Global Politics in 2017

Welcome to 2017. If you thought 2016 was an interesting year just wait for what will unfold this year. We can look forward to fresh developments in the MIddle East, Russia, China, USA and Europe. Global politics is changing and under the surface so are economic developments. I’m sure some things will be quite a surprise. Saying that, I’m going to attempt to present what can happen based on current situations.

Syria: While Assad has broken the back of the opposition, with the determined backing of Russia and Iran, resistance is bound to continue in different areas of the country. It is safe to say that Assad has held onto power, for now. The fact that he was prepared to see the destruction of his country and displacement of millions of the population are of no consequence to him. He has sworn to take control of all Syrian territory, including Daesh and Kurdish held areas. This operation could continue for some time yet and may never come to a total conclusion. Winning the war is one thing, winning the peace and rebuilding the country is quite another. The only way to control ex rebel held areas is through an iron fist of military rule. As part of this, Russia has sent hundreds of military police to Aleppo. Then there is the economic situation, the country is in ruins, large parts of the infrastructure destroyed, roads, bridges, water and electricity supplies are out of action. It is going to cost billions to rebuild. Syria does not have the money to rebuild, Russia can’t afford to help rebuild the country and neither can Iran, their economies are not strong enough. Many wealthy Syrian business people moved to Gulf states such as Dubai, also Canada and the USA, it has been suggested to me that they will move back to Syria when things calm down and re-open their factories. Whether this happens by choice or through the threat of having their factories taken over by the government remains to be seen. Assuming factories can be brought back on line, the surrounding infrastructure they need, such as water and electricity is less than reliable. I can also see a strong possibility that a lot of forced labour will be used, mainly of the remaining Sunni population, to begin the enormous task of cleaning up the country. Assad now has a mandate from the global community to mistreat his people as he sees fit and you can be sure he will not disappoint. For the future, Syria will remain a broken country, violence will continue and oppression will increase. Assad himself could not have held onto Syria without the help of Russia and Iran, as a result he will be obliged to do as he is told when it suits his saviours. The only way therefore for Syria to rebuild is if Arab states take out their cheque books and that is not going to happen as long as Assad is in power. There will have to be a transition to a Syrian leader more acceptable to the Arab states before they consider handing over any money. Who the new leader will be is not clear yet but it will be someone from inside the existing power structure of Syria and most probably a Sunni, not an Alawhite, not from the first tier of government but most likely from the second tier of power. If relative calm can be brought back to Syria there would be massive investment potential. Before the war, Syria had the most diverse economy of any Arab state and it has natural resources for producing phosphates and cement, as well as agriculture and textiles. To bring its economy back can only happen if the country is rebuilt and that is not going to happen as long as Assad is in power, financial interests will see to that. How any power transition plays out will be watched very carefully by Iran, they do not want to lose their influence in Syria as part of the Shia crescent they have constructed which stretches all the way to the Mediterranean sea. Russia in its new role as power broker in the region will be looking to maintain its influence in Sunni Turkey and Shia Iran as it negotiates a new power structure in Syria. Failing this, Syria will never be rebuilt. Where this will leave the Kurds in their semi-autonomous region of Syria remains to be seen, particularly as the USA has been stepping away from the region for some time now. Its only real remaining interest in the region being Israel and Saudi Arabia.

Turkey: Turkey has had a terrible year with many bombings and shootings. Since the failed coup attempt last summer President Erdogan has clamped down hard. Not just clearing out the military and police but also lawyers, judges and teachers. The so called ‘parallel structure’ full of Gulanist supporters as he asserts. He has gone well beyond those who had anything to do with the coup attempt. As a result, the fractures in Turkey between those who support Erdogan and those who don’t have become a chasm. Erdogan has to now keep the pressure at a high level to stop any dissent. Personally I see the potential for civil war in Turkey and I am going to stick my neck out and say the foundations for civil war are being laid now. Also of note is the fact that it was Russia, Turkey and Iran that laid the framework for a ceasefire in Syria. The USA was nowhere to be seen and not invited. This is a clear demonstration that Turkey is no longer looking west as it had done in the past. At the same time, don’t imagine that all is rosy between Turkey and Russia, their’s is a business relationship only and there are still areas of conflicting interest between them. Erdogan will not tolerate any Kurdish semi-autonomous state inside Syria and it will act unilaterally if Assad and Russia don’t end it. But I want to keep the focus on Turkey’s internal stability, or lack of it. The number of attacks by Kurds and Daesh increase, Erdogan’s policies are alienating a large part of the population who were used to having power and influence in the country. I believe the fuse has been lit in Turkey.

Russia: Flush with a sense of victory, Russia is back on the world stage and projecting its geo-political influence and military strength. With the USA stepping away from involvement in the Middle East, Russia has stepped forward to fill the vacuum. From the outside, Russia looks strong but the projection of power masks internal weakness. Its economy is in bad shape, the middle class is shrinking rapidly and the price of oil and gas is nowhere near high enough to help the Russian economy recover, its economy is now about the size of Italy’s according to World Bank data. Despite military success in Syria, war is very expensive and has been sucking up money from other parts of the economy. There is also the question of what Russia will do next. Emboldened by victory, inaction of the West and a soon to be new President of the USA, will Russia be tempted to strike out elsewhere? Russia can’t afford two wars and now that its operation in Syria is being scaled back, maybe soon will be the time when it increases activity in Ukraine. Just because Ukraine is not in the news much these days does not mean the situation in the east of the country is quiet, there are daily shootings and bombings, but not on a level high enough to get on the news. Will Russia now look to expand operations again in Ukraine and capture more territory? It is a possibility and it can do so in the knowledge that nobody can stop it. The big question is if Russia will try and capture territory from Estonia and Latvia, which have a significant Russian speaking population, the same as in eastern Ukraine. Will Russia gamble on NATO/OTAN backing down in the face of an invasion of those two Baltic countries? With incoming President Donald Trump showing a lack of enthusiasm for Nato, as well as seeming to be more isolationist, could Russia get away with it? Certainly European members of NATO would not be able to stop Russia in its tracks and Turkey would refuse to get involved in any way, despite also being a member of NATO. I think Russia will wait a while to see what Donald Trump actually does as President, and if he shows no interest in the region, Russia will take it as signal and go ahead. Maybe not in direct invasion but will use tactics similar to those used in Ukraine.

Regarding the internal situation in Russia, it should be pointed out the increasing power of the Orthodox church. Working with the Kremlin, its role seems to be that of getting the message to the people, telling them to endure economic hardship as a part of their faith and that Vladimir Putin is something like a living saint, sent to save the country from the rest of the corrupt world. In so doing, the Orthodox church is coordinating a campaign against all who do not uphold ‘traditional values’, including those who do. For example, Jehovah’s Witnesses, who were persecuted and sent to gulags during Soviet times for their political neutrality and talking about their faith, are once again under attack, labelled as an ‘extremist’ organization and their website is now banned in Russia, the only other place it is banned is in North Korea. The Orthodox church is the main perpetrator of this attack on basic rights of freedom of worship. It wants to control the message and the message is that Putin is some sort of saviour on a religious level. In the meantime, the Orthodox church is increasing its wealth while the people suffer increasing financial hardship. The country is returning to how it was during the time of the czars, A small rich elite, almost no middle class and the uneducated peasants who are constantly being fed news of how great their country has once again become.

What should be understood about Russia, is that it always tries to put the blame for difficulties on external situations but in the end it always tears itself apart from the inside. The Orthodox church with its growing power and influence over the masses, could, when the time comes, be the factor to cause upheaval in the country, give it time as it consolidates its power and influence in the ruling structure and education system of Russia. Very similar in a way to the ‘parallel structure’ that was developed in Turkey and led to the coup attempt last year.

USA: With a new incoming President it is not easy to say what is going to happen but 2016 was a difficult year for the country. The divisions in its society are increasing, Black Lives Matter is a case in point. Many people are struggling to earn enough, pay for medical insurance, get a decent education. It is against this backdrop that many decided to vote for Donald Trump, if only just to try something new, as the existing political establishment tends to look down its nose at the working poor. Will Trump help them? Time will tell and I wont try to second guess what will happen regarding this. What I do think will be different is foreign policy. Trump is a business man, making money is what drives him and he has a reputation for being quite ruthless. However, his skills wont necessarily translate into effective diplomatic negotiation. An example would be his comments on the ‘One China’ policy, by which Taiwan is recognized as a part of China, even though it has a democratically elected government. Trump suggested this policy should be renegotiated, with China making economic concessions in return for continued acceptance of this policy. For China the ‘One China’ policy is a red line and will never be acceptable for use in any economic negotiations, China will react and react strongly if Trump decides to go down this road. Being known for the size of his fragile ego, he takes offense very easily and has a tendency to seek revenge. When he realizes that he is being played by Russia, the consequences could be dramatic to say the least. Unless there is an economic argument, I don’t see Trump taking much of an interest in Syria or Yemen or any other humanitarian crisis. When it comes to oil, as with all administrations in the USA, Trump will take keen interest. But I keep coming back to is his total lack of experience in dealing with foreign governments, there are only common interests in global politics, never friendship and Trump is the sort of person who hates getting the less profitable side of the deal and he takes these things very personally. So I think it is safe to say, when it comes to foreign policy, things could become rather volatile. On the other hand he might take a back seat, delegating foreign policy and concentrating on the domestic interests of his business friends in the USA. With regard to the USA economy, I think he will borrow to spend on rebuilding the infrastructure (roads, bridges, power grids etc) of the country, which is in a desperate state of disrepair and if something is not done about it soon will have a direct effect on the economy.

Europe: With Brexit, Europe is losing its second largest economy, some of its biggest banks are in a fragile state and in Italy many of its smaller banks are in very bad health, if one of these small Italian banks were to fail it could start a cascade effect and potentially take the country out of the EU. Austerity has not worked as planned, wages are stagnant and populist political parties are on the rise. There will also be a massive business scandal to come out of Europe, which I’m not at liberty to talk about at the moment but the fall-out will be immense. In the Balkans, tensions simmer between Serbia and Bosnia, that war can happen again, in fact it would take very little for the region to erupt in violence. Terrorism in Europe is a continuing threat and will probably increase. The use of trucks to run down innocents is, sad to say, much more effective than someone with a AK47 and easier to get hold of for use as a weapon. I expect to see more attacks like these. I hate to say this, but I would not be surprised to see high speed trains being derailed as a means of terrorism. It is very easy to do and extremely difficult, if not impossible, to prevent.

There you have it. I think we will have an interesting 2017 for many different reasons.

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Russia and USA. The pushing and shoving continues

Turkey shooting down the Russian jet today was a response to Russia increasing its influence in the Middle East through its action in Syria. Turkey, as a member of NATO would not have done this without some sort of approval from the USA. Russia and USA do not want direct conflict but they both like proxy war. The pushing and shoving between them continues. So much happening, I need a while to get all the information in order to write in depth.

United Nations vs ISIS?

This week is going to be a busy one at the United Nations. As well as the General Assembly meeting there will be others to address the situation with ISIS (Daesh) and Ebola in west Africa.

Now that airstrikes in Syria against Daesh have started, led by the USA and Arab states, it is time to understand what is happening. Before I do, I want to tell you the reaction of my Syrian friends regarding the airstrikes. None of them are happy about it, not because they like Daesh but because they only see Bashar al Assad benefiting from the situation rather than the majority of the Syrian people. In general the view is that when the USA gets involved, the resulting situation is always worse than it was before. It has to be said, history tends to back them up on this.

A few weeks ago, President Obama spoke of the need to build a global coalition against the global threat of Daesh, their network is spread around the world and they have been preparing for for attacks by the West for quite some time. The USA has been leading talks behind the scenes with all the members of the U.N as a way of confronting the crisis.

While the act of attacking Daesh and stopping them in their tracks can only be a good thing there are many risks involved, in particular who or what will fill the vacuum which will follow. This is the real fear of the Sunni muslims in both Syria and Iraq. It could lead to expanded sectarian conflict across the region rather than bringing any sort of peace. Russia has already condemned the airstrikes in Syria as there has been no agreement by the Security Council of the U.N. It seems that Obama is going to try and rectify the lack of agreement this week by arguing that as Daesh are a global threat the response also needs to be global and there is only one global organization which can do the job, the U.N. In order for that to happen it would need all U.N member states to give real teeth to what until now has been little more than a corrupt talking shop. By giving the U.N genuine power it would be the only organization capable of confronting Daesh at the international level. This is why I believe this week will be quite interesting, there really could be moves to make this happen.

The crisis in the Middle East isn’t the only crisis in town. Ebola in west Africa is threatening to decimate populations and I use the word literally. It is a crisis which also requires a global response as it has the potential to spread far beyond where it is now. It has arrived to the point where there are now infected bodies in the streets, there are not enough medical facilities or staff to cope with the outbreak. There are cases where highly infectious bodies lie in the streets. It does not require a huge leap of the imagination to see how easy it would be for terrorists to extract blood from these bodies for extraction of the virus to be used as a weapon, the process is not complicated. Ebola is something which has the potential to effect us all and requires a global response of the same level that militant Islam is receiving.

Finally, I want to go back to the way most ordinary Syrians view Daesh compared to the government of Bashar al Assad and illustrate it with something I saw today. They don’t want Daesh but the Sunni majority hate the Syrian regime even more. By destroying Daesh they feel it will allow Assad to kill even more people and the USA with its military action will inadvertently help him to do it. These are not my opinions but are based on numerous conversations I have had with Syrians in the last few days.

Syrian Regime vs ISIS (Daesh)

Syrian Regime vs ISIS (Daesh)

A Potential New War. Part 2

Back at the end of March I wrote about the high possibility that Turkey would start a conflict with Syria. You can see it here I began hearing that there was a very good chance of this happening about 6 months ago. As of a couple of days ago there has been an interesting development which brings this likelihood even closer.

Turkey has sent a protection force comprising of main battle tanks, armoured personnel carriers and some 300 troops to protect the tomb of Suleyman Shah. This tomb is the supposed resting place of the grand father of Osman 1, the founder of the Ottoman Empire. For the moment they say they are there simply to protect it from damage, but damage by whom? Seemingly not the Islamic extremist group ISIL, Erdogan said and I quote “Right now, the issue is not about ISIL” and this protection force is only a few hundred metres from the Islamist base camp in the area. Something else must be afoot.

As I said in my first article on this topic, Turkey is becoming more belligerent and expansionist, it would like to reclaim some of the land it lost at the end of the Ottoman Empire. The northern territories of Syria are to be honest, ripe for the taking. It would appear that If Turkey does try to reclaim territory it will have the backing of the USA. Another important point is the fact that historically under the Ottoman empire, Turkey acted as the spiritual leader for Sunni Muslims, when the empire fell after the 1st world war Saudi Arabia stepped into that role with its own brand of Islam, Wahabism or Salafism. Turkey still believes that it should be the global leader for Muslims. Over time it is looking for ways to re-assert its influence and expanding into Syria is one way of starting to re-balance the Salafi influence as well as constrict the movement of the Shia Muslims of Iran who control Bashar al Assad and his regime.

Looking at the long term situation in Syria, things are looking quite mixed for Bashar al Assad. While he has been able to consolidate his grip on the region from Damascus up towards Homs and then on to the coastal areas of Latakia, including the strategically important port of Tartous, elsewhere in the country things are not looking so good for his regime. In the south around the Daraa region, moderate rebels under the command of Bashar al Zoubi of the Al Yarmouk Division, whom I met a couple of times are being able to create an area which is slowly pushing back the Syrian army. They are working on creating an autonomous area and until now there have been no major problems with Al Nusra and other extremists. It must be mentioned though that Jordan is being very firm about which areas the moderate rebels are permitted to try and take, I have this information directly from my contacts in the Al Yarmouk Division.

In the north, the extremists hold a lot more ground and the regime is regularly dropping barrel bombs from helicopters into civillian areas, particularly in Aleppo. In Menbij, ISIS are wreaking havoc, killing anybody who stands in their way. The moderate rebels in the north have very few resources and are not able to put up much resistance. The entrance of Turkey into northern Syria, ostensibly to protect the tomb could well be a precursor to a full on military assault to push out the extremists and annex the land. The moderates would be in no position to stop them and so it seems neither will Assad.

I’m going to join up a few dots now and see where this leads us. Assad has 2 main backers, Iran and Russia. Without these, Assad would have fallen a long time ago. The situation now is that Iran is financially in difficulty, it has just cut fuel subsidies for its people, the price of fuel has jumped overnight by nearly 75% for Iranians. The government in Tehran would not have done this unless it really needed the money, the problem is the Iranian population are also suffering, there is very high unemployment and under employment. Fuel cost rises will feed into inflation, food and heating will become more expensive etc. It is costing Iran a fortune to continue its support of Assad. Then we have Russia, many people don’t realize just how financially fragile Russia is at the moment, its banking sector is facing an enormous problem of bad loans. The crisis with Ukraine will probably lead to sanctions being put on Russian banks cutting them off from the global financial system. All this is keeping Putin busy, will he also have the resources to continue supporting Assad? Time will tell.

Nearly a year ago, I wrote that the result of the war in Syria would end up with the division of the country. The revolution has been hijacked, the people’s popular uprising along with their desire to regain their dignity and security after 40 years of the Assad’s family rule of the country, all has come to nothing, their country is in ruins while half the population is displaced. The reasons for this are shockingly simple. If the Syrian Revolution had been allowed to succeed then many countries would have lost their political influence in one of the most strategically important countries in the Middle East. Iran would have lost all its investment in Syria as well as having its hegemonic ambitions curtailed. Any new people’s government might or might not have been ambivalent towards Israel so the USA and Israel didn’t want to take the chance of the people succeeding in their revolution, just in case. Russia would lose its only port in the Mediterranean. There would be much to be lost for many countries if the people had been able to decide for themselves how they want their country to be governed.

Instead, we now have a situation where international geo-politics prefers a solution that divides the country and balances the power of Sunni and Shia Muslims across a huge swathe of the Middle East. In the north Turkey will take control of large areas, In the south Jordan will have control over the southern liberated region, using the moderate rebels there to do the fighting to create such a zone, as is happening today. Assad if he can hang on and I think he will, will continue to hold territory from Damascus up to the coastal region. Of course if he can hold on he will be much weaker than before. Essentially what this will do is create a new Sunni/Shia balance. Sunni Turkey and Jordan controlled areas to the north and south. Shia controlled areas from Damascus to the coast sandwiched between the Sunni. This division will enhance the security of Israel and curtail the hegemonic ambitions of Iran. The only way for this to succeed is if both Russia and Iran are sufficiently weakened and are unable to support Assad as before. Therefore I would propose that the current Russia/Ukraine crisis is part of the strategy, Russia will be destabilized soon, dangerously so. Iran is suffering economically, the end of fuel subsidies is a good indicator of the pain, can it really afford to continue supporting Assad and lending money to him to buy Russian military hardware? Hopefully now you can see how all this ties in with Turkey’s movement into Syria and what we can expect in the not too distant future.

As I said in a recent article, conditions in the world are very similar to those shortly before the outbreak of WW1. Watch this space.

Syria: Is the situation about to change?

A lot has happened today. Keep in mind that very soon, talks are supposed to start in Geneva between the government of Bashar al Assad, the rebel opposition and Iran. So what has been happening today. There has been fierce fighting in the north of Syria, I have been hearing in particular about the city of Menbij, a city east of Aleppo and not far from the the Turkish border. I was there in the spring of last year and met with the the city council leader, he invited me to stay at his home. Also today Turkey has closed its entire border with Syria, sending many soldiers to guard the entire border, ostensibly due to the threat of suicide bombers. Then there was the report released in the last few hours by a London law firm and reported by the Guardian newspaper and CNN regarding the systemic torture and execution of Syrian civilians over the last decade. I posted a copy here.

So what is going on? Considering the fact that the Geneva talks are due to start soon. it can only be down to the fact that strategy is changing. It seems to me that the USA has realized it seriously miscalculated its approach to the situation in Syria. Bashar al Assad actively yet surreptitiously  encouraged extremists to come into Syria with the idea that the global political system would support him against them. The problem was the USA has also encouraged extremists to go to Syria as a way to counter balance the hegemonic plans of Iran. However the entire situation has now become out of control. All these extremist groups are using Syria as a training ground and will send trained religious extremists to commit terrorist acts all across the world. Both Assad and the USA thought they could use religious extremists for their own purpose. It is the same as trying to hold a mad dog by its ears, they can’t win.

So now there is a new dynamic, this report into torture and execution by the Assad regime can only lead to inevitable consequences. Maybe not the ones the USA wanted. It would prefer to keep Assad in power but the Guardian and CNN reporting this is going to certainly stir the fire and it will be hard to ignore.

All I can say for the moment is that this is like watching a game of chess, those who think they are in control are those about to lose their king. In the short term, get ready for some serious pushing and shoving between the USA and Russia. Russia will not want to see its darling Assad toppled so it will be playing all sorts of political games in conjunction with Iran and Assad in the near future. If Assad goes then Russia will lose its last major influence in the middle east. Watch this space.

The Middle East & the Geo-political games being played in Syria

To be honest this is such a huge topic it is impossible to cover all of it here. I am concentrated on how Syria is at the center of international Geo-political strategy.

The Iran nuclear deal

It has to be said that anything that can reduce nuclear weapon development has to be a good thing. Why on earth we need them at all has to be the question, if ever they were used anywhere in the world, the consequences would enormous. So we come back to the Iran deal. Iran has been suffering under sanctions for a while now and the impact on its economy is heavy. Not only that, it is costing a lot of money to continue its military support of the Assad regime in Syria and also Hezbollah in Lebanon. Estimates put the cost of this support at somewhere in the region of $1 Billion per month. Iran is playing a clever game, they agreed to stop Uranium enrichment in return for the lifting of sanctions, which will allow them to sell their oil on the open market. What is interesting is how quickly they agreed to this. This suggests that they already have enough enriched Uranium to make a bomb, the hard part is building a deliverable weapon. So agreeing to this demand would not have been difficult for them. In any case, supporting Assad is a much greater priority for them now than the building of a nuclear weapon.  So why is Iran supporting Assad? Basically it comes down to the fact that Iran is trying to grow its sphere of dominance in the middle east. When Bashar al Assad became president he allowed Iran to have much more influence in the running of Syria than his father ever did. The Assad regime is the only one that will allow Iranian influence in Syria, in fact, now the Assad regime is so much in debt to the Iranians that it is little more than a vassal power that represents Iranian interests. If Assad were to go, Iran would lose this influence and its arm that reaches all the way to the Mediterranean sea  via Iraq to Syria and Lebanon. Hence it agreed to the nuclear deal as it needs the money to fight to keep Assad in power. I suggest you read this interview I made with Zaid Tlass, a senior air-force General and whose family was very close to the Assad family before they defected, to get more info about the regime and Iran.

Syria: Al Qaeda, the USA, Iran, Turkey etc

Syria is now at the center of Geo-political  games being played out by various countries. On the one hand you have Iran supporting Assad directly, and indirectly through Hezbollah as well as through various militias. There are also lots of Shia fighters from Iraq who are going to Syria in order to protect Shia holy shrines, it must be said though that they are not there to support Assad directly as his Baathist regime is very much like that of Saddam Hussein’s time in Iraq, which for obvious reasons doesn’t hold good memories for Iraqis. These Iraqi Shia fighters go because they get well paid and are able to support their families back in Iraq where economic conditions are terrible for many despite the vast oil wealth of the country. So Iran is paying poor Iraqis to go fight in Syria.

Al Qaeda is a rapidly strengthening force in Syria. When I was there back in the spring they really were not a problem, being very few in number. The last few months have changed all that. Now Syria is the number one place for them to go, they even call it a 5 star Jihad. Jihadii from all over the Muslim world are making their way to Syria to join Qaeda  Although still far fewer in number than the moderate FSA, Qaeda are much better equipped and funded and working hard to take control of the north of Syria away from the FSA. In fact now the FSA has 2 battles on its hands, against Assad and against Qaeda. It has been suggested to me by some FSA commanders that they would even consider working together with certain Shia militia to fight together against Qaeda as it is a mutual enemy before continuing to fight each other. I know many of you reading this will find it hard to understand but it this how the middle east has worked for a very long time. I would be very curious to see what might happen if the moderate Sunni and Shia joined forces to fight them. They might realize that they can actually get on together, who knows. They are really worried about Qaeda, if they were to take control it would not be enough to be a good Muslim, not smoking or drinking and praying five times a day. No, nor would it be enough to stay quiet and let Qaeda run the country. No,Qaeda would expect the people to join them, when I say join them I mean as fighters. If you refuse, you are seen as a traitor and they will kill you, as simple as that. If they get control of the country, the people will be forced to become fighters to be sent to other countries. If you are not with them 100% then you are the enemy. This is why the moderate Sunni rebels are prepared to consider making some unusual alliances.

What is interesting is that Qaeda are getting a lot of their heavy weapons from Libya. To get these weapons to Syria they have to be brought by sea and then landed in Turkey from where they make their way across the border. Smuggling large quantities of heavy weapons through a shipping port is no easy matter, particularly as the Turkish know what Qaeda are up to. But the fact is Qaeda are able to do this, which leads to the conclusion that Turkey is turning a blind eye to the situation and if Turkey know about it then you can be sure the USA knows about it too. So what is going on here, why would they allow this to happen?

This is my opinion based on my observations and interviews during a month in Syria and another month visiting Jordan and Lebanon, including refugee camps. It appears that Qaeda are being allowed to build up their strength and resources in Syria. In fact, Syria is being made to look such an attractive Jihad that as many Qaeda and associates as possible will go there to fight. They are leaving Pakistan and Afghanistan as well as Europe and the USA in droves, all heading to Syria, well equipped, well funded, ready to fight and die. Obviously, in the face of this, Iran is going to have to increase the resources it puts into keeping Assad in power. As I said before, this war is costing Iran a fortune and it is going to get much more expensive for them as Qaeda get stronger. This is why Iran agreed to the nuclear deal and the USA knows it. The strategy of the USA is to get Qaeda and Iran to fight each other to exhaustion in Syria. Let Qaeda and Iran build themselves up so they can have a proper war inside Syria and really try to wipe each other out.Not that the USA or others are looking to see Iran as a country destroyed but rather that its expansionist ambitions are severely curtailed. As a result, this war is going to continue for some time and Syria as a country will be reduced to rubble even more than it is now. Of course, no thought is given to the ordinary Syrian people who continue to suffer terribly as a result of this Geo-political strategy.

Then we have Turkey. They are playing the long game. Like Iran they also have expansionist ambitions that hark back to the days of the Ottoman empire. At the moment they are biding their time, allowing Qaeda to build up its strength in Syria for its fight against the Iranian owned Assad regime. The plan is that when Iran and Qaeda eventually exhaust themselves and the land is left in ruins, the few Syrians who are left will not be able to put up any resistance as Turkey annexes the northern territory of Syria. Syria as a country will cease to exist in the form we know it today. However, Turkey isn’t the only country with ambitions to have a slice of Syria.

The role of Jordan in the Syrian conflict

Jordan is also playing its own games. The supply of weapons that are sent to the FSA in the south of Syria from countries such as Saudi Arabia and Qatar all come through Jordan. However Jordan doesn’t pass on all the weapons that are destined for the FSA. It feeds through just a little, enough to keep the FSA fighting but no more. Also sometimes they play games such as mixing tracer rounds with standard ammunition. Tracer rounds give away your location when used and makes it easier to target you at night when fighting takes place. I was given this information directly by an FSA General.

Jordan is also trying to get the different rebel fighting brigades under their control. Let me explain how. There are many defected Syrian regime military officers now in Jordan. Some defected because they are against the regime but other simply because they were able to get their family and money out of the country and be able to protect their personal interests. Jordan has been trying, not very successfully at the moment, to insert these defected Syrian officers into the various rebel brigades, the largest of which in the south of Syria is the Liwa al Yarmouk brigade led by Bashar al Zoubi who I have met a couple of times in his home and also met Yasser al-Abboud who was the General before he was recently killed.

Anyway, the Jordanian idea is to dilute the authority of the FSA rebel commanders and bring them under their control. I know this as this is what many told me including Bashar al Zoubi and quite often the Jordanians will only give them supplies if they accept certain demands. This includes being told where they can and cannot attack. Obviously Jordan is working closely with the USA and the rebels being told where they can and cannot attack is a strategic decision that has as its ultimate aim the division of Syria also in the south. Let me explain why the ultimate objective is a divided Syria. So done, Syria will be a shadow of its former self and an Iranian controlled Assad regime can never be a threat to Israel. Jordan will never invade Syria to take control of the land in the south. What will happen is that as the Sunni, Shia and Regime forces fight each other to destruction in the north and center of the country, Jordan will offer nationality to those Syrians in the south and with it protection. In return Jordan will get access to the vast ground water resources that it so desperately needs. Before this can happen Jordan will eventually have to get rid of the various brigades leadership and replace them with their own selected people from among the the defected Syrian officers who are part of the  Syrian military council in Amman run by Colonel Achmed al Namah. One final point, at the moment there isn’t a big problem with Qaeda and other extremist factions in the south but if there were then Jordan would give direct help to the FSA to help defeat them. After, Jordan would continue with its original plans.

Will Israel and Saudi Arabia attack Iran or not

In a word no. Short of a nuclear strike, Iranian facilities are so well buried under mountains that attacking is impractical and fraught with risk. Iran has very good Russian made air defense systems, which means that there is no guarantee a strike would work. Saudi Arabia simply doesn’t have the military capability to make such a strike. Only Israel could conceive of such an action but they wont. In the end it will not be necessary if all goes according to the plan of getting Qaeda and Iran to fight each other to exhaustion in Syria.  And there are always cyber attacks to be used as a way of damaging Iranian infrastructure.

Syria talks in Geneva: Should Iran be involved

Any talks in Geneva will be fruitless. The rebels refuse to negotiate with the regime and also the moderate rebel commanders who have the power on the ground in Syria have not been included to take part. Those Syrians who claim to be the opposition are hardly recognized by the people on the ground. It makes no sense for there to be talks if Iran isn’t there because it is they who control Assad. Seeing as Iran is prepared to throw everything it has into keeping Assad in power any talks will be pointless.

How the middle east effects us: The Institutionalization of security and intelligence agencies and why they need the threat of terror and instability to justify their existence

I often hear people say that what happens in the middle east is nothing to do with them. Why should they care about a war far away between people who have different language, culture and religion be of any concern to us in the West. The fact is there is an indirect effect and it is a powerful one that effects us every day. The threat of terror and terrorist organizations and individuals are used as a reason for ever more surveillance of society. It has arrived at the point where all electronic communication is monitored. This mass monitoring of individuals has less to do with terrorism but rather with these organizations finding ways to justify their existence and growth. Allow me to explain.

It is interesting that when we look at different types of organizations, from charities and political parties to Intelligence services, they all have some vital things in common. They all start out with an objective and all the organizational effort is put into reaching the objective for which it was created. So a charity that looks after animal welfare or an intelligence organization that is tasked with protecting the country. As the organization becomes more successful it finds that its political and financial power increases as it grows in size and influence. What invariably happens next is a result of some interesting psychology. The organization develops an institutional mentality. What this means is that the continued growth and recognition of the organization becomes more important than the job it originally set out to do. This is also the time when those who are a part of the organization have to be much more conformist if they wish to continue working there. Internal rules and regulations become more important than the actual job. Creativity of thought and action is suppressed. Along with this you also have empire building within the organization as it moves from internal collaboration to protecting and developing internal power.

So we come back to the intelligence services. We see how they have become institutionalized. The report into the 9/11 attack shows that there was a lot of evidence beforehand of a planned attack and the report criticized the security services because of their internal conflicts of interest. The existence of the organization has become more important than its stated job. Internal empire building will mean that different elements will look for ever increased funding as they consolidate their positions. They are in competition with each other rather than genuinely collaborating. In order to justify increased funding they need to show two things; their successes, terrorist attacks they have stopped and their failures, it is the failures that will be used in combination with the success to ask for more money. If only we had more money for more resources then we could have stopped that particular attack.

So actually it serves the purpose of the intelligence services for there to be a high profile attack from time to time. I would say that the point has been reached where no matter how much money and new technology is pumped into security services the returns, stopping terrorist attacks, will be very much reduced due to ossifying institutionalization.

In the meantime, in combination with Geo-political strategy we see how the lives of ordinary people are counted as nothing, where governments consider their own citizens to be the enemy to be watched at all cost in case they try to change things.

Finally a look at government in general and why it is all subject to failure

Throughout human history we have tried pretty much every form of government that can be conceived. The track record isn’t good. What we are seeing now though is an ever greater disconnect between governments and the people they claim to govern. Governments are getting ever harder, iron-like and also more distant while the population is seen as something clay-like, to be molded and squeezed. The problem is that iron and clay really don’t mix and it wouldn’t take much to break that fragile bond. There is a lot more I can say about this but it will wait for another time.

Work in progress

I guess that those who follow my blog realize I have a particular interest in the middle east, I am fascinated by history and world events. Slowly, I’m putting an article together that looks at what is happening in the middle east at the moment, I am consulting many people who are very knowledgeable in their fields regarding what I am writing about. Things are starting to come together. The article, when it comes, is going to address the issues of:

The Iran nuclear deal.

Syria: Al Qaeda, the USA, Iran, Turkey.

Israel and Saudi Arabia attack Iran or not.

The role of Jordan in the Syrian conflict.

Syria talks in Geneva: Should Iran be involved?

How the middle east effects us: The Institutionalization of security and intelligence agencies and why they need the threat of terror and instability to justify their existence.

Finally a look at government in general and why it is all subject to failure.

It might take a couple of weeks or it might be a couple of months to answer the questions above, I already have the outline but now it is a question of the detail. Watch this space.

 

Al Qaeda, the USA and Syria.

Abdul Kader Salih the major leader of moderate rebel forces in Aleppo was injured and as a result died. When I was in Aleppo I spent a couple of days with the Al Tawheed brigade of which he was commander. He was very much the driving force and big ideas man who everybody looked to and united under. Because of his death it is going to be much easier for Al Qaeda forces in their objective of taking control of the entire city and surrounding areas. Jabhat al Nusra doesn’t exist anymore in its original form. The Islamist but non extremist element of them is now badly splintered, the rest of them have been absorbed by Al Qaeda.

It is a fact that Qaeda are bringing heavy weapons from such countries as Libya through Turkey. It isn’t the sort of thing that can easily be smuggled through international ports so Turkey must be turning a blind eye. The USA and Turkey are on good terms so it must be happening with tacit US approval. Why is this being allowed to happen?

The implication of this is that the moderate rebels are being deliberately sidelined with the objective of making this a religious war, which is what it has now become. Sunni vs Shia, and Iran will throw everything it has into maintaining Assad in power as their puppet. The aim of the USA is to allow Qaeda to grow in strength because it will force Iran, which is backing Assad to the hilt, to commit huge resources. The objective of the US is to make this war continue for as long as possible with the hope that Qaeda and Iran will exhaust themselves, with the result being that Iran’s sphere of influence and regional ambitions will be stymied and the majority of Qaeda’s resources will be concentrated in one area. It is a sort of evil genius that creates a strategy to make 2 of your biggest enemies fight each other to the finish.

Turkey is also storing up trouble for itself. In Turkey there are about 2 million Alawites, natural supporters of Assad who are becoming ever more unhappy at the actions of the Turkish government and their allowance of weapons to be moved to Qaeda in Syria. There is a real possibility of this becoming a regional war if the Turkish Alawites decide to take action. All my instincts are telling me that what is happening in Syria is going to spill over into other countries. There was the bomb attack at the Iranian embassy in a Hezzbollah controlled district of Beirut, this was carried out by those who want Iranian backed Hezzbollah to leave Syria. Events such as this will become more common. I can see how both Turkey and Lebanon can be drawn into the conflict.

It is a indictment of how rotten global politics is when Geo-political strategy is given priority but not a single thought is ever given to the ordinary people who suffer the consequences.

Interview with Firas Tlass the son of Syrian ex defense minister Mustafa Tlass

I recently had the opportunity to interview Firas Tlass. His father Mustafa Tlass was defense minister for Hafez al Assad the father of Bashar al Assad. The Tlass family was obviously very close to the Syrian regime and one of the most important families in Syria. The Tlass family were also one of the richest in Syria and had a lot of benefit from being so closely linked to the regime. In conjunction with this interview I would suggest that you also read the interview I did with Zaid Tlass, he defected from the Syrian military and gives a very personal insight into the working of the regime. You can find it here

The interview with Firas is below and I write it verbatim.

When the revolution started nearly 3 years ago the first Syrian army officer to defect to the revolution was Abdul Razzak Tlass, which created huge waves. It was considered inconceivable that any of the Tlass family would ever be disloyal to Bashar al Assad. As time went on, more and more of the Tlass family have decided to support the revolution. This is my second interview with a member of the Tlass family. Earlier this year  I had the opportunity to meet and interview Zaid Tlass Now I have had the chance to question Firas Tlass and ask him about the situation and why he defected even though it would cost him a lot of his wealth and business.

My first question was about his reaction to the defection of Abdul Razzak and the effect it had:

Firas: People always ask me about Abdul Razzak, but they don’t know that he was one amongst hundreds of my relatives to have made this decision. Many others, from officers to civilians have defected as well.However,Abdul Razzak became an important symbol because his defection came early, and because of his civilian character(as opposed to the typical military figure) ,which was very effective on the ground in terms of gaining the people’s heart.There are also many more like him who did not get as much attention.

Why did you defect? You had a lot of privilege by being close to the regime

Firas: I did not have a political position to defect from as I am not a politician nor was I involved militarily with the regime.I just decided to take a different course in my life and my conscience was the driver of my decision; for each one of us there will come a moment where we reassess our life, our choices,positions, and probably also affiliations.

For me, this moment came with the start of the Syrian revolution.I still had hope, the first few weeks, that there would be a national solution through a grand national reconciliation initiated by the regime to rebuild Syria on a totally new basis, one that responds to the aspirations of the Syrian people. However,when I lost hope,and that happened quiet early, within the first few weeks of the revolution, I chose to stand on the side of the oppressed,and this was the turning point in my life:I lost my company that I had been building for the past 30 years,my house and properties, but I have gained a consciousness, comfort and the feeling of being part of the people,the real people.

What about the role of Russia, Iran and North Korea in the conflict. What can you say about this?

Firas: Russia is defending itself and its interests through Bashar al Assad. For, as it is commonly known, it has a historic zone of influence in Syria since the Cold War,and within what has happened in the region Russia has lost some partial areas of influence,particularly in Libya and previously in Iraq; Syria remains its major influence in the Middle East. There is also another factor, not less important,and that is the Russian’s recognition of the American lack of enthusiasm to seriously intervene in Syria, and thus they are using this opportunity to fill the American void in the region.  Iran has an ideological project/plan which started with the Islamic revolution in 1979, which is based on exporting/diffusing the Islamic revolution, and imposing itself as a regional power.This ambition increased with the American wars in Afghanistan and Iraq; Syria, within the Iranian plan, is its arm extended to the West on the shores of the Mediterranean and on the borders of Israel and Lebanon. Iran is also aware that the Assad regime is the only system that could achieve its interests in the Arab region. Any other system, whatever its nature, if it were to govern Syria,would not be able to satisfy its interests in the same way as the Assad regime.That is why they think that the remaining of Bashar al Assad in power is a battle of survival, for their own nationalist goal, and they are ready to go even further than that to reach this goal. As for North Korea, the Syrian military cooperation with them is old; there is even a part of the military system of the Syrian army which depends on Korean technology, especially in the field of advanced missiles and chemical weapons. In case of a Korean commanders presence, they would be there as technical experts.

What about the refugee crisis in Jordan. Do you think it is being used as a tool by Iran and Syria to try and destabilize Jordan? If so will Jordan be drawn into the war?

Firas: Iran could do anything, it has intelligence arms extended as far as Argentina, and it will not hesitate to do anything that serves the survival of its ally, and the refugee crisis in Jordan is certainly one of the potential cards to be used on economical,security/intelligence,and media levels. Bashar al Assad’s regime runs his battle with the mentality of the long-war, so if he were to focus on a specific area or neglect another, he is thinking tactically about it, and considers it a temporary phase. And if this probability occurs, Jordan will be unable to make a big step of this kind because of its internal complications, and its inability to engage in a battle of this kind, which may create further disturbances on the Jordanian side.

So Iran and Russia and working together to create new spheres of influence in the middle east?

Firas: In a sense yes, they are trying to draw a map of new balances but their ability to do so is determined by the American position; for the role of any international or regional player today with regards to Syria is determined by the size of the American vacuum. What is not filled by America will be filled by other players, in particular Russia and Iran Russia and Iran are in agreement on several points; there has been some kind of agreement between them for many years: both have an imperial project, aiming to re-state their influence on an international and regional level,and both now have an interest in the survival of Bashar al Assad, though for different reasons.

How is it that Syria has become little more than a puppet under the control of the Iranians?

Firas: Hafez al Assad,the father of Bashar, understood very well the game of international alliances. He managed to build a strong coalition with Iran but it remained in the framework of an alliance,he  did not allow the Iranians to meddle or enter in the depth of Syrian affairs, because he knew the points of convergence with the Iranians (in Lebanon, Iraq, the Gulf and Israel) and refused to let Syria become a card in the hands of Iran’s ideological ambitions. Bashar al Assad did not realize this delicate balance,Bashar al Assad used to think that he owned the country, and he was acting out on this basis.He did not have a roadmap (not bad nor good) and he did not know what to do; he was influenced by the people around him,mostly Al Makhlouf who were driven by their business and financial interests. He did not reach the level of political awareness to manage a complex country like Syria in a troubled region and dangerous phase. and he let Syria turn from a regional player that benefited from its relationship with Iran to a card in the hand of Iran’s imperial project.

What about the Kurds. Do you think they have separatist intentions and will try to divide the country to create an autonomous region?

Firas: The Kurds have proved that they understand the game of politics. They took advantage of every opportunity to install a fait accompli that improves their chances to negotiate in the future. In principle, Syria has mistreated the Kurds (since independence,and not only in the rule of Al Assad) and failed to integrate them into the Syrian social fabric, and deprived them from their basic rights, mainly their cultural rights, that is why they feel alienated from the Syrian society. Today, this opportunity came with the eastern and northern areas falling out of control of the regime, they found themselves to be strong enough and organized to extend their influence over large areas of northern Syria. So they have done so. However, contrary to what is being portrayed by the media, I do not see that what is happening in the north is an introduction to the separation of the Kurds,since the majority of the Kurdish discourse is not separatist, and most of the Kurdish political formations consider themselves to be an integral part of the Syrian homeland; they are only demanding their legitimate rights as being an essential component of the Syrian identity.

Looking to the future. What do you think will happen in Syria?

Firas: History does not go back, there is no turning point,and inevitably there will be a new Syria. The road is long and difficult and there will be great sacrifices, but in the end, there will not be a place for Bashar al Assad in Syria, sooner or later. As for the shape of the end, or what you may call the solution, it is open to many possibilities, but the historical circumstances have paved the way for change,what remains is the endpoint. And this will come, inevitably, as history has taught us. The great challenge that we will face, in my opinion, is the economical and development challenge, which is no less important than the political, security, and social challenge. We have millions of unemployed and millions of Syrians who do not find food to eat; thousands of factories and work-shops have been destroyed. We must start thinking now about the development question, how are we to provide job opportunities for the people, and how are people to resume their lives.

And the extremists. What is the solution to that problem?

Firas: The issue of the jihadists is complex and requires a special body to deal with it. If the regime ends abruptly(Assad’s assassination or escape) then dealing with them should be based on advice- advising them to leave Jihad while providing them with a cash injection to purchase their ammunition and secure their return to their countries. What would be left of them then would be considered against the law and dealt with accordingly. As in the case of the continuation of the conflict and their continuously increasing influence to confront the opponent regime; here we would be entering a long struggle ,which will lead to a more complex regional conflict.

End of interview

Global GDP vs Global Debt. What is really going on?

I’m no economist but I am pretty good at understanding concepts. There are so many things about the global economy and all the talk about government debt that don’t make sense, well for me anyway and if anyone has any feedback I would like to hear it.

What it comes down to is this: In 2012 global GDP (Gross Domestic Product) that is the monetary value of all the finished goods and services including financial, produced in 2012 was about 70 Trillion Dollars. On the other hand the value of global debt (government, business and household) in 2012 was about 223.3 Trillion Dollars. That is a difference of 313% of global GDP. So my question is who are the creditors? Who is all the money owed to?

On the other hand, in theory, this level of global debt shouldn’t be a problem. For example, lets say you have an annual salary of $100k with no other debts and you take a mortgage to buy a house worth $300k, nobody would say that you can’t afford the house. The house could rise or fall in value but the debt itself remains the same. That is essentially the same situation with the ratio of global income to debt as exists now.

What is happening that is creating such a political storm in many countries, particularly in The USA and Europe, about government debt and spending? As I said before I’m not an economist but I am trying to find out for myself what is really happening. As part of trying to discover what is going on I want to look at the debt situations of two countries. The USA and Japan.

I have been looking at http://www.tradingeconomics.com to get the raw facts and figures and it poses some interesting questions. In Japan the ratio of government debt to GDP is 211%. This is the same as the person with the $100k salary taking a mortgage to buy a home worth $211k. In The USA the ratio of government debt to GDP is 101.6 %.

What is going on here? It seems like The USA government is the person with a $100k salary taking a mortgage to buy a home worth $101.6k, yet politically it is creating a storm that doesn’t exist in Japan, which has more than twice the level of government debt. What is the fundamental difference between these two countries?

I am going to quote directly from http://www.globalresearch.ca/ I came across their website in my research for this post and they put into words what I want to say more concisely than I can. The original article, written in September 2012, is here

“Japan’s massive government debt conceals massive benefits for the Japanese people, with lessons for the U.S. debt “crisis.”

In an April 2012 article in Forbes titled “If Japan Is Broke, How Is It Bailing Out Europe?”, Eamonn Fingleton pointed out the Japanese government was by far the largest single non-eurozone contributor to the latest Euro rescue effort.  This, he said, is “the same government that has been going round pretending to be bankrupt (or at least offering no serious rebuttal when benighted American and British commentators portray Japanese public finances as a trainwreck).”  Noting that it was also Japan that rescued the IMF system virtually single-handedly at the height of the global panic in 2009, Fingleton asked:

How can a nation whose government is supposedly the most overborrowed in the advanced world afford such generosity? . . .

The betting is that Japan’s true public finances are far stronger than the Western press has been led to believe. What is undeniable is that the Japanese Ministry of Finance is one of the most opaque in the world . . . .

Fingleton acknowledged that the Japanese government’s liabilities are large, but said we also need to look at the asset side of the balance sheet:

[T]he Tokyo Finance Ministry is increasingly borrowing from the Japanese public not to finance out-of-control government spending at home but rather abroad. Besides stepping up to the plate to keep the IMF in business, Tokyo has long been the lender of last resort to both the U.S. and British governments. Meanwhile it borrows 10-year money at an interest rate of just 1.0 percent, the second lowest rate of any borrower in the world after the government of Switzerland.

It’s a good deal for the Japanese government: it can borrow 10-year money at 1 percent and lend it to the U.S. at 1.6 percent (the going rate on U.S. 10-year bonds), making a tidy spread.

Japan’s debt-to-GDP ratio is nearly 230%, the worst of any major country in the world.  Yet Japan remains the world’s largest creditor country, with net foreign assets of $3.19 trillion.  In 2010, its GDP per capita was more than that of France, Germany, the U.K. and Italy.  And while China’s economy is now larger than Japan’s because of its burgeoning population (1.3 billion versus 128 million), China’s $5,414 GDP per capita is only 12 percent of Japan’s $45,920.

How to explain these anomalies?  Fully 95 percent of Japan’s national debt is held domestically by the Japanese themselves.

Over 20% of the debt is held by Japan Post Bank, the Bank of Japan, and other government entities.  Japan Post is the largest holder of domestic savings in the world, and it returns interest to its Japanese customers.  Although theoretically privatized in 2007, it has been a political football, and 100% of its stock is still owned by the government.  The Bank of Japan is 55% government-owned and 100% government-controlled.

Of the remaining debt, over 60% is held by Japanese banks, insurance companies and pension funds.  Another chunk is held by individual Japanese savers.  Only 5% is held by foreigners, mostly central banks.  As noted in a September 2011 article in The New York Times:

The Japanese government is in deep debt, but the rest of Japan has ample money to spare.

The Japanese government’s debt is the people’s money.  They own each other, and they collectively reap the benefits.

Myths of the Japanese Debt-to-GDP Ratio

Japan’s debt-to-GDP ratio looks bad.  But as economist Hazel Henderson notes, this is just a matter of accounting practice—a practice that she and other experts contend is misleading.  Japan leads globally in virtually all areas of high-tech manufacturing, including aerospace.  The debt on the other side of its balance sheet represents the payoffs from all this productivity to the Japanese people.

According to Gary Shilling, writing on Bloomberg in June 2012, more than half of Japanese public spending goes for debt service and social security payments.  Debt service is paid as interest to Japanese “savers.”  Social security and interest on the national debt are not included in GDP, but these are actually the social safety net and public dividends of a highly productive economy.  These, more than the military weapons and “financial products” that compose a major portion of U.S. GDP, are the real fruits of a nation’s industry.  For Japan, they represent the enjoyment by the people of the enormous output of their high-tech industrial base.

Shilling writes:

Government deficits are supposed to stimulate the economy, yet the composition of Japanese public spending isn’t particularly helpful. Debt service and social-security payments — generally non-stimulative — are expected to consume 53.5 percent of total outlays for 2012 . . . .

So says conventional theory, but social security and interest paid to domestic savers actually do stimulate the economy.  They do it by getting money into the pockets of the people, increasing “demand.”  Consumers with money to spend then fill the shopping malls, increasing orders for more products, driving up manufacturing and employment.

Myths About Quantitative Easing

Some of the money for these government expenditures has come directly from “money printing” by the central bank, also known as “quantitative easing.”  For over a decade, the Bank of Japan has been engaged in this practice; yet the hyperinflation that deficit hawks said it would trigger has not occurred.  To the contrary, as noted by Wolf Richter in a May 9, 2012 article:

[T]he Japanese [are] in fact among the few people in the world enjoying actual price stability, with interchanging periods of minor inflation and minor deflation—as opposed to the 27% inflation per decade that the Fed has conjured up and continues to call, moronically, “price stability.”

He cites as evidence the following graph from the Japanese Ministry of Internal Affairs:

How is that possible?  It all depends on where the money generated by quantitative easing ends up.  In Japan, the money borrowed by the government has found its way back into the pockets of the Japanese people in the form of social security and interest on their savings.  Money in consumer bank accounts stimulates demand, stimulating the production of goods and services, increasing supply; and when supply and demand rise together, prices remain stable.

Myths About the “Lost Decade”

Japan’s finances have long been shrouded in secrecy, perhaps because when the country was more open about printing money and using it to support its industries, it got embroiled in World War II.  In his 2008 book In the Jaws of the Dragon, Fingleton suggests that Japan feigned insolvency in the “lost decade” of the 1990s to avoid drawing the ire of protectionist Americans for its booming export trade in automobiles and other products.  Belying the weak reported statistics, Japanese exports increased by 73% during that decade, foreign assets increased, and electricity use increased by 30%, a tell-tale indicator of a flourishing industrial sector.  By 2006, Japan’s exports were three times what they were in 1989.

The Japanese government has maintained the façade of complying with international banking regulations by “borrowing” money rather than “printing” it outright.  But borrowing money issued by the government’s own central bank is the functional equivalent of the government printing it, particularly when the debt is just carried on the books and never paid back.

Implications for the “Fiscal Cliff”

All of this has implications for Americans concerned with an out-of-control national debt.  Properly managed and directed, it seems, the debt need be nothing to fear.  Like Japan, and unlike Greece and other Eurozone countries, the U.S. is the sovereign issuer of its own currency.  If it wished, Congress could fund its budget without resorting to foreign creditors or private banks.  It could do this either by issuing the money directly or by borrowing from its own central bank, effectively interest-free, since the Fed rebates its profits to the government after deducting its costs.

A little quantitative easing can be a good thing, if the money winds up with the government and the people rather than simply in the reserve accounts of banks.  The national debt can also be a good thing.  As Federal Reserve Board Chairman Marriner Eccles testified in hearings before the House Committee on Banking and Currency in 1941, government credit (or debt) “is what our money system is.  If there were no debts in our money system, there wouldn’t be any money.”

Properly directed, the national debt becomes the spending money of the people.  It stimulates demand, stimulating productivity.  To keep the system stable and sustainable, the money just needs to come from the nation’s own government and its own people, and needs to return to the government and people.”

End of article from Global Research

So the fundamental difference seems to be that in Japan the people are beneficiaries of government debt whereas in the USA the banks are the beneficiaries and it is the people who have to pay. When the financial crisis hit back in 2007 and the world went into recession I remember thinking that surely it would be more useful for the governments to use QE (Quantitative Easing) to give money directly to the people. If that had happened then the economy would have been truly stimulated. Using average figures, the US government bought bank debt of about $1.7 trillion to fend off collapse of  the financial system. All that has happened with the money the banks received is that they have lent it back to The Fed and are earning interest on it. Basically the government used taxpayers money to bail out the banks. The banks are now earning interest on this money as they lend it back to the government. How perverse is that?

If instead the government had used this $1.7 trillion and divided it up between the people of the USA then there would have been enough to give every individual, from baby to pensioner over $5,600. Let’s be more practical and say the money would have been better distributed on a household basis. There are just under 115 million households in the USA, if the money were divided equally then each one would have received about $14,782. Can you imagine the stimulus this would have given to the real economy as people used the money to buy goods, pay off debt or to use as a deposit on a home. The real economy would have recovered from recession rapidly.

If the government had done this then the entire banking system would have failed, or would it? I’m not so sure. All the banks were so indebted to each other that after seeing a few big banks go down they would have realized that the only way to stop a total collapse would have been to cancel out each others debts. The effect would have been dramatic, the financial sector would have shrunk enormously in value but it would still exist, the only difference being that all the artificial money and speculation would have vanished. This is what they meant when they said the banking system would collapse, all the derivatives and other financial instruments that are based on plucking numbers from the air would no longer be. Banks would have to go back to dealing with money that actually exists.

We need banks, they offer a very valuable service, they lend us money to buy our homes, they help business to grow. In this context banks are invaluable. The problem is they are now only interested in enriching themselves and they are doing it at the taxpayers expense.

It is ironic that Japan with its huge debt is also the country that lends the most to the USA yet the effect of debt on these two countries could not be more different. For Japan it is borrowing from itself and its people and pays back to itself and its people. The USA borrows from abroad to prop up a perverse banking system and in addition takes money from its people to do so.