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Alarm Bells In Washington As Philippines Election Threatens Its Anti-China Strategy

Andrew Korybko

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The Philippines votes for its next President on Monday.  Whilst the rest of the world pays little attention, strategists in Washington are worried.

The electoral frontrunner is Rodrigo Duterte, an eccentric, no-nonsense former mayor from the southern island of Mindanao who commands a Trump-like popularity and an equally loyal following. He has shaken Philippine politics to its core over the past couple of months, defying establishment pundits who – just as they did with Trump – wrongly predicted that his campaign would fizzle out over the course of each passing week.

Having totally underestimated just how dissatisfied most Filipinos are with the status quo, Duterte’s rivals missed the chance to outshine him by his anti-system rhetoric. With the race in its final days that is now too late.  Instead – also paralleling what happened with Trump – there are desperate calls for coalitions and deals to stop him.

Should these fail and should Duterte win on Monday, he promises a geopolitical revolution unlike anything the Philippines has ever seen in its history. 

Pivoting To Asia Through The Philippines

The US’s Pivot to Asia was announced by then-Secretary of State Hillary Clinton in the fall of 2011 with the unstated but obvious goal of “containing” China. Key to this strategy is the “rebalancing” – as the Pentagon calls it – of an estimated 60% of its overseas forces to the Asia-Pacific theatre. 

Such a major deployment requires many more bases than the US currently has in the region. The US has therefore sought the help of the loyal leader of its former Philippines colony, Benigno Aquino III, to find a way to re-open its bases in the Philippines which under popular pressure were closed in the 1990s.

Using the “China threat” as the ‘plausibly justifiable’ reason for doing so, but aware that the Philippines people still resent their former coloniser and are proud of having forced the US to close its Philippines bases at the end of the Cold War, the US has devised what it calls an “Enhanced Defence Cooperation Agreement” (EDCA) that allows for the “rotational presence” of American troops in at least five separate bases, one of which is located on the strategic island of Palawan that abuts the South China Sea.

Although not legally “permanent” or “officially” controlled by the US, this wink-and-a-nod arrangement would in reality allow the US to redeploy its forces to the Philippines, returning the Philippines archipelago to the role of the US’s second “unsinkable aircraft carrier” (alongside Japan) which it had during the Cold War.

The “China Containment Coalition”

The Pentagon plans to use the Philippines as the maritime lynch of its “China Containment Coalition” (CCC), gathering all of its allies’ navies together and deploying them within provocative striking range of China’s claimed islands.

The other three members of the US-led Quadrilateral Security Dialogue – Japan, India, and Australia – would find their own way to “rotate” their military units throughout the Philippines islands as well, thereby forming the core of the CCC.

To add a regional element to this mix, the plan is for the Philippines and Vietnam, both of which contest some of China’s maritime claims, to intensify their strategic cooperation to the point of a mutual defence treaty. 

This would draw Vietnam into the network of the anti-China coalition being built up by Washington by using the defence ties between Vietnam and the Philippines to making the members of the Quadrilateral Security Dialogue de facto allies of Vietnam.

Altogether, the Pentagon plan is to produce a critical mass of hostile states near China’s southern maritime border which backed by the US could quickly “counter” any moves by Beijing thereby “containing’ it to the East Asian mainland.

Duterte’s Revolution

Everything was proceeding according to plan until Duterte began to question the “Enhanced Defence Cooperation Agreement”. While his running mate has said Duterte would honour the agreement, he added that he would do so “from a position of strength”.

Back in October 2014, Duterte went on record to say the “Enhanced Defence Cooperation Agreement” should be scrapped if it allowed US servicemen in the Philippines to avoid justice for any crimes they committed.

This pinpoints an issue very sensitive for Filipinos who have vivid memories of how US troops were able to escape punishment for acts of gross misbehaviour whilst the US military occupied its bases in the Philippines.  Public anger over this issue was one of the key factors in mobilising local opposition to the bases and explains why many Filipinos oppose their return.

Since it is impossible to imagine such an incident not arising at some point, it is all but inevitable that a situation will occur which will fulfil Duterte’s criterion for scrapping the “Enhanced Defence Cooperation Agreement”  Taken together with Duterte’s assertion that he intends to deal with the US “from a position of strength” it is easy to see how this might trigger the process of revoking the agreement.

No Filipino politician has previously spoken about the US in this way.  Moreover other things he has said also suggest an intention to send a strongly independent line.

Not surprisingly the Pentagon-affiliated publication “Starts and Stripes”, which writes for US servicemen servicemen and their families, published a scathing critique of Duterte just last week.  Here are some excerpts:

“With Filipinos set to choose among five candidates on May 9, Duterte, the incumbent mayor of Davao City who has said the U.S. “should not meddle in our affairs,” holds a strong lead, according to the most recent poll released Sunday.

Duterte is very popular now because people are sick and tired of the same old, same old,” said Virginia Bacay Watson, a professor at the Asia-Pacific Center for Security Studies in Honolulu. “He’s kind of a fresh face, fresh perspective, compared to the other elites who are running.”

Duterte has presented himself to voters as a straight-talker who is not part of the Manila elite – someone who can get things done even if he needs to bend the rules to do so. That includes the country’s foreign affairs.

“He feels that American influence is too strong, that we’re too dependent on U.S. intervention in anything we do,” said Babe Romualdez, an opinion columnist for The Philippine Star newspaper who has interviewed the candidates one-on-one about their platforms on the U.S. military and relations with China.

“He was an activist when he was a student and young lawyer,” Romualdez said. “I get a sense that he’s saying the same things that most of the militants say.”

In Romualdez’s interview with the front-runner, the candidate said “we really don’t need the Americans to deal with the Chinese because the Chinese want to talk to us alone.”

“If I become president I’m going to reach out to the Chinese and talk to them alone without American intervention,” he said.

Duterte publically opposed the Visiting Forces Agreement with the U.S. – of which the EDCA was an amendment – and claimed in 2013 that he had rejected a request by the U.S. to establish Davao as a base of operations for drones.

Earlier this year, he was quoted saying that although the country was now bound by the EDCA, he had “reservations about the presence of foreign troops.” He added, “We will not allow the building of structures.””

Clearly, Duterte is not the sort of leader the Pentagon envisaged for the Philippines.   If he becomes Philippine President there will inevitably be concern in Washington that its elaborate plans for an anti-Chinese coalition in the region could be scuttled.

The New Silk Road Pays A Pit Stop To The Philippines

Worse still for the US Duterte is saying the Philippines and China could have peaceful and pragmatic relations with each other, engaging in bilateral dialogue over their disputes without the meddling interference of the US.

What that would mean for the US is that the Philippines might become a tacit Chinese ally, which would completely upend the regional strategic balance.

That is not what Duterte is actually calling for, but he did say is that he not only would be open to talking to Beijing, but would even further and engage in joint exploration in the South China Sea. Further, in seeking to develop the decades-neglected infrastructure of one of the most promising economies of Asia, Duterte has suggested that he would be open to inviting China to build a railroad and other types of connective projects that Beijing has become globally renowned for. This would of course mean replacing US contractors – traditionally heavily entrenched in the Philippines – with cheaper and possibly more efficient Chinese ones – potentially causing US companies to lose out from billions of dollars of construction deals.

Joint maritime exploration and infrastructure cooperation between the Philippines and China has the potential to turn the entire Philippines archipelago into the latest pit stop for China’s New Silk Road, presenting the US with its biggest geopolitical setback since the reunification of Crimea with Russia.

Concluding Thoughts

The entire future of the US’s Pivot to Asia hangs in the balance as Filipinos go to the polls in what is shaping up to be the most pivotal election in their country’s history.

While the US and its allied politicians are preaching a campaign of anti-Chinese fear mongering and war, Rodrigo Duterte is bucking the system and preaching the benefits the Philippines could reap from more pragmatic policies.

By questioning the need for the Enhanced Defence Cooperation Agreement and subtly threatening to subvert it, Duterte has made himself the US’s enemy number one amongst politicians from the Asia-Pacific. No other individual is speaking out in this way and unlike others who have come before him, he seems to command a high level of genuine people support.

If Duterte succeeds in winning the Presidency, it could represent a paradigm shift in Philippine history and the region’s geopolitics, resulting in the US losing its second ‘unsinkable aircraft carrier’ and having its Pivot to Asia – ie. its plan to “contain” China – fail before it has even properly got underway.

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It’s Official: ‘Britain’s Democracy Now At Risk’

It’s not just campaigners saying it any more: democracy is officially at risk, according to parliament’s own digital, culture, media and sport committee.

The Duran

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Via True Publica, authored by Jessica Garland – Electoral Reform Society:


Britain’s main campaign rules were drawn up in the late 1990s, before social media and online campaigning really existed. This has left the door wide open to disinformation, dodgy donations and foreign interference in elections.

There is a real need to close the loopholes when it comes to the online Wild West.

Yet in this year’s elections, it was legitimate voters who were asked to identify themselves, not those funnelling millions into political campaigns through trusts, or those spreading fake news.

The government trialled mandatory voter ID in five council areas in May. In these five pilot areas alone about 350 people were turned away from polling stations for not having their papers with them — and they didn’t return. In other words, they were denied their vote.

Yet last year, out of more than 45 million votes cast across the country, there were just 28 allegations of personation (pretending to be someone else at the polling station), the type of fraud voter ID is meant to tackle.

Despite the loss of 350 votes, the pilots were branded a success by the government. Yet the 28 allegations of fraud (and just one conviction) are considered such a dire threat that the government is willing to risk disenfranchising many more legitimate voters to try to address it. The numbers simply don’t add up.

Indeed, the fact-checking website FullFact noted that in the Gosport pilot, 0.4 per cent of voters did not vote because of ID issues. That’s a greater percentage than the winning margin in at least 14 constituencies in the last election. Putting up barriers to democratic engagement can have a big impact. In fact, it can swing an election.

In the run-up to the pilots, the Electoral Reform Society and other campaigners warned that the policy risked disenfranchising the most marginalised groups in society.

The Windrush scandal highlights exactly the sort of problems that introducing stricter forms of identity could cause: millions of people lack the required documentation. It’s one of the reasons why organisations such as the Runnymede Trust are concerned about these plans.

The Electoral Commission has now published a report on the ID trials, which concludes that “there is not yet enough evidence to fully address concerns” on this front.

The small number of pilots, and a lack of diversity, meant that sample sizes were too small to conclude anything about how the scheme would affect various demographic groups. Nor can the pilots tell us about the likely impact of voter ID in a general election, where the strain on polling staff would be far greater and a much broader cross-section of electors turns out to vote.

The Electoral Reform Society, alongside 22 organisations, campaigners and academics, has now called on the constitution minister to halt moves to impose this policy. The signatories span a huge cross-section of society, including representatives of groups that could be disproportionately impacted by voter ID, from Age UK to Liberty and from the British Youth Council to the Salvation Army and the LGBT Foundation.

Voters know what our democratic priorities should be: ensuring that elections are free from the influence of big donors. Having a secure electoral register. Providing balanced media coverage. Transparency online.

We may be little wiser as a result of the government’s voter ID trials. Yet we do know where the real dangers lie in our politics.

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Corrupt Robert Mueller’s despicable Paul Manafort trial nears end (Video)

The Duran – News in Review – Episode 79.

Alex Christoforou

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Paul Manafort’s legal team rested its case on Tuesday without calling a single witness. This sets the stage for closing arguments before the judge hands the case to jurors for a verdict.

Manafort’s defense opted to call no witnesses, choosing instead to rely on the team’s cross-examination of government witnesses including a very devious Rick Gates, Manafort’s longtime deputy, and several accountants, bookkeepers and bankers who had financial dealings with Manafort.

Closing arguments are expected on Wednesday. Jurors may begin deliberating shortly after receiving their final instructions from judge Ellis.

Manafort case has nothing to do with Mueller’s ‘Trump-Russia collusion witch-hunt’ as the former DC lobbyist is accused of defrauding banks to secure loans and hiding overseas bank accounts and income from U.S. tax authorities.

U.S. District Judge T.S. Ellis III denied a defense motion to acquit Manafort on the charges because prosecutors hadn’t proved their case.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the circus trial of Trump’s former Campaign Manager Paul Manafort, and how crooked cop Robert Mueller is using all his power to lean on Manafort, so as to conjure up something illegal against US President Donald Trump.

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Via Zerohedge

Prosecutors allege he dodged taxes on millions of dollars made from his work for a Ukrainian political party, then lied to obtain bank loans when cash stopped flowing from the project.

The courtroom was sealed for around two hours Tuesday morning for an unknown reason, reopening around 11:30 a.m. with Manafort arriving around 10 minutes later.

The decision to rest their case without calling any witnesses follows a denial by Judge T.S. Ellis III to acquit Manafort after his lawyers tried to argue that the special counsel had failed to prove its case at the federal trial.

The court session began at approximately 11:45 a.m.:

“Good afternoon,” began defense attorney Richard Westling, who corrected himself and said, “Good morning.”

“I’m as surprised as you are,” Judge Ellis responded.

Ellis then heard brief argument from both sides on the defense’s motion for acquittal, focusing primarily on four counts related to Federal Savings Bank.

Federal Savings Bank was aware of the status of Paul Manafort’s finances,” Westling argued. “They came to the loans with an intent of doing business with Mr. Manafort.”

Prosecutor Uzo Asonye fired back, saying that that even if bank chairman Steve Calk overlooked Manafort’s financial woes, it would still be a crime to submit fraudulent documents to obtain the loans.

“Steve Calk is not the bank,” Asonye argued, adding that while Caulk may have “had a different motive” — a job with the Trump administration — “I’m not really sure there’s evidence he knew the documents were false.”

Ellis sided with prosecutors.

The defense makes a significant argument about materiality, but in the end, I think materiality is an issue for the jury,” he said, adding. “That is true for all the other counts… those are all jury issues.”

Once that exchange was over, Manafort’s team was afforded the opportunity to present their case, to which lead attorney Kevin Downing replied “The defense rests.

Ellis then began to question Manafort to ensure he was aware of the ramifications of that decision, to which the former Trump aide confirmed that he did not wish to take the witness stand.

Manafort, in a dark suit and white shirt, stood at the lectern from which his attorneys have questioned witnesses, staring up at the judge. Ellis told Manafort he had a right to testify, though if he chose not to, the judge would tell jurors to draw no inference from that. – WaPo

Ellis asked Manafort four questions – his amplified voice booming through the courtroom:

Had Manafort discussed the decision with his attorney?

“I have, your honor,” Manafort responded, his voice clear.

Was he satisfied with their advice?

“I am, your honor,” Manafort replied.

Had he decided whether he would testify?

“I have decided,” Manafort said.

“Do you wish to testify?” Ellis finally asked.

“No, sir,” Manafort responded.

And with that, Manafort returned to his seat.

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One more step toward COMPLETE de-dollarization

Over the past several months, sitting here in Moscow, it has become increasingly obvious that while the US Dollar is unquestionably the world’s leading and liquid reserve currency, it comes with an ever increasing high price (of sovereignty and FX) if you are not the USA.

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I have opined and written about the trend towards de-dollarization before, but with the latest US –Turkish spat it has hit the wallets, mattresses and markets of a number of countries, be they aligned with Washington or not. One thing they all have in common was that in this recent era of low cost available money, many happily fed at the US dollar trough.

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This serves as a further albeit loud example to many nations for the need to diversify to an extent away from the greenback, or risk being caught up in its volatile, sudden and unpredictably risky increasingly politicized directions.

The Dollar and the geopolitical winds from Washington are today as never before openly being used as policy, which can be called the “carrot and stick”, a distinctly Pavlovian approach. Sadly, few if any can make out where or what the carrot is in this recent US worldview branding.

Tariffs, sanctions, pressured exchange rates, the Federal Reserve loosening or tightening, trade agreements and laws ignored or simply trashed… there is a lot going on which seems to democratically affect America’s allies as well as those on Washington’s politically popular and dramatic “poo-poo” list.

Just now from a press conference in Turkey, I watched Russia’s foreign minister Lavrov say that through the actions shown by the US, the role of the US dollar as a secure global reserve currency for free trade will diminish as more countries switch to national currencies for international trade.

He clearly spoke for many nations when he said; “It will make more and more countries that are not even affected by US sanctions go away from the dollar and rely on more reliable, contractual partners in terms of currency use.” Putting the situation in a nutshell he went on to say “I have already said this about sanctions: they are illegal, they undermine all principles of global trade and principles approved by UN decisions, under which unilateral measures of economic duress are unlawful.”

Turkey, a long-standing NATO ally and a key line of western defense during the long cold war years fully agreed with his Russian counterpart. The Turkish foreign minister Mr. Cavosoglu openly warned that US sanctions or trade embargoes can and are being unilaterally imposed against any country at any time if they do not toe DC’s political line.

He said at the same press conference; “Today, sanctions are imposed on Turkey, and tomorrow they can be used against any other European state. If the United States wants to maintain respect in the international arena, then it is necessary for it to be respectful of the interests of other countries.”

What is happening in Turkey is symptomatic of the developed and emerging markets globally. When trillions of dollars of newly issued lucre was up for grabs, thanks to several developed country central banks, it was comparatively easy for governments and companies just like Turkey’s to borrow funds denominated in dollars and not their national currencies.

Turkey has relied on foreign-currency debt more than most EM’s. Corporate, financial and other debt denominated mostly in dollars, approximates close to 70% of it’s economy. Therefore as the Turkish lira plunges, it is very costly for those companies to repay their dollar-denominated loans, and even now it is patently clear many will not.

The concern rattling around the underbelly of the global markets is what can be reasonably expected for assets and economies that were inflated by cheap debt, the United States included. All this points not so much to a banking crisis as has happened eight years ago, but a systemic financial market crisis.

This is a new one, and I doubt if any QE, QT, NIRPs, or ZIRPs will make much of a difference, despite the rocket-high equity markets the US has been displaying.

One financial trader I spoke to, whom I have known since the early 1980’s (and I thought him ancient then) muttered to me “we’re gettin’ into the ecstasy stage, nothing but the high matters, everything else including the VIX is seen as boring denial, and not the warning tool it is. Better start loading up on gold.”

Meanwhile, de-dollarization is ongoing in Russia and is carefully studied by a host of countries, especially as the Russian government has not yet finished selling off US debt; it still has just a few billion to go. The Russian Finance Minister A. Siluanov said this past Sunday that Russia would continue decreasing holdings of Treasuries in response to sanctions.

The finance minister went on to say that, Russia is also considering distancing itself from using the US dollar for international trade, calling it an unreliable, conditional and hence risky tool for payments.

Between March and May this year, Russia’s US debt holdings were sold down by $81 billion, which is 84% of its total US debt holdings, and while I don’t know the current figure it is certain to be even less.

The latest round of tightening sanctions screws against Russia were imposed by the State Department under a chemical and biological warfare law and should be going into effect on August 22. This in spite of the fact that no proof was ever shown, not under any established national or international law, or with any of several global biochemical conventions, not even in the ever entertaining court of public opinion.

Whatever Russia may continue to do in its relationship with US debt or the dollar, the fact of the matter is that Russia is not a heavyweight in this particular financial arena, and the direct effects of Russia’s responses are negligible. However, the indirect effects are huge as they reflect what many countries (allied or unallied with the US) see as Washington’s overbearing and more than slightly unipolar trade and geopolitical advantage quests, be they Mexico, Canada, the EU, or anyone else on any hemisphere of this globe.

Some of the potential indirect effects over time may be a similar sell-off or even gradual reduction of US debt exposure from China or any one of several dozens of countries deciding to reduce their exposure to US debt by reducing their purchases and waiting for existing Treasuries to mature. In either case, the trend is there and is not going away anytime soon.

When Russia clears its books of US dollarized debt, then who will be next in actively diversifying their US debt risk? Then what might be the fate of the US Dollar, and what value then will be the international infusions to finance America’s continually growing debt, or fuel the funds needed for further market growth? Value and the energy of money has no politics, it ultimately trends towards areas where there is a secure business dynamic. That being said, looks like we are now and will be living through the most interesting of disruptive times.

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