobuchar or an aging Bernie Sanders), the idea percolating among progressive Democrats looking for someone more exciting is Beto O’Rourke as a presidential candidate in 2020. Beto would be like Bernie with a straight spine, youthful energy and a bracing willingness to condemn US militarism and to question military spending (in both fluent English and Spanish).

We’ve got an interesting next two years ahead of us.

The Next Financial Crisis – OpEd

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By Daniel Lacalle*

We have been reading numerous comments recently about a forthcoming recession and the next crisis, particularly on the tenth anniversary of the collapse of Lehman Brothers.

The question is not whether there will be a crisis, but when. In the past fifty years, we have seen more than eight global crises and many more local ones, so the likelihood of another one is quite high. Not just because of the years passed since the 2007 crisis, but because the factors that drive a global crisis are all lining up.

What drives a financial crisis? Three factors.

  • Demand-side policies that lead investors and citizens to believe that there is no risk. Complacency and excess risk-taking cannot happen without the existence of a widespread belief that there is some safety net, a government or central bank cushion that will support risky assets. Terms like “search for yield” and “financial repression” come precisely from artificial demand signals created from monetary and political forces.
  • Excessive risk-taking in assets that are perceived as risk-free or bullet-proof. It is impossible to build a bubble on an asset where investors and companies see an extraordinary risk. It must happen under the belief that there is no risk attached to rising valuations because “this time is different”, “fundamentals have changed” or “there is a new paradigm”, sentences we have all hears more times than we should in the past years.
  • The realization that this time is not different. Bubbles do not burst because of one catalyst, as we are told to believe. The 2007-2008 did not start because of Lehman, it was just a symptom of a much wider problem that had started to burst in small doses months before. Excess leverage to a growth cycle that fails to materialize as the consensus expected.

What are the main factors that could trigger the next financial crisis?

  • Sovereign Debt. The riskiest asset today is sovereign bonds at abnormally low yields, compressed by central bank policies. With $6.5 trillion in negative-yielding bonds, the nominal and real losses in pension funds will likely be added to the losses in other asset classes.
  • Incorrect perception of liquidity and VaR (Value at Risk). Years of high asset correlation and synchronized bubble led by sovereign debt have led investors to believe that there is always a massive amount of liquidity waiting to buy the dips to catch the rally. This is simply a myth. That “massive liquidity” is just leverage and when margin calls and losses start to appear in different areas -emerging markets, European equities, US tech stocks- the liquidity that most investors count on to continue to fuel the rally simply vanishes. Why? Because VaR (value at risk) is also incorrectly calculated. When assets reach an abnormal level of correlation and volatility is dampened due to massive central bank asset purchases, the analysis of risk and probable losses is simply ineffective, because when markets fall they fall in tandem, as we are seeing these days, and the historical analysis of losses is contaminated by the massive impact of monetary policy actions in those years. When the biggest driver of asset price inflation, central banks, starts to unwind or simply becomes part of the expected liquidity -like in Japan-, the placebo effect of monetary policy on risky assets vanishes. And losses pile up.

The fallacy of synchronized growth triggered the beginning of what could lead to the next recession. A generalized belief that monetary policy had been very effective, growth was robust and generalized, and debt increases where just a collateral damage but not a global concern. And with the fallacy of synchronised growth came the excess complacency and the acceleration of imbalances. The 2007 crisis erupted because in 2005 and 2006 even the most prudent investors gave up and surrendered to the rising-market beta chase. In 2017 it was accelerated by the incorrect belief that emerging markets were fine because their stocks and bonds were soaring despite the Federal reserve normalization.

What will the next crisis look like?

Nothing like the last one, in my opinion. Contagion is much more difficult because there have been some lessons learnt from the Lehman crisis. There are stronger mechanisms to avoid a widespread domino effect in the banking system.

When the biggest bubble is sovereign debt the crisis we face is not one of the massive financial market losses and real economy contagion, but a slow fall in asset prices, as we are seeing, and global stagnation.

The next crisis is not likely to be another Lehman, but another Japan, a widespread zombification of global economies to avoid the pain of a large re-pricing of sovereign bonds, that leads to massive tax hikes to pay the rising interests, economic recession and unemployment.

The risks are obviously difficult to analyse because the world entered into the biggest monetary experiment in history with no understanding of the side effects and real risks attached. Governments and central banks saw rising markets above fundamental levels and record levels of debt as collateral damages, small but acceptable problems in the quest for a synchronised growth that was never going to happen.

The next crisis, like the 2007-08 one, will be blamed on a symptom (Lehman in that case), not the real cause (aggressive monetary policy incentivising risk-taking and penalising prudence). The next crisis, however, will find central banks with almost no real tools to disguise structural problems with liquidity, and no fiscal space in a world where most economies are running fiscal deficits for the tenth consecutive year and global debt is at all-time highs.

When will it happen? We do not know, but if the warning signs of 2018 are not taken seriously, it will likely occur earlier than expected. But the governments and central banks will not blame themselves, they will present themselves -again- as the solution.

Originally published at dlacalle.com

About the author
*Daniel Lacalle
has a PhD in Economics and is author of Escape from the Central Bank Trap, Life In The Financial Markets and The Energy World Is Flat.

Source:
This article appeared at the MISES Foundation


Kim Kardashian’s Home In Danger Of Being Burned Down In Wildfire

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Kim Kardashian and Kanye West’s home is in grave danger of being burned down, Just Jared says.

According to TMZ, the wildfire has reached the property of the family’s Calabasas abode, which they evacuated last night.

At the time of this posting, the fire has not reached the Kardashian-West‘s main home but flames are on the property.

“I heard the flames have hit our property at our home in Hidden Hills but now are more contained and have stopped at the moment. It doesn’t seems like it is getting worse right now, I just pray the winds are in our favor. God is good. I’m just praying everyone is safe

Must Financial Regulation Come From The State? The History Of Self-Regulating Markets – Analysis

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By Philip Booth*

Despite the fact that there is little evidence for this proposition, it is widely held that deregulation of financial markets caused the financial crisis. Given that it is so widely believed, perhaps it is not surprising that the response from the Roman Catholic Church should involve calls for more regulation. For example, in Caritas in Veritate, it is stated: “Both the regulation of the financial sector, so as to safeguard weaker parties and discourage scandalous speculation, and experimentation with new forms of finance, designed to support development projects, are positive experiences that should be further explored and encouraged, highlighting the responsibility of the investor.”

The Church embraces state regulation

However, despite the Church’s teaching on the principle of subsidiarity, the question is rarely asked, “Who should regulate the financial sector?” Church documents tend to suggest that the state should regulate financial markets, and there is little recognition that it is even possible for regulatory institutions to develop within markets themselves ,or within civil society. Indeed, the recent Vatican letter Oeconomicae et pecuniariae quaestiones, quoting an earlier Vatican letter on the financial crisis, suggested that deregulation leads to a regulatory and institutional vacuum (21).

But problems in financial markets are not necessarily solved by bureaucratic agencies churning out rules and regulations. In 2011, the UK financial regulator issued regulations, guidance, advice, discussion documents or consultations totalling 4.3 million words – more than five times the length of the Bible. This will not help anybody. We need another approach.

In areas outside the financial sector, the Church has often stressed the importance of non-governmental institutions – for example in Centesimus Annus and especially in Quadragesimo Anno.

There is just a glimpse of a recognition of this aspect of Church teaching in the above-mentioned Vatican letter. Immediately after arguing that government deregulation of financial markets led to an institutional vacuum, the letter did add (in apparent contradiction):

Numerous associations emerging from civil society represent in this sense a reservoir of consciousness, and social responsibility, of which we cannot do without. Today as never before we are all called, as sentinels, to watch over genuine life and to make ourselves catalysts of a new social behavior, shaping our actions to the search for the common good, and establishing it on the sound principles of solidarity and subsidiarity.

If only the extraordinary history of regulatory institutions that arise from within markets themselves were appreciated, there might be less of a tendency to rush to the assumption that government bureaucracies should be the main regulators of financial markets.

The history of self-regulating markets

Until 1986 in the UK, and in earlier times in other countries, securities markets were more or less entirely regulated by exchanges These private bodies regulated the behaviour of investors, dealers, advisers and companies whose shares were quoted on the exchange.

In Britain, modern stock exchanges first developed in coffee shops. When the exchange first had an independent home at the beginning of the nineteenth century, it had restrictions on membership and tacit rules. For example, when delayed settlement was introduced to increase liquidity, those who did not settle their accounts would be labelled “lame duck” on a board and could be prevented from acting as brokers.

Over time, exchanges developed codified rules. These included rules for those trading on the exchange and rules for companies that wished to be listed on the exchange. It was in the interest of companies that rule-making was robust because an orderly exchange should enable companies to raise capital at lower cost.

It was also in the interest of members of the exchange that trade should be regulated, because it would reduce the costs of monitoring, reduce losses to fraud, and so on. A codified rule book covering default and settlement, arbitration, and bad debts was introduced in the London exchange in 1812. There were rules relating to the quotation of prices and also relating to general behaviour of members. These were designed to increase transparency. The exchange also dealt with problems caused by the misuse of insider information. The quotation of securities was regulated from 1844 onwards.

The London stock exchange was essentially a club or society which could determine its own rules for membership, for the behaviour of its members, and for companies the shares of which were traded on the exchange. Sometimes these were stringent, such as those which prevented conflicts of interest by prohibiting members from both trading on their own book (jobbing) and providing advice (broking).

The effectiveness of this system of market-generated regulation was verified by a parliamentary inquiry. In 1877-78 a Royal Commission held an inquiry into the stock exchange and concluded that the exchange’s rules “had been salutary to the interests of the public” and that the exchange had acted “uprightly, honestly, and with a desire to do justice.” It further commented that the exchange’s rules were “capable of affording relief and exercising restraint far more prompt and often satisfactory than any within the read of the courts of law.”

Stock exchanges are not the only examples of private rule-making institutions in financial markets. Professional bodies blossomed in mid-to-late nineteenth century financial markets. For example, in the U.S. from 1875 to 1930 there was very little regulation of accounting. Indeed, publicly quoted firms did not have to be audited, though many were. However, by 1926, 90 per cent of companies quoted on the New York Stock Exchange had audited accounts, and there were professional bodies of accountants with their own rules who were responsible for auditing in many cases.

Over-the-counter derivatives business is almost wholly the preserve of wholesale investors but, interestingly, those markets do not go unregulated, even though they do not attract the same regulatory interest from governments as consumer-facing markets.

These markets are regulated by a private body, the International Swaps and Derivatives Association (ISDA). ISDA’s mission is: “[to foster] safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products.” It achieves this in a number of ways all of which involve regulatory functions, such as: “Developing standardized documentation globally to promote legal certainty and maximum risk reduction.”  Members have to apply to join and can have their membership revoked.

ISDA members can choose to use the ISDA master agreement which applies to over 90 per cent of over-the-counter derivatives transactions in the world. This represents 90 per cent of outstanding derivatives contracts at the end of 2016 – almost $0.5 quadrillion. In addition, as part of their regulatory function, ISDA also have a dispute resolution procedure (thus circumventing the need to use courts in most instances) and a Credit Derivatives Determinations Committee. The latter uses a set of rules to determine, for example, whether a credit default event has taken place and, thus, counterparties to a derivative contract need to settle.

The Church should enrich the conversation

The recent Vatican letter and also Caritas in Veritate emphasised what should be the core of Catholic social teaching when it comes to finance and economics – the requirement for all participants in markets to behave ethically and virtuously. Recent Vatican letters have also often emphasised the intrinsic benefits of markets but suggested that their shortcomings be addressed through government regulation, especially at the international level.

Theory and practice suggest that there are problems with governments acting as regulators, as they simply churn out more and more rules without restraint. There should be a renewed emphasis in the development of Catholic social teaching on the development of regulatory institutions within markets themselves and on the development of civil society institutions for restraining behaviour in the financial sector. Such bodies are largely ignored by economists, and of course by politicians, who prefer government regulation. The Church could enrich the conversation.

About the author:
*Philip Booth
is Professor of Finance, Public Policy and Ethics, St. Mary’s University, Twickenham, which is the UK’s largest Catholic university. He is also a senior academic fellow at the Institute of Economic Affairs (IEA).

Source:
This article was published by the Acton Institute

Remembering Operation Jaywick: Singapore’s Asymmetric Warfare – Analysis

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Decades before the concept of asymmetric warfare became popular, Singapore was already the site of a deadly Allied commando attack on Japanese assets. There are lessons to be learned from this episode.

By John Kwok*

September 26, 2018 marks the 75th anniversary of Operation Jaywick, a daring Allied commando raid to destroy Japanese ships anchored in Singapore harbour during the Second World War. Though it was only a small military operation that came under the larger Allied war effort in the Pacific, it is worth noting that the methods employed bear many similarities to what is today known as asymmetric warfare.

States and militaries often have to contend with asymmetric warfare either as part of a larger campaign or when defending against adversaries. Traditionally regarded as the strategy of the weak, it enables a weaker armed force to compensate for disparities in conventional force capabilities. Increasingly, it has been employed by non-state actors such as terrorist groups and insurgencies against the United States and its allies to great effect, as witnessed in Iraq, Afghanistan, and more recently Marawi. Operation Jaywick is a good case study that demonstrates the advantages, costs, and use of asymmetric warfare.

Z Special Unit

Operation Jaywick was carried out by a special task force called Z Special Unit that was formed in June 1942 and made up of officers and men from Australia and Britain who had escaped Singapore before its surrender.

Launched on 2 September 1943, Z Special Unit commandos made their way to Singapore using a captured Japanese fishing boat that had been repurposed into a transport infiltration vessel and renamed MV Krait after a species of small venomous snake in Southeast Asia.

Using the Krait, Z Special Unit infiltrated Japanese-controlled waters around Singapore and travelled to as close as possible to the harbour before deploying commandos in three collapsible canoes. Each canoe carried two commandos who paddled the canoes into the harbour and attached mines on time-delayed charges to the hulls of target ships.

After laying the mines, the commandos paddled out to open waters to rendezvous with the Krait before escaping back to Australia. On the morning of 27 September, the mines went off, sinking or severely damaging seven Japanese ships, or some 30,000 tonnes of Japanese shipping. Z Special Unit subsequently returned to Australia safely on 19 October. From its starting point in the Exmouth Gulf in Western Australia, the raid and the round trip took 48 days.

Japanese Response

The raid had caught the Japanese completely off guard as they had up till then believed that they were safe from Allied counter-attacks in Singapore, which was well within safety of Japan’s defence parameter in the Pacific. The Japanese assumed that it was the work of local saboteurs and responded with strong policing actions on the civilian population.

On 10 October, in response to the raid, the Kempeitai, the Japanese military police, arrested 57 civilians and transported them to Kempeitai prisons in YMCA and the Central Police Station for interrogation on the suspicion of providing information that aided the raid.

The purge was led by Lieutenant-Colonel Sumida Haruzo, the Chief of the Kempeitai. Sumida and his men used brutal methods to force the suspects to confess to covertly aiding the Allies. Fifteen suspects were either tortured to death or died in captivity. Those who survived served long prison sentences at either Outram Jail or Changi Prison.

One of those who survived torture and captivity was Elizabeth Choy, now recognised as a war heroine for resisting the Japanese during captivity. This event is remembered in local Singaporean war narratives as the Double Tenth Incident.

Disproportionate Benefits

None of the ships sunk or damaged had been warships but at the time the loss of seven transport ships was a critical blow to the already thinly stretched Japanese shipping, severely hampering its ability to keep up with its logistical demands. The more significant contribution of Operation Jaywick was psychological. Operation Jaywick challenged Japanese notions of supremacy in the region and their confidence to resist Allied incursions.

On the Allied front, the raid was considered a resounding success and had a galvanising effect on Allied morale at a time when their conventional options were limited. Traditionally, the measure of an asymmetric approach’s success is calculated by the degree to which it negatively impacts the enemy’s will to resist, and here the result was a net gain in morale for the Allies. However, in a protracted war, the ability to challenge the enemy’s will to resist is critical to winning the war, and the psychological impact inflicted on the enemy using asymmetric operations like Jaywick cannot be understated.

Strategic Considerations

However, as mentioned earlier, Operation Jaywick led to the Double Tenth Incident. Asymmetric operations typically require support and co-option from the local civilian population. Even if an operation did not involve the civilian population, regardless of the mission’s result, it was the civilian population that bear the brunt of enemy reprisals.

For non-state actors, they stand to gain a lot but lose very little, and this is likely the reason why asymmetric warfare is more readily used by non-state actors; civilian casualties do not matter so long as their political aims are achieved.

On the other hand, states considering the use of asymmetric operations need to be clear of the objectives, and their political and military leaders ready to accept, and justify, the use of such operations. This is because the fallout from asymmetric operations like Operation Jaywick can, and often does, echo long after a war.

Without any local intelligence, the Allies did not receive any information on the Double Tenth Incident and were therefore led to believe that Operation Jaywick could be repeated at the same locale. One year was spent preparing for Operation Rimau, a more complex and larger scale version of Operation Jaywick.

However, having been stung once, Japanese surveillance and patrols around Singapore and the Riau Islands were placed on high alert. Even though it placed a strain on Japanese military preparedness, it paid off when the Z Special Force returned in Oct 1944. None of 23 men involved in Operation Rimau survived the Japanese counter-offensive.

Asymmetric operations are heavily dependent on the element of surprise. The military maxim of not attacking the enemy at the same place twice must therefore guide the planning for future asymmetric operations.

Operation Jaywick is a good reminder of what asymmetric warfare can achieve when deployed alongside conventional operations. For military planners, the element of surprise gained to support a tactical operation, and the potential impact on civilian populations are of utmost importance. It is therefore timely to re-visit Operation Jaywick so that it can inform political and military leaders on the benefits and challenges of asymmetric warfare.

*John Kwok is a Research Fellow and Ian Li a Research Analyst with the Military Studies Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

The Khashoggi Crisis: Saudi Arabia Braces For Tougher Post-Election US Attitude – Analysis

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Saudi Arabia is bracing itself for a potentially more strained relationship with the United States in the wake of Democrats gaining control of the House of Representatives in this week’s mid-term elections and mounting Turkish efforts to corner the kingdom in the Khashoggi crisis.

To counter possible US pressure, the kingdom is exploring opportunities to diversify its arms suppliers and build a domestic defense industry. It is also rallying the wagons at home with financial handouts and new development projects in a bid to bolster domestic support for crown prince Mohammed bin Salman.

The Democrats’ election victory has strengthened Saudi concerns that the Trump administration may pressure the kingdom to back down on key issues like the Yemen war that has sparked the world’s worst humanitarian crisis since World War Two and the 17-month old Saudi-United Arab Emirates-led economic and diplomatic boycott of Qatar.

US officials have argued that Saudi policies complicate their efforts to isolate and economically cripple Iran.

The officials assert that the boycott of Qatar and the fallout of the October 2 killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul constitute obstacles to the creation of a Sunni Muslim alliance against the Islamic republic, dubbed an Arab NATO, as well as the achievement of other US goals in the Middle East, including countering political violence and ensuring the free flow of oil.

Going a step further, senior Israelis say they have given up on the notion of a Sunni Muslim alliance whose interests would be aligned with those of the Jewish state and see their budding relations with Gulf states increasingly in transactional terms.

The Trump administration signalled its concerns even before the killing of Mr. Khashoggi.

“Our regional partners are increasingly competing and, in the case of the Qatar rift, entering into outright competition to the detriment of American interests and to the benefit of Iran, Russia and China,” National Security Adviser John Bolton wrote to Secretary of State Mike Pompeo and Defense Secretary Jim Mattis in a letter late summer, according to Reuters.

With the House expected to be tougher on arms sales to the kingdom and possibly go as far as imposing an arms embargo because of the humanitarian crisis in Yemen caused by Saudi and UAE military operations, Saudi Arabia has wasted no time in casting around for alternative weapons suppliers.

In apparent recognition that the Saudi military, reliant on US and European arms acquisitions, would find it difficult to quickly shift to Russian or Chinese systems, Saudi Arabia appears for now to be focussing on alternative Western suppliers.

That could prove to be risky with anti-Saudi sentiment because of the Yemen war also running high in European parliaments and countries like Spain and Germany either teetering on the brink of sanctions or having toyed with restrictions on weapons sales to the kingdom.

Saudi Arabia, nonetheless, has in recent days contracted Spanish shipbuilder Navantia to jointly build five corvettes for the Saudi navy and offered South African state-owned defense group Denel $1 billion to help the kingdom build a domestic defense industry.

The partnership with Denel would involve Saudi Arabia taking a minority stake in German defense contractor Rheinmetall, which designs armoured fighting vehicles and howitzers.

With sale of the US-made precision-guided munitions bogged down in Congress, Spain has stepped in to address Saudi Arabia’s immediate need. The question is however whether Spain can fully meet Saudi demand.

A US refusal already before the Gulf crisis and the Khashoggi incident to share with Saudi Arabia its most advanced drone technology, paved the way for Chinese agreement to open its first overseas defense production facility in the kingdom.

State-owned China Aerospace Science and Technology Corporation (CASC) will manufacture its CH-4 Caihong, or Rainbow drone, as well as associated equipment in Saudi Arabia. The CH-4 is comparable to the US armed MQ-9 Reaper drone.

Saudi Arabia also fears that Democratic control of the House could strengthen opposition to a nuclear energy agreement with the kingdom. Five Republican senators called on President Donald J. Trump days before the mid-term election to suspend talks with Saudi Arabia.

Development of a defense industry would over time serve Prince Mohammed’s efforts to diversify the Saudi economy and create jobs.

So would King Salman’s inauguration this week of 259 development projects worth US$6.13 billion ranging from tourism, electricity, environment, water, agriculture, housing, and transport to energy. King Salman launched the projects during a curtailed visit to Saudi provinces designed to bolster support for his regime as well as his son, Prince Mohammed

On the other hand, the government’s most recent decision to restore annual bonuses and allowances for civil servants and military personnel without linking them to performance constitutes an attempt to curry public favour that runs contrary to Prince Mohammed’s intention to streamline the bureaucracy and stimulate competition.

Bonuses were cut in 2016 as part of austerity measures. They were restored last year and linked in May to job performance.

In a further populist move, King Salman also pardoned prisoners serving time on financial charges and promised to pay the debts up to US$267,000 of each one of them.

King Salman’s moves appear designed to lessen Saudi dependence on US arms sales and project a united front against any attempt to implicate Prince Mohammed in the death of Mr. Khashoggi.

The moves come as Turkish President Recep Tayyip Erdogan insists that the order to kill the journalist came “from the highest levels of the Saudi government” and the Trump administration demands Saudi action against the perpetrators and those responsible for the murder.

Failure to be seen to be taking credible action may not undermine King Salman’s rallying of the wagons at home but will do little to weaken calls in Washington as well as European capitals for tougher action in a bid to force Saudi Arabia to come clean on the Khashoggi case and adopt a more conciliatory approach towards ending the Yemen war and resolving the Gulf crisis.

Romania: Government Suffers New Blow As EU Minister Resigns

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By Ana Maria Luca

Romania’s EU Affairs minister and coordinator of the EU Council presidency preparations resigned after a cabinet meeting, the country’s government confirmed on Saturday.

Romanian Minister Delegate for European Affairs Victor Negrescu handed in his resignation less than two months before his country is set to take over the European Council six-month rotating presidency on January 1, 2019, ahead of Brexit and the European elections.

According to various government sources who spoke to the media on condition of anonymity on Saturday, Negrescu resigned after a very tense cabinet meeting on Friday where ministers discussed how ready Romania is to handle the EU Council Presidency.

Romania is to take over the EU presidency from Austria.

Negrescu was in charge of coordinating the EU Council presidency preparations. He could not be reached for comment.

Minister for European Funds Rovana Plumb confirmed Negrescu’s move for news channel Digi 24 on Saturday.

“I understand that this resignation has happened. Yesterday, during the government meeting I spoke to Mr. Negrescu, we talked about how ready we are in principle to take over the EU Council presidency,” she said.

Finance minister Eugen Teodorovici also confirmed Negrescu’s move. “It’s an act I do not understand. To do this when you have a unique chance to coordinate such a presidency reveals political immaturity, he said on Saturday.

Negrescu, 33, was appointed as the Minister Delegate for European Affairs under the Romanian Foreign Ministry in June 2017. He was an MEP during 2014-2017.

He is a member of the ruling Social Democrat Party and also the national coordinator of the Romanian network of the European Socialist Party.

Sri Lanka: PM Rajapaksa Says ‘People Should Uphold My Decision’

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Sri Lanka’s Prime Minister Mahinda Rajapaksa yesterday said that the people should be given an opportunity to uphold his decision to change the present political scenario.

“I believe that my decision to change the present political scenario should be tried in the court of the people. They should decide whether my decision is right or wrong,” the Prime Minister added.

He said that his government will receive an impetus to reverse the country’s course from anarchy, if people approve his decision to change the present political setting.

The Prime Minister was speaking at the book launch titled Sri Lanka Arthikaye Thewasarak Pragathiya Saha Agathiya authored by International Trade and Investment Promotion Minister Bandula Gunawardena at the Hector Kobbekaduwa Agrarian Research and Training Institute yesterday.

Rajapaksa said that he was called upon to accept the country at this crucial juncture as the country was heading towards anarchy and the country’s assets were being sold for a song.

“There won’t be a country, if I refused this proposal and excised restraint”, the Prime Minister said.

The Prime Minister added that the country’s assets would have been sold for a song to foreign countries, if he had waited without accepting this proposal to take over the country.

The China/Russia Space Threat: Is Star Wars Far Away Or On The Horizon? – Analysis

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By Dana Ogle*

Space – The Final Frontier?

The space race from the 1950s until the end of the Cold War between the Soviet Union and the United States eventually ended in a tie.  Maybe not totally a tie, but the advent of the International Space Station (ISS) and the amount of training performed at Star City just outside of Moscow by both Russians and Americans in preparation for their missions give the appearance that the former rivalry is now a cooperative event.  Over the last few years, space is becoming the focus of many nations from a security perspective.  Merom’s succinct summation of the cost of using offensive force is a driving reason for the new focus on space either from the standpoint of dominance or of countering other nations’ use of it.This time, instead of claiming dominance by planting a flag on the moon, the idea of controlling a domain that is still not truly understood provides a level of security impacting many areas, like the Global Positioning System (GPS), Positioning, Navigating, and Timing (PNT), and Satellite Communication (SATCOM) (Harrison et al. 2018; Weeden and Sampson 2018).  And it is China and Russia that are currently leading the charge of attempting to operationalize and weaponize space to project power.

Power Projection

Countering the threat of the United States is a purpose both China and Russia cite as a reason to develop space and counterspace capabilities, but that is almost the default/de facto motive for any action they take.  Achieving space superiority is not on par with becoming a nuclear power in terms of international recognition, but China and Russia both see gaining the upper hand in space as a way to set their nations apart from the rest of the international community.  China recently declared space as a military domain. That allows China to expand its military doctrine “that the goal of space warfare and operations is to achieve space superiority using offensive and defensive means in connection with their broader strategic focus on asymmetric cost imposition, access denial, and information dominance.”( Weeden and Sampson 2018, xi). Based off of this statement, the Chinese view space as another avenue to project military power. And space, like cyberspace, is much harder to counter due to the difficulty in attribution.

Russia’s efforts to regain counterspace capability also provides a method for projecting power and is another area to show that they are back as players on the world stage.  President Putin laid out four ideas for a 21st century Russia, “(1) the strong, functioning state; (2) the state-guided market economy; (3) the welfare state with attendant safety net; and (4) the state-safeguarded foreign and security policy position that provides Russia a Eurasian – and even global – leadership position.” (Willerton 2017, 211) Pursuing a program of space and counterspace options ties directly into the first and fourth idea presented by the President and could tie into the second and third if Russia is able to export technology or intellectual capital to assist other nations.  The Russian perspective sees “modern warfare as a struggle over information dominance and net centric operations that can often take place in domains without clear boundaries and contiguous operating areas.” (Weeden and Sampson 2018, xii) Space falls within this definition so, if by leveraging space to conduct cyberspace or space-enabled information operations, then that provides an even larger platform that Russian targets must defend. After all, Russia has “extensive operational experience from decades of spaces operations.” (Harrison et al. 2018, 13) Although some areas of the Russian space program have atrophied since the end of the Cold War, Russia and the U.S. have maintained a partnership with civil space missions to the ISS. (Harrison et al. 2018, 13)

GPS, PNT, and SATCOM

Most nations widely use GPS and PNT for navigation and the geo-tagging of locations for official and unofficial uses.  For China, GPS is how Japan maintains situational awareness in the East China Sea. (Horowitz et al. 2016, 30) If China were able to achieve control over GPS satellites, the advantage it would have over other nations would be hard to quantify.  Aside from blinding or manipulating what the Japanese see in the East China Sea, commercial and military pilots rely on GPS, as do many other peoples for navigation via ships, cars or phones.  Unmanned Aerial Systems, or drones, are also dependent on GPS, and many military operations use drones for communication relays.  If China or Russia manipulated or jammed the link between a ground control station and the drone, then the drone could pose a threat to any airplanes or helicopters in the area. If a weaponized drone, then that capability could be used against unauthorized targets (a rogue drone) or cause chaos due to the lack of communications.

A vast majority of communications today are done by SATCOM.  To control or have the ability to deny, degrade, disrupt, destroy, or manipulate any combination of GPS, PNT, and SATCOM gives a nation a huge benefit and should be cause for concern by all.  Most systems were built and launched into orbit before cybersecurity became an issue.  The distance from Earth to the satellites’ respective orbits provided an inherent level of assumed security, so many measures that are standard on systems today are not on satellites currently in use.  Knowing the exact amount of cyber-attacks on satellites or their ground stations is unlikely as the number is either classified or nations and companies are unwilling to admit they were victims publicly.  What is known is that both China and Russia are capable, competent cyber and signals intelligence(SIGINT) actors and attacks of this nature are not beyond their abilities.

A 2014 Crowd strike report linked the “People’s Liberation Army General Staff Department Third Department 12th Bureau Unit 61486 – that subset of what is ‘generally acknowledged to be China’s premiere SIGINT collection and analysis agency’ dedicated specifically to ‘supporting China’s space surveillance network.’” (Weeden and Sampson 2018, 7-7) That level of attribution is impressive in such a nebulous environment.  Although not an official attribution by the United States Government, Crowd strike and other commercial threat intelligence providers’ identification and designation of threat actors are generally universally accepted as accurate.

A Russian Criminal syndicate, known as Turla, exploited satellite links to hack other targets according to Kaspersky Labs. (Weeden and Sampson 2018, 7-7) The Russian Government can claim Turla was a criminal act and not supported by Russia, but in 1998 Russian hijackers gained “control of a U.S. – German ROSAT deep-space monitoring satellite, then issued commands for it to rotate toward the sun, frying its optics and rendering it useless.”(Weeden and Sampson 2018, 7-8) These few examples demonstrate China and Russia maintain both the intent and capability to conduct operations in space.

Weaponization

Both China and Russia are “developing the ability to interdict satellites both from the ground standpoint and from the space standpoint” according to the Director of the Defense Intelligence Agency. (Tucker 2018) The idea of weaponizing space is enticing and terrorizing.  For those nations that are able to develop and deploy technology to disrupt other satellites, a huge advantage exists. Iran, India, and Israel are among other nations seeking to develop a space or counterspace program.  (Harrison et al. 2018; Weeden and Sampson 2018) None of these nations, however, is at the level of the space/counterspace programs of China, Russia, or the United States. Nor are they likely to refocus the bulk of their economies and militaries to concentrate solely on space. Much like the alliances developed as nuclear powers emerged, nations that desire space superiority or, simply wishing that the United States not be the dominant space power, may put their efforts toward aligning with a power they feel they can benefit from, even if other strategic objectives do not necessarily align.  The threat presented by space does not produce the mass panic that nuclear war does, but when considering that space is the domain where missiles and communications could be jammed or re-directed resulting in an inadvertent nuclear crisis, the legitimacy and severity of threats from space become apparent.

China and Russia launched a 200 million dollar venture in 2015 whose purpose was to innovate technologies. (Harrison et al. 2018, 6) In July 2018, China sent a delegation to Russia to explore potentially building a jointly-run station based on Russian knowledge in an area China is deficient. (Russia, China 2018) Interestingly, in 2013, the European Space Agency considered making China its primary space partner, instead of the United States, “as China’s global ‘rising power’ status now extends to space.” (Johnson-Freese 2015, 91)

China’s messaging that it is serious about becoming a space power resonates with other nations and they appear ready to broker the relationships needed to achieve the goal.  Russia has the technical knowledge and perhaps the upper hand in that it is a key partner on the ISS with several other nations, including the United States.  If Russia and China continue with either joint ventures or Russia supplying China with expertise, it is unknown how the United States will react, since it vehemently opposes China’s inclusion on the ISS. (Johnson-Freese 2015, 95) In February 2018, the United States Director of National Intelligence identified “Russia and China as continuing to launch ‘experimental’ satellites that conduct sophisticated on-orbit activities, at least some of which are intended to advance counterspace capabilities …some technologies with peaceful applications—such as satellite inspection, refueling, and repair—can also be used against adversary spacecraft.” (Tucker 2018) The issue is on the United States radar at a high enough level that the threats presented by China and Russia were included in the 2018 Worldwide Threat Assessment of the US Intelligence Community from the Director of National Intelligence. (Coats 2018, 13) To what extent the United States will go to deter either China or Russia in space is still unknown at this time, however.

Space Law

The United Nations maintains an Office for Outer Space Affairs that, among other roles, assists with space law “associated with the rules, principles, and standards of international law appearing in the five international treaties and five sets of principles governing outer space, which have been developed under the auspices of the United Nations.” (United Nations 2018) In addition to the space laws adjudicated by the United Nations, individual states have their own laws regarding the use of space.  China and Russia are among those that develop national space laws.  China’s 2015 National Security Law made China’s defense of interests in space legally binding and a white paper in that same year stated, “threats from such new security domains as outer space and cyberspace will be dealt with to maintain the common security of the world community.” (Weeden and Sampson 2018, 1-20).  Russian National space laws listed on the United Nations website include areas covering space activity, management structure, licensing space operations, Russian Space Agency regulations, and an agreement between the Russian Federation and Cabinet Ministers of Ukraine about technical safeguards on the use of outer space. (United Nations 2018) The bulk of the Russian laws listed were written in the 1990s, with the exception of the Ukrainian agreement which is dated 2009. So, the possibility exists that these laws do not represent what the Russian Federation follows today as a national space law.

One area under that is a potential loophole for any nation is the dual-use nature of most satellites.  Unless a country scrutinizes a satellite before launching it into orbit, determining the use is strictly for a defensive or offensive purpose is difficult to prove.  Again, the tyranny of distance comes into play trying to establish the true nature of space-related activities.  Intelligence collection methods possibly can gather the required information to identify a weapons system or counter-weapons system on a satellite schematic, but for a communications, GPS, or PNT satellite, proving its ultimate use for something more than just supporting commercial or regular military communications and navigation services is not so easy.

What’s Next?

International and national laws are in place to ensure the freedom and safety of space for all nations. But those laws only help nations that can afford to operate in space to a certain extent.  As China and Russia expand their independent efforts at becoming dominant nations in space, where Chinese-Russian joint ventures go is worth watching. How far these two nations are willing to collaborate and even become true partners in space will have lasting consequences on how other countries will or can react. The space threat is real even if it is difficult to quantify based on it being mostly an amorphous threat today.  That does not mean nations are not trying to exploit seemingly ambiguous space as a domain for their own national advantages.  Thus, there is no excuse for international organizations like the United Nations to be caught unaware if sometime in the near future a major power shows it has successfully turned space into a domain for waging war or projecting power.

About the author:
*Dana Ogle
has over 25 years’ experience as a United States Marine, providing mission integration in ground, air, and cyberspace operations. She is currently a doctoral student in the School of Security and Global Studies at the American Military University.

Source:
This article was published by Modern Diplomacy


US Voters Check Trump – Analysis

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US midterm elections reflect polarization as Republicans add Senate seats and Democrats control the House of Representatives.

By Susan Froetschel*

US voters dismissed fears of globalization, increased turnout for the midterm elections and handed Donald Trump a divided Congress as anticipated by many analysts.

Overcoming districting maps that favored Republicans, Democrats will control the House in January, while Republicans strengthened their control of the Senate. Campaigning for Republican candidates, Donald Trump advised voters to pretend that he was on the ballot, and the nation split as the midterms became a referendum on the president’s performance.

US foreign policy will not change overnight due to the executive branch’s special powers – including the ability to issue executive orders, make appointments, enter treaties and veto legislation. Voters called for a new direction from Washington that emphasizes social protections, scientific evidence and respect for human rights rather than tax-cuts and gimmicks, denial about a changing climate and disregard for regulations. Turnout of young adults was higher than in midterms of previous years, but still trails the percentage rate of older voters.

Congress remains divided. Party leadership in each chamber determines control of committees and, in turn, the legislation that moves forward and areas requiring investigation. The House must set priorities among the multitude of possibilities: Russian meddling in the US elections, the US military role in Syria and Yemen, murder of Saudi journalist Jamal Khashoggi, oversight of sanctions against North Korea and Iran, inhumane treatment of immigrants as well as egregious conflicts of interests between various Trump administration officials and Russia, Saudi Arabia and a range of industry leaders. Special counsel Robert Mueller’s investigation into Russian interference into the 2016 US presidential campaign may draw more protection and attention. The House can perform its duty as a check on the US presidency.

Legislation requires approval of both chambers, and the US midterms decided all 435 seats of the House and 33 of 100 seats in the Senate. The House of Representatives with two-year terms reflects the popular mood. All bills for raising revenue originate in the House, per the Constitution. The number of House members assigned to each state varies depending on population, ranging from 53 for California and 32 for Texas to one each for seven states. The US Senate, with members serving six-year terms, provides more continuity: Terms last six years, and each state has two senators regardless of size. In addition to introducing and approving legislation, the Senate has the responsibility to provide advice and consent on treaties, which require two-thirds majority approval of all present, and major appointments with a simple majority. The House holds the power to initiate impeachment proceedings against officials, including the president, while the Senate adjudicates the House decision with removal of the impeached person requiring a two-thirds vote. No action will be taken in this area until Mueller concludes his investigation.

Congress will scrutinize Trump’s every move on the world stage, especially as he meets with the Russian president in mid-November and the Chinese president at the November 30 meeting of the world’s 20 largest economies.

A bigger worry may be patching relations with traditional allies like Canada and Europe. With a divided Congress, allies will continue to monitor trends, counting on their constituents to view the election outcome as a rejection of the two-year US test of populism, and temper similar movements in their own countries. The European Union could resist fragmentation, holding Trump at arm’s length until  the administration regards that set of long-time allies as partners and demonstrates readiness to cooperate on shared concerns that include managing mass migration, preventing terrorism, reducing inequality, mitigating climate change, preserving social protections, and financing government policies.

Most US voters have come to realize the value of US cultural, economic and security connections with the rest of the world. Foreign companies hire almost 7 million US employees, up 22 percent from 2007. About half of sales of S&P 500 companies come from overseas, reports S&P Dow Jones Indices. Overall, US farmers export more than 20 percent of their products overseas – and more than half of all walnuts, cotton, almonds, sorghum, rice and soybeans. The US agriculture industry still maintains strong support for Trump – with losses for Democrats in Indiana, North Dakota and Missouri – due to subsidies, crop insurance and other policies that curtail open trade. Still, imports from China and other nations keep prices low and inflation at bay. Foreigners, led by China, also hold about half of the US public debt at low interest rates.

During the final days of the campaign, Trump rallied supporters by targeting immigration and a caravan of several thousand migrants that originated in Honduras. The United States has more immigrants than any other country in the world, reports the Pew Research Center, and immigrants account for 13.5 percent of the US population, or nearly triple the share in 1970. And while voters pointed to health care as a leading concern, the foreign-born represent more than 25 percent of the nation’s doctors.

About 40 percent of voters still support Trump policies, and many worry about jobs, complex technologies, competition, change and a loss of culture. Political leaders have their work cut out to ease so much anger. Social protections could help reduce fears, and the next set of leaders in the House will likely focus on domestic issues like health care, education, job training, and retirement security and other social protections while countering the Trump agenda. Such work, though, is of little consequence if voters perceive that the protections are quick fixes and unreliable. Such programs become sustainable only if Democrats become the party of efficiency and fiscal responsibility.

US public debt stands at $21 trillion. Rising interest rates reduce money for projects favored by Republicans and Democrats, and that contributes to polarization. The nonpartisan Congressional Budget Office predicts that the public debt will be 100 percent of GDP by 2028. “Lawmakers would have less flexibility to use tax and spending policies to respond to unexpected challenges,” notes the Congressional Budget Office. “The likelihood of a fiscal crisis in the United States would increase.” Deficit spending and rising interest rates challenge US ability to save and invest in new programs. Trump and the Democratic-controlled House will test one another when the debt ceiling must be lifted in spring of 2019.

Democrats must use all tools of analysis and persuasion to convince constituents that their proposals can result in savings – whether preparing for climate change with conservation and a gradual shift to renewable energies or reducing immigration pressure by encouraging strategic foreign aid, family planning, education and development. Trump has relied on separation of families and a military approach, dispatching 15,000 troops to the US border with Mexico to greet the caravan. History suggests such military interventions contributed to a legacy of poverty and violence motivating Central Americans to flee their homes. For example, the US supported military interventions in Honduras to support plantation owners in the early 20th century and established joint US-Honduran programs for combatting Nicaragua Contra rebels in the 1980s.

The president, ever eager to gain attention, could present distractions including military attacks. Crafting US policies, though, he will find few willing partners among allies who must worry about their own domestic affairs and constituents. Or, Trump, who does not seem to have any core ideological belief, could yet surprise Democrats in Congress, already suggesting in one television interview that he regrets his tone. By moderating tone and working with Democrats on immigration reform, trade limits or infrastructure investment, he could argue that cooperation was part of his plan all along to make America great again.

*Susan Froetschel is editor of YaleGlobal Online.

Improved Measurements Might Unveil Unknown 95 Percent Of Universe’s Building Blocks

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Only five percent of the substances that make up our visible universe and everything around us are provisionally understood and described by science. CERN is the world’s largest particle physics test facility. Here, on the outskirts of Geneva, researches look for the remaining 95 percent of the universe’s substances by beaming particles against one other in collisions that create a type of ‘mini-Big Bang ‘.

“It’s a special kind of ‘archaeology’, where we search for the basic rules of the game applicable to the universe. These can tell us about the structure of everything. The types of particles we produce were dominant in the early universe immediately following the Big Bang,” explains professor and project leader Jens Jørgen Gaardhøje of the Niels Bohr Institute.

The new 11.2 million kroner grant from the Ministry of Higher Education and Science will primarily be used for upgrades to ALICE and ATLAS, two large and complex detectors at the CERN facility. Detectors examine the unique state of the universe during the first billionth of a second after the Big Bang, and look for new particles and new physics, beyond the successful ‘standard model’ that describes the building blocks as we understand them now.

More collisions will unveil new and rare phenomena

The detector upgrades are part of a major upgrade process throughout CERN, especially of its flagship 27 km long superconducting Large Hadron Collider (LHC). The overall upgrades are scheduled to continue until 2025 and are being financed by CERN member nations, including Denmark. The upgrades will allow for multiple collisions – 50,000 per second – and thereby increase the probability of discovering new particles.

“We will be able to study multiple new phenomena as a result of the increased collision rate and improved detectors. For me, there is no doubt whatsoever that boundaries will shift. Naturally, we also hope that the revolutionary breakthroughs ahead will change our understanding of nature,” says Jens Jørgen Gaardhøje.

The increased number of collisions places greater demands on the detectors used to measure them. The ALICE and ATLAS upgrades will be developed and built by Danish and international researchers, completely from scratch. ALICE is expected to be completed in 2021, and ATLAS in 2025, along with the rest of the CERN accelerator upgrades.

Minister for Higher Education and Science Tommy Ahlers had this to say about the grant:

“If we are going to be an elite research nation, Danish researchers will increasingly need high-tech facilities. Therefore, it is important that we invest in the infrastructure they need.”

Dean John Renner of the Faculty of Science comments: “This grant is an important piece in the great puzzle of trying to understand our world through science. At the same time, it is essential for Denmark. Without it, we would not be contributing our share to the large research partnership that CERN is. “

China Gives ‘Guarantee’ On Winter Gas Supplies – Analysis

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By Michael Lelyveld

Despite all-out efforts to avoid shortages, China will depend on the volatile spot market for liquefied natural gas (LNG) to keep its homes heated for the second winter in a row.

On Oct. 24, China’s top planning agency said it has a “contingency plan in case of emergencies such as extreme weather, in order to guarantee sufficient supplies of gas for residential use during the winter,” the official English- language China Daily reported.

The guarantee by the National Development and Reform Commission (NDRC) is the government’s strongest assurance to date that homes will not be left in the cold as a result of anti-smog bans on coal-fired heating, as was the case last December.

Details of the contingency plan announced by NDRC spokeswoman Meng Wei were not reported, but it is believed to include a combination of industrial cutbacks during the winter season and increased supplies from the international spot market for LNG.

More than 120 billion cubic meters (4.2 trillion cubic feet; one bcm = 35.3 billion cubic feet) of gas will be made available for the winter heating season, or more than half of all the gas that China consumed last year. Forty percent of the winter supplies will be reserved for residential service, Meng said.

With limited supplies from domestic production and cross-border pipelines, the government’s guarantee will have to rely on major increases of imported LNG from both long-term contracts linked to oil prices and the spot market.

In the first nine months of the year, tanker shipments of super-cooled LNG from abroad accounted for 57 percent of China’s total gas imports, outpacing pipeline deliveries, according to customs figures.

LNG’s share of total gas imports stood at 55.5 percent last year, exceeding pipeline deliveries for the first time.

In 2017, China relied on pipeline and LNG imports for 38.7 percent of gas consumption. Through September, LNG imports have climbed 44.7 percent so far this year.

The NDRC believes it is better prepared to avert shortages this winter as a result of a crash program to open new LNG import terminals and gas storage facilities.

China’s storage capacity as a share of consumption has been only a fraction of the international average for major importers, leaving the country unprepared for rising demand.

The NDRC said that China has now addressed the problem with about 100 newly-opened storage facilities, including tanks and depleted oil wells, accounting for 16 billion cubic meters (bcm) of capacity.

Still not enough

But with consumption of 237.3 bcm in 2017, China’s 3.5-bcm increase in storage this year will still be inadequate to meet consumption growth, if it sticks to its anti-smog campaign.

Domestic gas production is running only 6.2 percent ahead year-earlier output, while China’s Central Asia Gas Pipeline (CAGP) system is nearing capacity.

The limitations appear to make LNG imports the only avenue for the double-digit growth in demand.

Total gas imports have jumped 33.1 percent in the first 10 months of this year, Platts Commodity News reported citing customs data.

But the government’s calculations may be complicated by the unexpected and unpredictable vacillations of the Asian LNG market.

On Oct. 25, Reuters reported that half a dozen tankers with LNG cargoes were “stranded” for up to two weeks in waters off Singapore and Malaysia due to adverse trading conditions and weaker-than-expected demand in the larger Asian market.

The sudden turnaround in the Asian market is said to be the result of multiple factors, including official weather forecasts in Japan and Australia of a milder-than-usual winter in the region this year.

The predictions have led to a market condition known as “contango,” when future gas prices rise above those for the nearer term, causing traders to delay deliveries.

In this case, the situation has been muddied by several factors, including the high cost of delay.

Due to the flood of LNG shipments in preparation for winter, tanker rates have soared to nearly U.S. $150,000 (1 million yuan) per day, according to petroleum industry consultants Gaffney, Cline & Associates.

But in addition to the weather forecast, changes in demand are taking place in Japan, which has been the world’s largest LNG importer.

The country’s nuclear reactors have started to come back on line sooner than expected following the Fukushima disaster of 2011, further reducing Asian LNG demand, Reuters said.

In an added complication, Japan’s Inpex Corp. has started shipping LNG from its U.S. $40-billion (278-billion yuan) Ichthys project in the offshore of Western Australia, easing the Asian supply picture even further, The Wall Street Journal reported.

“It is heartening news for China, which sees sudden rises in demand for LNG during the winter months,” the paper said.

Will gas prices rise?

For the time being at least, the eased pressure on prices seems to have outweighed concerns over China’s 10-percent tariff on LNG imports from the United States, imposed as part of the ongoing trade war.

But China’s lack of available storage is likely to determine its ability to take advantage of more favorable conditions, leaving it susceptible to paying spot market prices whenever winter demand spikes.

In a separate report, Platts quoted Citigroup analysts as saying that “as of September, LNG storage fields, with already limited capacity, might be nearly full due to more aggressive injections to avoid a repeat of last winter’s gas supply shortage.”

Despite the NDRC’s guarantee and easing market conditions, the government has signaled its concern that gas costs will rise.

On Oct. 26, Reuters reported that the government has warned China’s three big state-owned oil companies “not to manipulate gas prices or exceed the ceiling of government guided prices as the winter heating season approaches.”

Mikkal Herberg, energy security research director for the Seattle-based National Bureau of Asian Research, said that China’s infrastructure problems have not been solved, despite the crash capacity-boosting program since the crisis last winter.

“Their storage and pipeline capacity is very limited. It’s not something they’re going to fix in 12 months. It’s going to take a number of years,” Herberg said.

China will get some relief from the infrastructure pinch with the opening of Russia’s 4,000-kilometer (2,485-mile) Power of Siberia pipeline. But deliveries are not expected until December 2019, gradually rising to peak volumes of 38 bcm annually after several years.

In the meantime, China may have no way of avoiding reliance on high-priced LNG imports this winter, even if prices are slightly lower than last year’s record levels.

“They really have no choice but to be dependent on the short-term spot market for the incremental demand beyond what’s been contracted,” Herberg said.

Herberg compared China’s gas supply problems with the just-in-time production process in manufacturing that depends on incoming supplies of parts instead of warehouses full of inventory.

“That will make them, chronically for the next number of years, just-in-time buyers. I don’t see a way out of that,” he said.

“The imports are likely to weigh on the profits of China’s state-owned petroleum giants. The recent windfall in earnings from higher oil prices in the third quarter has been “covering up” the gas costs, Reuters said in another report.

The impact on the PetroChina subsidiary of China National Petroleum Corp. (CNPC) has been particularly heavy, according to Reuters.

“It is on the hook to fix China’s perennial gas shortages and must import from abroad to do so,” it said. The company reportedly spent about 20 billion yuan (U.S. $2.9 billion) on gas imports in the first nine months of the year, suffering losses on most sales due to domestic price controls.

The warmer-than-usual weather may also make smog more persistent this winter, since weaker cold fronts will allow air to stagnate, China’s National Climate Center said at a press conference last week.

Ron Paul: President Trump’s Iran Policy, Is It ‘Normal’? – OpEd

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It’s not often that US Government officials are honest when they talk about our foreign policy. The unprovoked 2003 attack on Iraq was called a “liberation.” The 2011 US-led destruction of Libya was a “humanitarian intervention.” And so on.

So, in a way, Secretary of State Mike Pompeo was refreshingly honest last week when, speaking about newly-imposed US sanctions, he told the BBC that the Iranian leadership “has to make a decision that they want their people to eat.” It was an honest admission that new US sanctions are designed to starve Iranians unless the Iranian leadership accepts US demands.

His statement also reveals the lengths to which the neocons are willing to go to get their “regime change” in Iran. Just like then-Secretary of State Madeleine Albright said it was “worth it” that half a million Iraqi children died because of our sanctions on that country, Pompeo is letting us know that a few million dead Iranians is also “worth it” if the government in Tehran can be overthrown.

The US Secretary of State has demanded that Iran “act like a normal country” or the US would continue its pressure until Iran’s economy crumbles. How twisted is US foreign policy that Washington considers it “normal” to impose sanctions specifically designed to make life miserable – or worse – for civilians!

Is it normal to threaten millions of people with starvation if their leaders refuse to bow down to US demands? Is the neoconservative obsession with regime change “normal” behavior? Is training and arming al-Qaeda in Syria to overthrow Assad “normal” behavior? If so, then perhaps Washington’s neocons have a point. As Iran is not imposing sanctions, is not invading its neighbors, is not threatening to starve millions of Americans unless Washington is “regime-changed,” perhaps Iran is not acting “normal.”

So what is normal?

The continued Saudi genocide in Yemen does not bother Washington a bit. In fact, Saudi aggression in Yemen is viewed as just another opportunity to strike out at Iran. By making phony claims that Yemen’s Houthis are “Iran-backed,” the US government justifies literally handing the Saudis the bombs to drop on Yemeni school busses while claiming it is fighting Iranian-backed terrorism! Is that “normal”?

Millions of Yemenis face starvation after three years of Saudi attacks have destroyed the economy and a Saudi blockade prohibits aid from reaching the suffering victims, but Secretary Pompeo recently blamed Yemeni starvation on, you guessed it: Iran!

And in a shocking display of cynicism, the US government is reportedly considering listing Yemen’s Houthis as a “terrorist” organization for the “crime” of fighting back against Saudi (and US) aggression. Labeling the Yemeni resistance a “terrorist” organization would effectively “legalize” the ongoing Saudi destruction of Yemen, as it could be justified as just another battle in the “war on terror.” It would also falsely identify the real culprits in the Yemen tragedy as Iran, which is repeatedly and falsely called the “number one sponsor of terrorism” by Pompeo and the rest of the Trump Administration neocons.

So yes, Secretary of State Mike Pompeo told one wicked truth last week. But before he demands that countries like Iran start acting “normal” or face starvation, perhaps he should look in the mirror. Are Pompeo and the neocons “normal”? I don’t think so.

This article was published by RonPaul Institute.

Iran Equipping Police With Body Cameras

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Iran’s Police is equipping its officers with body cameras, a commander said.

In comments on Monday, General Mohammad Sharafi, commander of an Iranian Police department tasked with prevention of crimes, said around 5,000 police officers will have been furnished with body cameras by the end of the current Iranian year (March 2019).

According to the general, 1,000 police officers have so far gotten body cameras in the provinces of Tehran, West Azarbaijan, Isfahan, and Khorassan Razavi, and at Imam Khomeini International Airport.

The commander further said that all police stations and detention centers across the country will be furnished with surveillance and security cameras by year end.

In October 2017, body cameras became part of the police officer’s uniform in capital Tehran as part of a new scheme to ensure respect for the citizenship rights.

Mounted onto the officers’ uniform, the body cameras record footages during the operations which can be monitored online from a central department.

Police officials say the evaluation of footage from the body cameras would help optimize operational tactics in dealing with crimes.

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