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The Emerging Market Collapse Through The Eyes Of Don Corleone | Zero Hedge

The Emerging Market Collapse Through The Eyes Of Don Corleone | Zero Hedge.

Submitted by Ben Hunt of Epsilon Theory

It Was Barzini All Along

Tattaglia is a pimp. He never could have outfought Santino. But I didn’t know until this day that it was Barzini all along.

— Don Vito Corleone

Like many in the investments business, I am a big fan of the Godfather movies, or at least those that don’t have Sofia Coppola in a supporting role. The strategic crux of the first movie is the realization by Don Corleone at a peace-making meeting of the Five Families that the garden variety gangland war he thought he was fighting with the Tattaglia Family was actually part of an existential war being waged by the nominal head of the Families, Don Barzini. Vito warns his son Michael, who becomes the new head of the Corleone Family, and the two of them plot a strategy of revenge and survival to be put into motion after Vito’s death. The movie concludes with Michael successfully murdering Barzini and his various supporters, a plot arc that depends entirely on Vito’s earlier recognition of the underlying cause of the Tattaglia conflict. Once Vito understood WHY Philip Tattaglia was coming after him, that he was just a stooge for Emilio Barzini, everything changed for the Corleone Family’s strategy.

Now imagine that Don Corleone wasn’t a gangster at all, but was a macro fund portfolio manager or, really, any investor or allocator who views the label of “Emerging Market” as a useful differentiation … maybe not as a separate asset class per se, but as a meaningful way of thinking about one broad set of securities versus another. With the expansion of investment options and liquid securities that reflect this differentiation — from Emerging Market ETF’s to Emerging Market mutual funds — anyone can be a macro investor today, and most of us are to some extent.

You might think that the ease with which anyone can be an Emerging Markets investor today would make the investment behavior around these securities more complex from a game theory perspective as more and more players enter the game, but actually just the opposite is true. The old Emerging Markets investment game had very high informational and institutional barriers to entry, which meant that the players relied heavily on their private information and relatively little on public signals and Common Knowledge. There may be far more players in the new Emerging Markets investment game, but they are essentially one type of player with a very heavy reliance on Common Knowledge and public Narratives. Also, these new players are not (necessarily) retail investors, but are (mostly) institutional investors that see Emerging Markets or sub-classifications of Emerging Markets as an asset class with certain attractive characteristics as part of a broad portfolio. Because these institutional investors have so much money that must be put to work and because their portfolio preference functions are so uniform, there is a very powerful and very predictable game dynamic in play here.

Since the 2008 Crisis the Corleone Family has had a pretty good run with their Emerging Markets investments, and even more importantly Vito believes that he understands WHY those investments have worked. In the words of Olivier Blanchard, Chief Economist for the IMF:

In emerging market countries by contrast, the crisis has not left lasting wounds. Their fiscal and financial positions were typically stronger to start, and adverse effects of the crisis have been more muted. High underlying growth and low interest rates are making fiscal adjustment much easier. Exports have largely recovered, and whatever shortfall in external demand they experienced has typically been made up through an increase in domestic demand. Capital outflows have turned into capital inflows, due to both better growth prospects and higher interest rates than in advanced countries. … The challenge for most emerging countries is quite different from that of advanced countries, namely how to avoid overheating in the face of closing output gaps and higher capital flows. — April 11, 2011

As late as January 23rd of this year, Blanchard wrote that “we forecast that both emerging market and developing economies will sustain strong growth“.

Now we all know what actually happened in 2013. Growth has been disappointing around the world, particularly in Emerging Markets, and most of these local stock and bond markets have been hit really hard. But if you’re Vito Corleone, macro investor extraordinaire, that’s not necessarily a terrible thing. Sure, you don’t like to see any of your investments go down, but Emerging Markets are notably volatile and maybe this is a great buying opportunity across the board. In fact, so long as the core growth STORY is intact, it almost certainly is a buying opportunity.

But then you wake up on July 9th to read in the WSJ that Olivier Blanchard has changed his tune. He now says “It’s clear that these countries [China, Russia, India, Brazil, South Africa] are not going to grow at the same rate as they did before the crisis.” Huh? Or rather, WTF? How did the Chief Economist of the IMF go from predicting “strong growth” to declaring that the party is over and the story has fundamentally changed in six months?

It’s important to point out that Blanchard is not some inconsequential opinion leader, but is one of the most influential economists in the world today. His position at the IMF is a temporary gig from his permanent position as the Robert M. Solow Professor of Economics at MIT, where he has taught since 1983. He also received his Ph.D. in economics from MIT (1977), where his fellow graduate students were Ben Bernanke (1979), Mario Draghi (1976), and Paul Krugman (1977), among other modern-day luminaries; Stanley Fischer, current Governor of the Bank of Israel, was the dissertation advisor for both Blanchard and Bernanke; Mervyn King and Larry Summers (and many, many more) were Blanchard’s contemporaries or colleagues at MIT at one point or another. The centrality of MIT to the core orthodoxy of modern economic theory in general and monetary policy in particular has been well documented by Jon Hilsenrath and others and it’s not a stretch to say that MIT provided a personal bond and a formative intellectual experience for a group of people that by and large rule the world today. Suffice it to say that Blanchard is smack in the middle of that orthodoxy and that group. I’m not saying that anything Blanchard says is amazingly influential in and of itself, certainly not to the degree of a Bernanke or a Draghi (or even a Krugman), but I believe it is highly representative of the shared beliefs and opinions that exist among these enormously influential policy makers and policy advisors. Two years ago the global economic intelligentsia believed that Emerging Markets had emerged from the 2008 crisis essentially unscathed, but today they believe that EM growth rates are permanently diminished from pre-crisis levels. That’s a big deal, and anyone who invests or allocates to “Emerging Markets” as a differentiated group of securities had better take notice.

Here’s what I think happened.

First, an error pattern has emerged over the past few years from global growth data and IMF prediction models that forced a re-evaluation of those models and the prevailing Narrative of “unscathed” Emerging Markets. Below is a chart showing actual Emerging Market growth rates for each year listed, as well as the IMF prediction at the mid-year mark within that year and the mid-year mark within the prior year (generating an 18-month forward estimate).

Pre-crisis the IMF systematically under-estimated growth in Emerging Markets. Post-crisis the IMF has systematically over-estimated growth in Emerging Markets. Now to be sure, this IMF over-estimation of growth exists for Developed Markets, too, but between the EuroZone sovereign debt crisis and the US fiscal cliff drama there’s a “reason” for the unexpected weakness in Developed Markets. There’s no obvious reason for the persistent Emerging Market weakness given the party line that “whatever shortfall in external demand they experienced has typically been made up through an increase in domestic demand.” Trust me, IMF economists know full well that their models under-estimated EM growth pre-crisis and have now flipped their bias to over-estimate growth today. Nothing freaks out a statistician more than this sort of flipped sign. It means that a set of historical correlations has “gone perverse” by remaining predictive, but in the opposite manner that it used to be predictive. This should never happen if your underlying theory of how the world works is correct. So now the IMF (and every other mainstream macroeconomic analysis effort in the world) has a big problem. They know that their models are perversely over-estimating growth, which given the current projections means that we’re probably looking at three straight years of sub-5% growth in Emerging Markets (!!) more than three years after the 2008 crisis ended, and — worse — they have no plausible explanation for what’s going on.

Fortunately for all concerned, a Narrative of Central Bank Omnipotence has emerged over the past nine months, where it has become Common Knowledge that US monetary policy is responsible for everything that happens in global markets, for good and for ill (see “How Gold Lost Its Luster”). This Narrative is incredibly useful to the Olivier Blanchard’s of the world, as it provides a STORY for why their prediction models have collapsed. And maybe it really does rescue their models. I have no idea. All I’m saying is that whether the Narrative is “true” or not, it will be adopted and proselytized by those whose interests — bureaucratic, economic, political, etc. — are served by that Narrative. That’s not evil, it’s just human nature.

Nor is the usefulness of the Narrative of Central Bank Omnipotence limited to IMF economists. To listen to Emerging Market central bankers at Jackson Hole two weeks ago or to Emerging Market politicians at the G-20 meeting last week you would think that a great revelation had been delivered from on high. Agustin Carstens, Mexico’s equivalent to Ben Bernanke, gave a speech on the “massive carry trade strategies” caused by ZIRP and pleaded for more Fed sensitivity to their capital flow risks. Interesting how the Fed is to blame now that the cash is flowing out, but it was Mexico’s wonderful growth profile to credit when the cash was flowing in. South Africa’s finance minister, Pravin Gordhan, gave an interview to the FT from Jackson Hole where he bemoaned the “inability to find coherent and cohesive responses across the globe to ensure that we reduce the volatility in currencies in particular, but also in sentiment” now that the Fed is talking about a Taper. Christine Lagarde got into the act, of course, calling on the world to build “further lines of defense” even as she noted that the IMF would (gulp) have to stand in the breach as the Fed left the field. To paraphrase Job: the Fed gave, and the Fed hath taken away; blessed be the name of the Fed.

The problem, though, is that once you embrace the Narrative of Central Bank Omnipotence to “explain” recent events, you can’t compartmentalize it there. If the pattern of post-crisis Emerging Market growth rates is largely explained by US monetary accommodation or lack thereof … well, the same must be true for pre-crisis Emerging Market growth rates. The inexorable conclusion is that Emerging Market growth rates are a function of Developed Market central bank liquidity measures and monetary policy, and that all Emerging Markets are, to one degree or another, Greece-like in their creation of unsustainable growth rates on the back of 20 years of The Great Moderation (as Bernanke referred to the decline in macroeconomic volatility from accommodative monetary policy) and the last 4 years of ZIRP. It was Barzini all along!

This shift in the Narrative around Emerging Markets — that the Fed is the “true” engine of global growth — is a new thing. As evidence of its novelty, I would point you to another bastion of modern economic orthodoxy, the National Bureau of Economic Research (NBER), in particular their repository of working papers. Pretty much every US economist of note in the past 40 years has published an NBER working paper, and I only say “pretty much every” because I want to be careful; my real estimate is that there are zero mainstream US economists who don’t have a working paper here.

If you search the NBER working paper database for “emerging market crises”, you see 16 papers. Again, the author list reads like a who’s who of famous economists: Martin Feldstein, Jeffrey Sachs, Rudi Dornbusch, Fredric Mishkin, Barry Eichengreen, Nouriel Roubini, etc. Of these 16 papers, only 2 — Frankel and Roubini (2001) and Arellano and Mendoza (2002) — even mention the words “Federal Reserve” in the context of an analysis of these crises, and in both cases the primary point is that some Emerging Market crises, like the 1998 Russian default, force the Fed to cut interest rates. They see a causal relationship here, but in the opposite direction of today’s Narrative! Now to be fair, several of the papers point to rising Developed Market interest rates as a “shock” or contributing factor to Emerging Market crises, and Eichengreen and Rose (1998) make this their central claim. But even here the argument is that “a one percent increase in Northern interest rates is associated with an increase in the probability of Southern banking crises of around three percent” … not exactly an earth-shattering causal relationship. More fundamentally, none of these authors ever raise the possibility that low Developed Market interest rates are the core engine of Emerging Market growth rates. It’s just not even contemplated as an explanation.

Today, though, this new Narrative is everywhere. It pervades both the popular media and the academic “media”, such as the prominent Jackson Hole paper by Helene Rey of the London Business School, where the nutshell argument is that global financial cycles are creatures of Fed policy … period, end of story. Not only is every other country just along for the ride, but Emerging Markets are kidding themselves if they think that their plight matters one whit to the US and the Fed.

Market participants today see Barzini/Bernanke everywhere, behind every news announcement and every market tick. They may be right. They may be reading the situation as smartly as Vito Corleone did. I doubt it, but it really doesn’t matter. Whether or not I privately believe that Barzini/Bernanke is behind everything that happens in the world, I am constantly told that this is WHY market events happen the way they do. And because I know that everyone else is seeing the same media explanations of WHY that I am seeing … because I know that everyone else is going through the same tortured decision process that I’m going through … because I know that everyone else is thinking about me in the same way that I am thinking about them … because I know that if everyone else acts as if he or she believes the Narrative then I should act as if I believe the Narrative … then the only rational conclusion is that I should act as if I believe it. That’s the Common Knowledge game in action. This is what people mean when they say that a market behavior of any sort “takes on a life of its own.”

For the short term, at least, the smart play is probably just to go along with the Barzini/Bernanke Narrative, just like the Corleone family went along with the idea that Barzini was running them out of New York (and yes, I understand that at this point I’m probably taking this Godfather analogy too far). By going along I mean thinking of the current market dynamic in terms of risk management, understanding that the overall information structure of this market is remarkably unstable. Risk-On / Risk-Off behavior is likely to increase significantly in the months ahead, and there’s really no predicting when Bernanke will open his mouth or what he’ll say, or who will be appointed to take his place, or what he or she will say. It’s hard to justify any large exposure to public securities in this environment, long or short, because all public securities will be dominated by this Narrative so long as everyone thinks that everyone thinks they will be dominated. This the sort of game can go on for a long time, particularly when the Narrative serves the interests of incredibly powerful institutions around the world.

But what ultimately saved the Corleone family wasn’t just the observation of Barzini’s underlying causal influence, it was the strategy that adjusted to the new reality of WHY. What’s necessary here is not just a gnashing of teeth or tsk-tsk’ing about how awful it is that monetary policy has achieved such behavioral dominance over markets, but a recognition that it IS, that there are investment opportunities created by its existence, and that the greatest danger is to continue on as if nothing has changed.

I believe that there are two important investment implications that stem from this sea change in the Narrative around Emerging Markets, which I’ll introduce today and develop at length in subsequent notes.

First, I think it’s necessary for active investors to recalibrate their analysis towards individual securities that happen to be found in Emerging Markets, not aggregations of securities with an “Emerging Markets” label. I say this because in the aggregate, Emerging Market securities (ETF’s, broad-based funds, etc.) are now the equivalent of a growth stock with a broken story, and that’s a very difficult row to hoe. Take note, though, the language you will have to speak in this analytic recalibration of Emerging Market securities is Value, not Growth, and the critical attribute of a successful investment will have little to do with the security’s inherent qualities (particularly growth qualities) but a great deal to do with whether a critical mass of Value-speaking investors take an interest in the security.

Second, there’s a Big Trade here related to the predictable behaviors and preference functions of the giant institutional investors or advisors that — by size and by strategy — are locked into a perception of Emerging Market meaning that can only be expressed through aggregations of securities or related fungible asset classes (foreign exchange and commodities). These mega-allocators do not “see” Emerging Markets as an opportunity set of individual securities, but as an asset class with useful diversification qualities within an overall portfolio. So long as market behaviors around Emerging Markets in the aggregate are driven by the Barzini/Bernanke Narrative, that diversification quality will decline, as the same Fed-speak engine is driving behaviors in both Emerging Markets and Developed Markets. Mega-allocators care more about diversification and correlations than they do about price, which means that the selling pressure will continue/increase so long as the old models aren’t working and the Barzini/Bernanke Narrative diminishes what made Emerging Markets as an asset class useful to these institutions in the first place. But when that selling pressure dissipates — either because the Barzini/Bernanke Narrative wanes or the mega-portfolios are balanced for the new correlation models that take the Barzini/Bernanke market effect into account — that’s when Emerging Market securities in the aggregate will work again. You will never identify that turning point in Emerging Market security prices by staring at a price chart. To use a poker analogy you must play the player — in this case the mega-allocators who care a lot about correlation and little about price — not the cards in order to know when to place a big bet.

In future weeks I’ll be expanding on each of these investment themes, as well as taking them into the realm of foreign exchange and commodities. Also, there’s a lot still to be said about Fed communication policy and the Frankenstein’s Monster it has become. I hope you will join me for the journey, and if you’d like to be on the direct distribution list for these free weekly notes please sign up at Follow Epsilon Theory.

Syria: Enough Is Enough | James Zogby

Syria: Enough Is Enough | James Zogby.

I wish I could be optimistic about Geneva II, but I cannot. That it happened at all is good. But “good for what” remains unclear. Listening to the speeches at the opening session established quite convincingly that none of the participants were ready to deal with the reality of what has become the most horrific tragedy of this new century.

During the past three years, the Syrian people have been victimized by a cruel and unrelenting war. While the competing sides may argue over who is at fault and what should now be done, what remains indisputable are the cold hard numbers of those who have been killed or forced to flee from their homes. Less quantifiable, but still real, is the physical destruction of once beautiful neighborhoods and world heritage treasures, and the emotional destruction visited upon a generation of Syrian children who will bear the scars of this war for a generation.

Despite all of this, the fighting continues without letup with neither side willing or able to accept the responsibility of contributing to ending it. The people may be exhausted, but the regime and the opposition are not.

We are three years into this bloody mess and what should have been clear from the outset has now become certain. This conflict will not end with one side claiming a decisive victory. Neither the regime and its international sponsors, nor the opposition and the countries that support them will be able to win. That this simple fact is not, and maybe cannot be, accepted by either side is what keeps the conflict going.

While it is easy find fault with the combatants, equally at fault are those who have funded them, armed them, and provided them with political support without control or conditions. Continuing the fight and continuing to fuel the fight is worse than a fool’s errand, it is a crime.

Delusions abound. The fragmented and deeply divided opposition, represented at Geneva by a rump delegation, still claims to speak for the Syrian people. The reality on the ground speaks otherwise. They blame the U.S. for not supporting them and refuse to accept responsibility for their own disarray. Some of their elements continue to maintain that their revolution is democratic and pluralistic, but the main forces doing the fighting — even those who are now termed as “moderates” — are anything but. Among the main rebel forces are disciplined extremist groups that have committed deplorable acts against civilians. Even now the opposition coalition insists on the precondition that the regime must step aside, as if they would be in a position to govern in its stead.

For its part, the regime continues to speak of its “legitimacy”, but its behavior has, if anything, cost it the right to claim that mantle. It was a brutal dictatorship before the war began and its conduct during the conflict has rightly earned it the epitaph of “war criminal”.

In this context, it was especially galling to listen to the Syrian Foreign Minister in his opening address speak of the “will of the Syrian people,” lecturing the U.S. Secretary of State saying “No one, Mr. Kerry, has the right to withdraw legitimacy of the [Syrian] president other than the Syrians themselves.” He said this, I presume, with a straight face, ignoring the tens of thousands killed, the millions who have been forced to flee, and the cities that have been devastated — all supposedly in the vain effort to establish this claim of “legitimacy”.

Surely this regime has run its course. Just as surely, this opposition, such as it is, is not in a position to lead. Therein lies the core of the Syrian tragedy. It is not just that neither side can win, but that neither side deserves to win — nor can they, in any event, govern the country.

Syria and the Syrian people deserve better. Those who maintain that the culture of the Syrian people is open, tolerant, and progressive are right. But those qualities are fast fading. Three years of conflict have ushered in a new reality of fanaticism, violence, and the evil of sectarian hostility. Out of all this, it will hard to build the new Syria. But Syrians still deserve the chance.

I have never supported a war and find it difficult to do so now, but I find myself increasingly convinced that the U.S. and international community have a responsibility to act and may need to use force to help end this conflict. If Geneva II fails to make progress toward any meaningful compromise, then I believe action must be taken.

There are firm demands that should be presented to all sides. The regime must stop its aggressive assault on “rebel-held positions” in populated areas. The destruction created by attacks on neighborhoods and the suffering that has been inflicted on innocent civilians is unacceptable. The opposition must be pressed to consolidate its ranks by becoming more inclusive and adopting a non-sectarian agenda for change. And they must purge their ranks of sectarian extremists. Both sides must agree to begin serious negotiations, without preconditions, to implement the transitional authority envisioned in the Geneva I formula.

Establishing a power-sharing transitional government will not be easy. It will take time. But both sides must be disabused of the notion that they can govern alone. The opposition has its base, as does the regime. If they want to be part of Syria’s future and if their funders and supporters want to be seen as making a constructive contribution to a resolution to this conflict, then they must agree to such a power-sharing arrangement. There is no other way.

If this does not occur within a defined period of time, then the U.S. may find it necessary to mobilize international support to launch strikes in Syria against both the regime and positions held by extremist groups. The strikes would in all likelihood need to be significant and sustained enough to change the calculations of the combatants. The Russians may choose to be part of this solution or not. But we are long past the time when the fate of Syria should be decided by a Russian veto.

Simultaneously, the U.S. would also need to lead an effort to mobilize a post-agreement peace-keeping force and a reconstruction and resettlement fund for Syria and its millions of refugees and internally displaced persons. Even after a power-sharing arrangement is reached, international support will be important to give the Syrians the time they need to make it work.

This degree of U.S. involvement may not be welcomed by many Americans and it will likely be rejected in many parts of the Arab World. But enough is enough. Something must be done to help end this Syrian nightmare.

Netanyahu Gambles on Cyber Opportunities Outside Israel – Bloomberg

Netanyahu Gambles on Cyber Opportunities Outside Israel – Bloomberg.

Israeli Prime Minister Benjamin Netanyahu says the benefits of opening the country’s cyber industry to foreign partnerships can balance out security risks.

“There is tension” between security and business, he said in a Bloomberg Television interview in Davos, Switzerland, on Jan. 24. “I made a decision to take a gamble on expanding our cyber cooperation with companies and countries.”

Netanyahu’s comments suggest he may seek to loosen export licensing restrictions on cyber-related technologies after a stronger shekel and a faltering global economy led to a decline in the country’s sales abroad last year. Israel’s chief scientist, who runs a government project that invests in startups, last year urged an export policy reform that would balance national security needs with that of the industry.

“If you really want to extend the benefits of cyber security, then you need partners,” said Netanyahu, without directly commenting on the export policy. He met with heads of state and the chief executive of Yahoo! Inc. during his three days at the World Economic Forum in Davos last week.

Israel’s TheMarker.com financial news website reported today that multinationals including Microsoft Corp. and Amazon.com Inc. have said in private talks that they plan to open cyber centers in Israel. It didn’t say where it received the information.

Multinationals Present

Israel already has companies like Check Point Software Technologies Ltd. (CHKP), that trades in New York with a market value of $13 billion, and software security company Trusteer Inc. that International Business Machines Corp. bought for about $800 million last year.

Hackers briefly shut down several Israeli government websites last April in a coordinated assault protesting the treatment of Palestinians. Attacks against Web hosting servers and data centers are a growing threat, Bloomberg Industries said in a Jan. 16 report citing Cisco Systems Inc. (CSCO)Highly publicized attacks such as on the discount chain Target Corp. have raised the profile of network security providers.

“The Internet drives growth and everything is dependent on one thing, having security,” said Netanyahu. “We will balance our security needs with our business.”

Israel’s cyber-security industry has grown from a few dozen companies to more than 220 in the past three years, according to the Tel Aviv-based IVC Research Center that monitors the industry. Seventy-eight companies in the space raised more than $400 million during that period and 20 multinationals operate development centers in Israel.

Bureau Formed

Netanyahu established the National Cyber Bureau about two years ago to promote cyber security companies, coordinate between the military, education and business sectors, and start a high school program to train students early.

The industry is augmented by young men and women who serve at least two years in military cyber security units, offering the civilian sector a pool of experienced staff.

EMC Corp., the world’s largest maker of storage computers, said in November it will establish a second development center in Israel and expand activity at its first while developing solutions for the Israeli Defense ministry and military.

“There is a strong momentum in the cyber security sector and increasing interest from foreign financial, corporate and government investors,” IVC Chief Executive Officer Koby Simana said in a phone interview.

Boost Exports

Cyber technology will add to Israeli exports, that account for about a third of Israel’s economy and have been a growth engine for the past decade. Sales abroad contracted 0.1 percent last year, according to the Central Bureau of Statistics.

The Israeli currency has rallied 6.1 percent in the past 12 months, the most among 31 major currencies tracked by Bloomberg. Steps by authorities, which have included three rate cuts that brought borrowing costs down to 1 percent and Bank of Israel foreign currency purchases of more than $5 billion, have failed to stop the shekel’s ascent.

“I tell our exporters, who are very nimble mammals, that ultimately you have to adjust and that is hard,” Netanyahu said.

To contact the reporters on this story: Gwen Ackerman in Jerusalem atgackerman@bloomberg.netHans Nichols in Washington at hnichols2@bloomberg.net

To contact the editor responsible for this story: Riad Hamade at rhamade@bloomberg.net

Activist Post: Wolf Blitzer Gets SCHOOLED on Syria: ‘Do you think there’s real democracy in the US?’

Activist Post: Wolf Blitzer Gets SCHOOLED on Syria: ‘Do you think there’s real democracy in the US?’.

Youtube

Activist Post: The Plundering of South Sudan

Activist Post: The Plundering of South Sudan.

image source

Tony Cartalucci
Activist Post

RT’s report “Who is to blame for the crisis in South Sudan?” gave a succinct background on the warring factions inside the new “nation” of South Sudan and the Western genesis of the conflict. The report would state:

The SPLM has received support from the US and Israel throughout the duration of the civil war fought between southern rebels and Khartoum, which has historically had unfriendly relations with the West and has moved very closely to China in recent times to jointly develop the country’s oil wealth prior to the separation. Romantic notions for self-determination did not motivate the West to support southern secession; the objective was to partition Sudan and deprive Khartoum of economically relevant territory in the south where most of the oil fields lie. In exchange for the financial, material, political, and diplomatic support received from the West, the new government in Juba endorsed a ‘Faustian pact’ with its sponsors to open its economy to international finance capital and multinational interests. The government in Juba even applied for IMF membership before it had even officially gained independence from Sudan.

The piece would continue by laying out the current dilemma for the West:

Despite supporting the South’s independence with diplomatic muscle and military aid, the United States has been unable to gain a foothold in the country’s oil sector; Juba’s crippled economy remains dominated by Asian companies, primarily from China. South Sudan must rely on pipelines that run through Khartoum to export its oil, and the two countries produced around 115,000 barrels of oil per day in 2012, less than half the volume produced in the years before South Sudan’s independence. Both sides have nearly gone to war over disputed oil fields that straddle a poorly demarcated border. Judging from the poor economic performance of both countries since the partition and the dramatic loss of the life in the ongoing crisis, the experiment of South Sudanese independence is failing.

Image: Violence predictably is centered around currently Chinese-controlled oil infrastructure. The goal is to have violence drive the Chinese out just as was done by NATO in Libya.

The piece would go on to note that peace deals reached leaving Sudan intact could have avoided the deadly conflict now raging – and that of course is correct. However, peace is not and never was the goal of the West and its involvement in Africa – economic gain is.

Precisely because China still maintains extensive holdings in Sudan and South Sudan’s oil infrastructure, the conflict will be brought to a fever pitch – and unsurprisingly the conflict’s epicenter corresponds with South Sudan’s primary oil producing regions. If and when the Chinese are pushed out of South Sudan, the West will continue either across the border to establish routes for exporting their newly gained oil wealth from the landlocked country, or proceed through Kenya with or without the current government in Nairobi’s backing.

The BBC would report in their article, “China’s oil fears over South Sudan fighting,” that (emphasis added):

The stakes could not be higher for China, the largest investor in South Sudan’s oil sector, as fierce fighting continues between forces loyal to President Salva Kiir and those of his former deputy.

Some of the largest oil fields China operates are in areas controlled by fighters backing Riek Machar, the country’s vice-president until he was sacked in July.

Oil production has already dropped by 20% since the onset of the conflict three weeks ago and more than 300 Chinese workers have been evacuated. 

The spectre of their Libyan experience also weighs heavily on the Chinese minds – project after project now lies deserted because of heavy fighting during the Arab Spring uprising of 2011, inflicting huge losses on China.

Most telling of all is the BBC’s reference to Libya – another nation destroyed by Western military aggression that saw both Russian and Chinese interests crumble overnight and replaced by Western corporations. While South Sudan’s chaos is being orchestrated more covertly by the West, the final goal of pushing out the Chinese and taking over is the same.

Similar covert destabilization can be seen all across what the 2006 Strategic Studies Institute’s report “String of Pearls: Meeting the Challenge of China’s Rising Power across the Asian Littoral” calls China’s “String of Perals.” This includes US-backed militants attempting to carve off the province of Baluchistan from Pakistanwhere China has established a port at Gwadar and at another Chinese port in the state of Rakhine, Myanmar that has been the scene of brutal, genocidal violence carried out by “democracy icon” Aung San Suu Kyi’s “saffron monks” against Rohingya refugees.

Setting Up Shop in South Sudan

There is no doubt that the US and its accomplices Israel and Uganda have decided to stay in South Sudan. TheUS corporate foundation-funded “Enough Project” provided the rhetorical justification for an enduring presence in the war-torn African state in its Al Jazeera op-ed titled, “Al Jazeera America Op-ed: South Sudan’s Salva Kiir needs to put his black hat back on,” which stated:

To be sure, growing pains are common in societies working to secure their independence after years of marginalization and authoritarian rule. Building a cohesive national identity among South Sudan’s 81 ethnic groups will take generations. Still, the looming specters of mass intercommunal violence means we cannot afford to be complacent. The United States committed itself to the South Sudanese people’s long march toward independence decades ago. It would be a shame if America allowed a return to war when the South Sudanese are so close to securing their future.

With that humanitarian/freedom-promoting foot-in-the-door, the West has the pretext it needs to meddle for decades to come.

To begin with, Israel Military Industries Ltd. (IMI) signed what it called a “water infrastructure and technology development” deal with South Sudan’s government in 2012. The deal allegedly covers desalination, irrigation, water transport and purification, but a visit to Israel Military Industries Ltd. website indicates they are military contractors and arms manufacturers, not engineers and certainly not specialists in water infrastructure. Other sources claim IMI will serve as a conduit for actual Israeli water firms – but in light of US, Israeli, Saudi, and Qatari joint operations elsewhere, IMI will most likely serve as a conduit for weapons, cash, and conflict as well (or instead).

Image: It is not entirely clear how a military contractor and weapons manufacturer like Israel’s IMI is going to develop South Sudan’s water infrastructure. Just like Qatar’s use of humanitarian aid groups to smuggle weapons into Syria, Israel is most likely using “development” as cover for perpetuating conflict both within South Sudan to drive out the Chinese, as well as across the border in Sudan to the north to finally topple the government in Khartoum.

In 2013, Israel and South Sudan would begin forging oil deals. In UPI’s report, “South Sudan signs oil deal with Israel,” it was stated:

South Sudan says it has signed an agreement with several Israeli oil companies, a potentially significant strategic move that will consolidate the Jewish state’s relations with the fledgling, oil-rich East African state.

UPI would continue, highlighting the glaring problem of actually exporting the oil to turn a profit:

South Sudan’s petroleum and mining minister, Dhieu Dau, announced the oil deal last week after he returned from a visit to Israel.

He said negotiations were ongoing with Israeli companies, which he did not identify, seeking to invest in South Sudan.

Dau indicated the southern government in Juba, ramshackle capital of the infant state, hoped to export oil to Israel, but observed that this could not happen before March.

He gave no indication how the landlocked south would achieve this, or what volume of crude would be involved. But it’s a move Khartoum would do everything possible to wreck.

Finally, the UPI report indicates the much larger implications of Israel’s (and the US’) involvement in South Sudan, using it as a springboard to topple neighboring Sudan in the north:

The prospect of Israel actually getting oil from South Sudan remains uncertain, given Juba’s difficulties with Khartoum.

There has been talk of building a 1,000-mile export pipeline from South Sudan across Kenya to the Indian Ocean that would free Juba from reliance on Khartoum’s pipelines.

But no definite plans for the project, expected to cost around $2 billion, have yet materialized.

It may be that Israeli companies are seeking to help out in that regard — if only to undermine the Islamic-oriented Khartoum regime and its alliance with Tehran, and to gain access to the Nile River, Egypt’s primary source of water and a strategic target.

During Sudan’s civil war, one of Africa’s longest conflicts in which some 2 million people died, Israel provided the southern rebels with arms, training and funding, as it has done in other parts of Africa seeking to weaken its Arab adversaries.

Clearly, the presence of Israeli arms dealers is not to develop South Sudan’s infrastructure but rather to flood the region with weapons to flush out the Chinese and eventually stab northward toward Sudan and its capital of Khartoum. UPI’s report would go on to admit that military aid was still undoubtedly flowing to South Sudan for this very purpose.

In addition to a proxy military confrontation with Sudan, the US, Israel, Saudi Arabia, and Qatar have been attempting to overthrow the government in Khartoum from within – attempting an “Arab Spring-style” uprising in late 2013 that eventually fizzled.

Enter US AFRICOM and Uganda’s Museveni 

Infamous Western collaborator and Ugandan dictator-for-life Yoweri Museveni has been fighting the West’s proxy wars in Africa for decades. He has also done much within his borders to appease the West including selling large tracts of land to foreign developers right out from beneath the feet of his own people – many times killing landowners who refused eviction.

Image: Whatever pretext the West attempts to use to place Western troops inside of Africa while Fortune 500 corporations scoop up the continent’s vast resources, it is nothing more than modern recolonization. US troops placed in Uganda to fight “Kony” are now conveniently in place to aid in the despoiling of neighboring South Sudan – a state carved out of proper Sudan via Western-fueled civil war. 

In 2011 under the false pretext of fighting Joseph Kony’s “Lord’s Resistance Army” the US would begin deploying troops to Uganda. By 2013, these troops would still be there – when violence began to spread across nearby South Sudan, US troops conveniently still stationed in Uganda would be mobilized for the evacuation of US citizens. Stars and Stripes would report in their article, “Marines airlift US Embassy personnel out of South Sudan,” that:

Nonessential U.S. Embassy personnel were evacuated Friday from South Sudan aboard two KC-130 aircraft assigned to a Marine crisis response team positioned in nearby Uganda.

The article would also report:

Last week, the Special Purpose Marine Air Ground Task Force-Crisis Response also was pre-positioned at Entebbe, Uganda, to provide additional support. The unit, from Moron, Spain, was formed less than a year ago to bolster AFRICOM’s crisis-response capabilities.

Uganda, like Sudan, has clearly been permanently brought into AFRICOM’s fold under an initial false “humanitarian” pretext that was then quietly shifted to the permanent occupation of African territory. And Uganda not only serves as a base for US AFRICOM, but is also using its soldiers to carry out AFRICOM’s objectives beyond Uganda’s borders.

The Guardian would report in its recent article, “South Sudan peace talks falter as Uganda sends in troops,” that:

The South Sudan peace talks being held in Ethiopia have stalled, officials say, as a rebel commander claims big victories against the South Sudanese government and Uganda sends in more troops and military hardware.

The report would also claim:

Uganda, he said, had sent 1,200 troops to secure installations such as the airport and state house, adding that Ugandan military aircraft had bombed several rebel-held positions.

Uganda says its deployment of more troops and military hardware to Juba this week came at the request of Kiir. Lieutenant Colonel Paddy Ankunda, a Ugandan military spokesman, said on Wednesday that reinforcements were dispatched on Monday and Tuesday “to plug security gaps”. He denied the Ugandans were actively involved in combat.

Yoweri Museveni, the president of Uganda, is a strong ally of Kiir. The neighbouring countries have built a bond that goes back to South Sudan’s armed struggle for independence from Sudan and the Khartoum government. Museveni recently warned Machar that East African countries would unite to defeat him militarily if he does not agree to attend peace talks.

In essence, Uganda is providing the manpower on the ground while the US, Israel, Saudi Arabia, Qatar and others provide the cash, weapons, and everything else. It is another proxy war, just like the ongoing conflict in Syria, albeit with Ugandan troops literally invading South Sudan to prop up the West’s proxy government in Juba.

Who is funding and arming rebel groups fighting the West’s proxy government is still unclear. Reports indicate it may be dissident factions of South Sudan’s own armed forces involved in a recent coup attempt. Other theories suggest that US, Uganda, and/or Israel may be funding and arming both sides hoping to carry the conflict onward to Khartoum. It is clear that Khartoum, Sudan, one way or another, is the US-Israeli-Saudi-Qatari goal – to complete the theft of Sudanese oil as well as the means to export it out of the broken, worn-torn, decimated country.

This is the current state of the Wall Street-London global order in Africa – and a tattered, exploited Africa in our future should this state persist.

Tony Cartalucci’s articles have appeared on many alternative media websites, including his own at 
Land Destroyer ReportAlternative Thai News Network and LocalOrg.

Read other contributed articles by Tony Cartalucci here.

The Ron Paul Institute for Peace and Prosperity : Iraq: The ‘Liberation’ Neocons Would Rather Forget

The Ron Paul Institute for Peace and Prosperity : Iraq: The ‘Liberation’ Neocons Would Rather Forget.

Ronpaul Tst
Remember Fallujah? Shortly after the 2003 invasion of Iraq, the US military fired on unarmed protestors, killing as many as 20 and wounding dozens. In retaliation, local Iraqis attacked a convoy of US military contractors, killing four. The US then launched a full attack on Fallujah to regain control, which left perhaps 700 Iraqis dead and the city virtually destroyed.According to press reports last weekend, Fallujah is now under the control of al-Qaeda affiliates. The Anbar province, where Fallujah is located, is under siege by al-Qaeda. During the 2007 “surge,” more than 1,000 US troops were killed “pacifying” the Anbar province.  Although al-Qaeda was not in Iraq before the US invasion, it is now conducting its own surge in Anbar.

For Iraq, the US “liberation” is proving far worse than the authoritarianism of Saddam Hussein, and it keeps getting worse. Last year was Iraq’s deadliest in five years. In 2013, fighting and bomb blasts claimed the lives of 7,818 civilians and 1,050 members of the security forces. In December alone nearly a thousand people were killed.

I remember sitting through many hearings in the House International Relations Committee praising the “surge,” which we were told secured a US victory in Iraq. They also praised the so-called “Awakening,” which was really an agreement by insurgents to stop fighting in exchange for US dollars. I always wondered what would happen when those dollars stopped coming.

Where are the surge and awakening cheerleaders now?

One of them, Richard Perle, was interviewed last year on NPR and asked whether the Iraq invasion that he pushed was worth it. He replied:

I’ve got to say I think that is not a reasonable question. What we did at the time was done in the belief that it was necessary to protect this nation. You can’t a decade later go back and say, well, we shouldn’t have done that.

Many of us were saying all along that we shouldn’t have done that – before we did it. Unfortunately the Bush Administration took the advice of the neocons pushing for war and promising it would be a “cakewalk.” We continue to see the results of that terrible mistake, and it is only getting worse.

Last month the US shipped nearly a hundred air-to-ground missiles to the Iraqi air force to help combat the surging al-Qaeda. Ironically, the same al-Qaeda groups the US is helping the Iraqis combat are benefiting from the US covert and overt war to overthrow Assad next door in Syria. Why can’t the US government learn from its mistakes?

The neocons may be on the run from their earlier positions on Iraq, but that does not mean they have given up. They were the ones pushing for an attack on Syria this summer. Thankfully they were not successful. They are now making every effort to derail President Obama’s efforts to negotiate with the Iranians. Just last week William Kristol urged Israel to attack Iran with the hope we would then get involved. Neoconservative Senators from both parties recently introduced the Nuclear Weapon Free Iran Act of 2013, which would also bring us back on war-footing with Iran.

Next time the neocons tell us we must attack, just think “Iraq.”

Israel launches fresh air strikes on Gaza – Middle East – Al Jazeera English

Israel launches fresh air strikes on Gaza – Middle East – Al Jazeera English.

The girl was killed and her family were wounded in an air strike on a refugee camp in Gaza [Reuters]
A three-year-old Palestinian girl was killed and at least six other people wounded in a series of Israeli air and tank strikes on the Gaza Strip, medical sources said.Medics named the girl as Hala Abu Sabikha from the central Gaza Strip, noting “three other members of her family were wounded” on Tuesday.

Emergency services spokesman Ashraf al-Qudra said six people had been wounded in a series of strikes, which came in response to the shooting to death earlier of an Israeli repairing the security fence separating Gaza from Israel.

The Hamas interior ministry said Abu Sabikha and her family were injured in an air strike on a refugee camp in central Gaza.

It also said a person was moderately wounded in a tank shelling near the Karni crossing in northern Gaza and that there were two other air strikes on militant positions in northern Gaza, where no casualties were reported.

The Israeli army said aircraft, tanks and infantry “targeted terror sites in the Gaza Strip” in retaliation for the shooting of the Israeli.

“The sites targeted were a weapon-manufacturing facility and a terror infrastructure in the southern Gaza Strip, a terror site and another terror infrastructure in the central Gaza Strip and a concealed rocket launcher in the northern Gaza Strip,” an army statement said.

 

Israeli PM condemns US and UK spying on predecessor as ‘unacceptable’ | World news | theguardian.com

Israeli PM condemns US and UK spying on predecessor as ‘unacceptable’ | World news | theguardian.com.

Israeli prime minister Binyamin Netanyahu
Israeli prime minister Binyamin Netanyahu chairs a weekly cabinet meeting at his office in Jerusalem on Sunday. Photograph: Gali Tibbon/AP

The Israeli prime minister Benjamin Netanyahu has broken his silence over revelations that British and US spy agencies had targeted one of his predecessors, condemning the activities as “unacceptable”.

Papers leaked by Edward Snowden, and published by the Guardian on Friday, revealed that GCHQ in association with the National Security Agency had targeted an email address used by the Israeli prime minister when Ehud Olmert was in office.

Three further Israeli targets appeared on GCHQ documents, including another email address understood to have been used to send messages between the then Israeli defence minister, Ehud Barak, and his chief of staff, Yoni Koren.

“I have asked for an examination of the matter,” Netanyahu told members of his ruling Likud Party at a meeting of the parliamentary faction in the Knesset on Monday. “In the close relationship between Israel and the United States, there are things that are prohibited and that are unacceptable to us.”

Netanyahu had pointedly avoided addressing the growing storm at a meeting of the Israeli cabinet the previous day, prompting widespread media comment in Israel that he was attempting to stifle discussion on the embarrassing revelations about the behaviour of Israel’s closest strategic ally.

Israel has given undertakings not to spy on the United States since the arrest and life imprisonment of US naval intelligence analyst Jonathan Pollard in 1987 for spying on behalf of Israel.

Netanyahu and other Israeli leaders across the political spectrum, as well as senior retired US security officials, have unsuccessfully petitioned successive presidents to release Pollard, who has served a longer sentence than any other spy in the US. Although Netanyahu repeated his claim on Monday that the two matters should not be connected, he pointedly met with Pollard’s wife Esther in Jerusalem and posted a video of their handshake on his YouTube channel in response to a new groundswell of protest demanding Pollard’s immediate release in light of the latest revelations.

“I have met with Esther Pollard and updated her on our ceaseless efforts to liberate Jonathan. He should have been released long ago. I think that’s understood by everyone here, and also understood by large and growing sectors in the United States,” said Netanyahu.

Israel and the US are locked in sensitive diplomatic manoeuvring around the peace talks with the Palestinians. This new issue could not have arisen at a worse time.

Several Israeli ministers had already broken ranks and protested publicly about NSA surveillance. Israeli anger at the US was exacerbated by a report in Yedioth Ahronoth, the country’s largest-selling newspaper, that a US marine rented an apartment in June 2009 directly opposite the private home of Ehud Barak, a former prime minister and military chief of staff who was then Israel’s defence minister.

“Israeli intelligence detected sizeable amounts of electronic equipment delivered to the US-rented apartment,” Yedioth reported, together with diagrams of the sophisticated laser spying devices that might have been used to eavesdrop on Barak’s private conversations via the vibrations of the windows of his home.

Strategic affairs minister Yuval Steinitz and other officials said the NSA and GCHQ would have learned little of value from the email addresses and phone lines they apparently intercepted, which were publicly listed contact points and not used for the transmission of sensitive information.

Oved Yehezkel, a former military intelligence officer who was cabinet secretary to then prime minister Olmert, said it was assumed that communications between Israeli leaders were being monitored by their closest friends in Washington. “Of course we knew. Anyone who thinks that friends and allies don’t spy on each other should re-read John le Carré,” Yehezkel said.

 

GCHQ and NSA targeted charities, Germans, Israeli PM and EU chief | UK news | The Guardian

GCHQ and NSA targeted charities, Germans, Israeli PM and EU chief | UK news | The Guardian.

Edward Snowden composite with GCHQ and fibre optics

The details of GCHQ and NSA targets are the latest revelations from documents leaked by Edward Snowden. Photograph: Guardian

British and American intelligence agencies had a comprehensive list ofsurveillance targets that included the EU’s competition commissioner, German government buildings in Berlin and overseas, and the heads of institutions that provide humanitarian and financial help to Africa, top-secret documents reveal.

The papers show GCHQ, in collaboration with America’s National Security Agency (NSA), was targeting organisations such as the United Nations development programme, the UN’s children’s charity Unicef andMédecins du Monde, a French organisation that provides doctors and medical volunteers to conflict zones. The head of the Economic Community of West African States (Ecowas) also appears in the documents, along with text messages he sent to colleagues.

The latest disclosures will add to Washington’s embarrassment after the heavy criticism of the NSA when it emerged that it had been tapping the mobile phone of the German chancellor, Angela Merkel.

One GCHQ document, drafted in January 2009, makes clear that the agencies were targeting an email address listed as belonging to another important American ally – the “Israeli prime minister”. Ehud Olmert was in office at the time.

Three further Israeli targets appeared on GCHQ documents, including another email address understood to have been used to send messages between the then Israeli defence minister, Ehud Barak, and his chief of staff, Yoni Koren.

Prominent names that appear in the GCHQ documents include Joaquín Almunia, a Spaniard who is vice-president of the European commissionwith responsibility for competition policy.

Britain’s targeting of Germany may also prove awkward for the prime minister, David Cameron: in October, he endorsed an EU statementcondemning NSA spying on world leaders, including Merkel.

They have both been in Brussels, attending an EU summit that concludes on Friday.

The names and details are the latest revelations to come from documents leaked by the whistleblower Edward Snowden. They provoked a furious reaction from the European commission, Almunia and others on the target lists.

• The commission said the disclosures “are unacceptable and deserve our strongest condemnation. This is not the type of behaviour that we expect from strategic partners, let alone from our own member states.” Almunia said he was “very upset” to discover his name was on GCHQdocuments.

• Leigh Daynes, UK executive director of Médecins du Monde, said he was “bewildered by these extraordinary allegations of secret surveillance. Our doctors, nurses and midwives are not a threat to national security. There is absolutely no reason for our operations to be secretly monitored.”

• Another target, Nicolas Imboden, the head of an NGO that provides help to African countries, said the spying on him was “clearly economic espionage and politically motivated”.

• Human Rights Watch, Privacy International and Big Brother Watch condemned the targeting.

• Labour said the committee that oversees GCHQ should be given extra powers.

The disclosures reflect the breadth of targets sought by the agencies, which goes far beyond the desire to intercept the communications of potential terrorists and criminals, or diplomats and officials from hostile countries. Asked about this activity, a spokesman for GCHQ said it was “longstanding policy that we do not comment on intelligence matters”, but the official maintained the agency “takes its obligations under the law very seriously”.

The new information is published after a joint investigation by the Guardian, the German news magazine Der Spiegel and the New York Times. According to documents, the targeting efforts involved programmes run from GCHQ’s listening post near the small Cornish seaside resort of Bude. This is a key listening facility that receives substantial funding from the NSA to undertake shared transatlantic surveillance operations.

Among other activities, the base was tasked with monitoring satellite communications between Europe and Africa, and the papers show that Bude tested the value of new “carriers” used by telecoms companies to judge whether they would be worth intercepting.

According to documents, dated from 2008 to 2011, a unit at Bude did this by testing samples of data to see whether surveillance targets already on GCHQ and NSA databases were making use of the new connections.

If GCHQ analysts identified a carrier they thought could be useful, they would be asked: “Can this carrier be tasked on collection system?”

Providing more permanent surveillance would often depend on whetherGCHQ had suitable software and, if not, whether it was possible to upgrade systems to make it possible.

Almunia is in charge of major anti-monopoly investigations and approving mergers of companies with significant presence in the EU. He has been involved in a long-running investigation into Google over complaints about the company’s alleged stranglehold on online advertising. He has also clashed with Google and Microsoft over privacy concerns and was prominent in the EU’s response to the global financial crisis.

Surveillance on such a senior EU official with a major role in economic affairs is bound to alarm other European nations, and raise concerns as to whether intelligence produced from Almunia or others is shared with the US – the NSA has a number of personnel at the base in Bude and contributes millions of pounds to its budget.

Another target was the French defence and logistics giant Thales Group, which is part-owned by the French government.

In all, communications from more than 60 countries were targeted in this particular operation, with other names listed in the GCHQ documents including Mohamed Ibn Chambas, the current African Union-United Nations joint special representative for Darfur, as well as multiple African heads of state.

Imboden, from the non-profit Ideas Centre in Geneva, and Solomon Asamoah, deputy head of the Africa Finance Corporation, also appeared on GCHQ’s lists.

The documents do not give any insight into why GCHQ deemed them worthy of surveillance.

In 2009, Chambas was president of Ecowas. He had been closely involved in efforts to bring peace to Liberia, and GCHQ picked up text messages he sent while in the country to receive an award.

One message read: “Thanks Kwame. Glad to know all is well. Am in Liberia for receive National Award … inde celebration.” A second added: “What machine gun sounds? Am in Gbanga former HQ of Charles Taylor …”

Offices operated by the UN development programme, which administers financial relief to poor nations, and of the World Health Organisation were also among listed targets.

The targeting of German government buildings may prove the biggest political headache for the UK. The documents show GCHQ targeting German government networks in Berlin, and official communications between Germany and Georgia and Germany and Turkey. Germany’s embassy in Rwanda was also a target.

The papers seen by the Guardian do not disclose the extent of any surveillance or for how long any collection took place.

However, each individual or group had a specific ID number in the agency’s “target knowledge base”. This indicates they had been a deliberate target of surveillance efforts, rather than accidentally caught in a dragnet.

Unlike its US counterpart, GCHQ is entitled to engage in spying relating to economic matters, but only if it is linked to national security issues.

The 1994 Intelligence and Security Act says the agency can work “in the interests of national security, with particular reference to the defence and foreign policies of Her Majesty’s government; in the interests of the economic wellbeing of the United Kingdom; and in support of the prevention and the detection of serious crime”. However, critics have repeatedly called for a proper definition of “national security”, and raised questions about what should be permitted to protect “economic wellbeing” beyond the need to help UK companies defend themselves against the theft of intellectual property or from cyber-attacks.

Documents show GCHQ has also been keen to break into global roaming exchanges (known as GRXs), which are centres that handle routing international mobile calls to the appropriate countries and phone networks. Belgacom, which Der Spiegel revealed this year was the victim of GCHQ hacking efforts, is one such international exchange.

One 2010 presentation referring to the agency’s efforts against GRXs went on to note that “diplomatic targets from all nations have an MO [modus operandi] of using smartphones” and added the agency had “exploited this use at the G20 meetings last year”. The Guardian in Junerevealed GCHQ had engaged in extensive surveillance efforts against G20 delegates in 2009, including in order to secure advantages in trade talks and bilaterals.

On Monday, the Guardian, Der Spiegel and the New York Times jointly approached GCHQ for comment. The agency would not go into any details but said: “One of the purposes for which GCHQ may be authorised to intercept communications is where it is necessary for the purpose of safeguarding the economic wellbeing of the UK.” However, the code of practice made clear this had to be “directly related to state security. Interception under this purpose is categorically not about industrial espionage.”

The NSA said: “As we have previously said, we do not use our foreign intelligence capabilities to steal the trade secrets of foreign companies on behalf of – or give intelligence we collect to – US companies to enhance their international competitiveness or increase their bottom line. The United States collects foreign intelligence just as many other governments do.

“The intelligence community’s efforts to understand economic systems and policies, and monitor anomalous economic activities, are critical to providing policymakers with the information they need to make informed decisions that are in the best interest of our national security. As the administration also announced several months ago, the US government is undertaking a review of our activities around the world – looking at, among other issues, how we co-ordinate with our closest allies and partners.”

 

Experts Fear Nuclear Famine: “A Disaster So Massive in Scale that No Preparation is Possible”

Experts Fear Nuclear Famine: “A Disaster So Massive in Scale that No Preparation is Possible”.

nuke-famine

At last count, there are eight countries in the world that have officially designed, developed and tested nuclear weapons. Another two (Israel and Iran) deny they have built or are building such weapons, but the probability that Israel has them and that Iran is building them is believed by members of the international community to be extremely high.

That being said, it’s only a matter of time before a madman at the helm in any of these ten nuclear-armed states decides to push the button. With the global economy in shambles, the world’s super powers mobilizing military assets, and hundreds of trillions of dollars in unservicable debt soon to be realized by the financial community, how long before history rhymes with previous large-scale events that culminated in the fall of the Roman empire or the World Wars that  devastated tens of millions of lives in the 20th century?

War, it seems, is inevitable. Not just because of the many problems faced by mankind, but because of the nature of mankind itself.

Whether that war is a widespread nuclear conflict involving the world’s super powers, or a more limited event in the middle east involving Pakistan and India, according to anew report published by the International Physicians for the Prevention of Nuclear War, a nuclear engagement (even a limited one) would lead to widespread destruction across planet earth, with at least 2 billion people at risk of starvation or death.

The kicker? The effects will be so long-lasting, according to the author of the study, that there’s pretty much nothing we can do to survive it:

The threat of nuclear war has been embedded in global consciousness since the invention of the atomic bomb. Most fears are focused on blast radius and radioactive fallout; but the long-term effects of a nuclear conflict could be far more concerning.

According to new research from the International Physicians for the Prevention of Nuclear War and Physicians for Social Responsibility, a phenomenon known as “nuclear famine” is keeping experts up at night. The study estimates that more than 2 billion people are at risk.

Its author, Ira Helfand, says even a limited nuclear war could lead to “the end of civilization.”

Helfand theorizes it could occur in stages. The first is climate change. Existing literature shows that a regional nuclear war between India and Pakistan could drastically affect temperatures throughout the world. A 2007 study published in Atmospheric Chemistry and Physics predicts that the soot created by such an event could reduce temps by 1.25°C per year for at least a half-decade.

This would wreak havoc on global crops.

The final stage of this catastrophe is starvation.

With his best guess, Helfand breaks the at-risk into three groups: (a) 870 million people already facing malnourishment, (b) grain-importing nations, and (c) the entire population of China. The first group gets more than 75% of its nutrition from grain, and a significant portion would not be able to afford higher prices.

Grain-importing nations, like South Korea, Japan, most of North Africa, and the Middle East, would be hard hit by trading partners who suddenly decide to stop exporting. Additionally, China’s 1.3 billion citizens would use up their rice and wheat reserves in a few months, and international hoarding may make open-market purchases impossible.

As Helfand has said: ”This is a disaster so massive in scale that really no preparation is possible. We must prevent this.”

With the vast majority of the world’s nations still unable to build the bomb, a blanket approach could work. ICAN pleads that the “very survival of humanity depends on nuclear weapons never being used.”

Fool.com via IPNNW Study

The nuclear-armed nations of the world didn’t just build these weapons so they can look at them. Sure, our leaders may claim these weapons are merely deterrents designed to prevent war, but the fact is, advanced weaponry has always been used for the purposes of conquering. Our modern era is no different.

We came dangerously close during the Cuban missile crisis in the early 1960′s. Cooler heads prevailed that day.

And even if starting a war is unintentional, it could happen. On at least one occasion, in 1983, the United States and Russia were literally minutes away from a full-scale confrontation under both country’s policies of mutually assured destruction. It turns out that was a false alarm – but the world was almost destroyed as a result. This is one of the incidents we know about, and given the secrecy behind such military operations, it’s quite possible that there have been more.

The bottom line is that we must assume these weapons will be used at some point – that should be a given. What we don’t know is the scale of the nuclear engagement. It could be that Russia, the United States, Israel, China and North Korea just start lobbing intercontinental ballistic missiles by the hundreds, in which case we’re all pretty much toast. Or, it could be a limited war, with the conflict in India and Pakistan finally coming to a head.

Whatever the case, even if those dropped bombs detonate thousands of miles away from you, there is a strong likelihood that you will feel the direct effects in the form of an almost immediate climate change, food scarcity, extreme price rises, and the riots and looting that are sure to follow.

As with any disaster, whether its a nuclear war, global financial collapse, or a natural disaster, we can fully expect the worst of the worst. As the IPPNW report notes:

We would have to expect panic on a far greater scale following a nuclear war, even if it were a “limited” regional war,  especially as it became clear that there would be significant, sustained agricultural shortfalls over an extended period.

It is probable that there would be hoarding on an international scale as food exporting nations suspended exports in order to assure adequate food supplies for their own populations.

Though the report suggests it is impossible to prepare for such an event, one could argue that survival is certainly possible.

Assuming we survive the nuclear impact and fallout because we live in a strategic location (or just got lucky!), your most immediate concerns would be food, water and self defense, all of which must be considered before such an event occurs if you intend to improve your odds of survival.

Surviving a nuclear winter will, of course, not be easy. According to the report, two billion people could die as a result – probably within a matter of months or a year. Asimilar scenario would play out should a disaster like a Super EMP weapon or solar flare take out our national (or global) power grid.

Regardless of the disaster, the aftermath, like any crisis or emergency, is survivable.

From the standpoint of preparedness, this means having long-term food stores and apreparedness plan to go along with them. You’ll first need to survive the initial “die-off” as millions of people search for food and resources. Then, when your own food stores run out, you’ll need to be able to produce your own by way of micro-farming and raising your own livestock.

What it will boil down to is adaptability. We can’t predict what will happen or what we will face. But understanding the potential threats, how to mitigate them when they occur, and the options we have available should our best laid plans fail gives us a much better chance of surviving disasters than just pretending like they can’t ever happen.

 

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