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Exit, Stage ‘Left’ — How Brazil invited impeachment into its parliament

Dilma Rousseff’s impeachment shows how a political movement that aspires to socialism in Latin America can never achieve its objectives by practising liberal reformism.

Haneul Na'avi

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On 31st August 2016 the ‘B’ in BRICS finally succumbed to a 14 year-long battle with opportunism.  

Following Lower House Speaker Jose Eduardo Cardozo’s annulment of its majority vote, head of Senate Renan Calheiros defiantly continued the impeachment process. As Sputnik reported 

“Following a three day debate, a majority of 61 senators voted definitively to remove Rousseff from the presidency. 20 senators voted against; there were no abstentions.”

Responding to the impeachment, Rousseff dejectedly addressed her supporters.

“The will of 61 senators has replaced that of 54,5 million people who voted for me.”

The bitter irony is that these ’54.5 million Brazilians’—many whom depend on former president Luiz Inacio Lula da Silva’s Borsa Familia conditional cash transfer (CCT) programmes—could only watch as Brazilian Democratic Party Movement (PMDB) leader, Michel Temer, was officially sworn in on 1st September 2016.

Shortly after receiving the news, three countries—Venezuela, Ecuador, and Bolivia—recalled their embassies and denounced the new leadership.  As Ecuadorian President Rafael Correa explained

“Never will we condone these practices, which recall the darkest hours of our America.”

Unsurprisingly, the United States, the godfather of colour revolutions, hurriedly expressed its solidarity with Temer.   In the well-crafted Duckspeak of US State Department spokesman James Kirby declared

“[…] the Brazilian Senate in accordance with Brazil’s constitutional framework has voted to remove President Rousseff from office.  We’re confident that we will continue the strong bilateral relationship that exists between our two countries as the two largest democracies and economies in the hemisphere.”

Latin America’s far-right parroted the State Department. Argentina’s Foreign Ministry, in banal political jargon, declared

“[The] Argentine government expresses its respect for the institutional process [and] its willingness to continue on the path of a real and effective integration in the framework of absolute respect for Human rights, democratic institutions and International Law.”

Latin America is no stranger to Western contortions of ‘human rights, democratic institutions, and international law’, where in November 2015, acting Argentinian President Mauricio Macri beta tested Temer’s privatisation scheme after defeating leftist Daniel Scioli in elections, and like a despotic oncologist, followed up with a cocktail of media blackouts, budget cuts, privatisations and deepening ties to the US State Department to remove as many traces of Kirchnerismo as possible.

As expected, Pro-Rousseff demonstrators flooded the streets across Brazil. RT reported

“The greatest act of civil disobedience took place in Sao Paulo, where protesters clashed with police on Agenda Paulista, in the downtown area; in Rio de Janeiro, where activists gathered in Cinelandia square; and in Brasilia, where activists rallied in the Praca dos Tres Poderes square.”

Despite the public’s legitimate concerns, the Worker’s Party has squandered its ‘revolution’.  Nevertheless, hindsight is 20-20, but Brazil’s future stands at 50-50, and the chagrin of Rousseff’s adamant supporters may not be enough to reinstate her in power due to an uncomfortable truth: the Worker’s Party’s immature understanding of socialism was its primary shortcoming.

Several prominent member states of the Boliviarian Alliance for the Peoples of our Americas (ALBA) such as Venezuela, Cuba, Ecuador, and Bolivia, have struggled almost unabatedly with foreign interference and have won, at least temporarily, by uniting under a common framework which is politically, economically, and socially Marxist in nature.

Since its foundation in 2004, when United Socialist Party of Venezuela (PSUV) founder Hugo Chavez increased bilateral agreements with Cuba, the ALBA has expanded from 2 to 11 countries, serving as a model for Latin American self-determination and not simply an Economist quick fix of common market and trade associations.   Brazil however was only partially involved.

A Latin American Bureau article highlighted this

“[…] the most serious disappointment of all was the PT’s failure to develop a strategy for political reform, the only way of breaking the right’s stranglehold over the country’s political institutions, particularly Congress, and of curbing the insidious impact of massive electoral financing by the country’s economic elite.”

Yet, even this only flaccidly represents the truth. Brazil needed political revolution, not reforms, in order to purge the very opportunists now in power.

Secondly, Lulism, the theory behind Lula da Silva’s politics, was impossible under its coalition-based parliamentary system.  Furthermore, Lula wrongly assumed that creating an ‘alternative’ to Latin America’s Boliviarian and Chavism movements, instead of fully integrating with them, would yield better results. Dan La Botz asserts that

“during [Lula’s] first term, rather than leading the working class forward in struggle against the country’s capitalists and politicians as many expected, he made peace with them.”

The PT simply pandered to Brazil’s class contradictions instead of dissolving them.  For example, the PT relied on Petrobras oil sales and government coffers, but forged partnerships with the World Bank to monitor payouts.

Dubbed the “Quiet Revolution”, Brazil’s Borsa Familia programme created a welfare state dependent on capital from the Washington-funded InterAmerican Development Bank (IADB). Brazil even initiated the IADB partnership and sought financing for its pacing of disbursements programme (SWAp components).  As a World Bank report highlighted

“[They] requested the World Bank to partner the BFP in the context of longstanding Bank support for its social agenda under the Policy Sector Reform framework.  The Bank’s four-year project loan, excluding counterpart funds, is expected to be US$572.2 million.”

The World Bank is the economic muscle of US imperialism, created to financially restructure post-War (and coup) countries, ensuring US dollar dominance.   When Rousseff challenged this by shifting to Iran to trade in Brazilian Reals, this infuriated the State Department, which later commanded its ‘assets’ to overthrow Rousseff and privatise Brazil’s pre-salt oil deposits.

Conversely, Brazil’s neighbours remained vigilant. President Nicholas Maduro, although not as politically graceful as Chavez, still defended socialism by expanding it across South America in defiance of US-led sanctions, colour revolutions, falling oil prices, and ongoing parliamentary coup.

In fact, Boliviarianism, the unifying ideology of the ALBA nations, is to combat Western imperialism and liberal democracy.   As a FRIDE report puts it

“[…] the emergence of Chavism and other populist leaders can be explained by the limited results of liberal democracy and the neo-liberal politics designed in Europe and Washington.”

In international relations, Brazil and Venezuela both see the Islamic Republic of Iran as a strategically; however, Venezuela has expanded ties since the Ahmedinejad administration as a measure of solidarity, not trade.  As FRIDE says

“Both [Iran and Venezuela] are strongly committed to creating a bilateral alliance based on common oil interests, military cooperation, ideological affinities between the presidents and open hostility against the United States and its allies.”

Going against public ‘opinion’, former MERCOSUR leader Rodolfo Nin Novoa (Uruguay) chose Venezuela as the bloc’s new leader, ignoring protests from Argentina, Paraguay, and Brazil’s reactionary leadership.

To combat these advancements, the State Department currently uses neoliberal parliaments and colour revolutions as weapons against the ruling party.  However, where Venezuela has preserved its autonomy as the centrepiece of ALBA and MERCOSUR, Argentina and Brazil succumbed to their American creditors via regime change, failing to counteract them.  

One such example—rather than becoming victimised by bogus indictments and legislative skullduggery, Maduro wielded them both to crush the colour revolutions of Popular Will leaders Leopolo Lopez and Lester Toledo; well-documented State Department assets.  As reported by Venezuela Analysis

“Minister of Domestic Affairs, Justice and Peace, General Néstor Reverol […] has issued an arrest warrant for opposition leader Lester Toledo of the Popular Will Party (VP) in Zulia state for allegedly ‘financing terrorism’. This comes after President Nicolás Maduro also said on Tuesday that he will consider stripping all Venezuelan politicians of immunity in order to permit courtprosecutions for suspected coup-plotters.”

ALBA members fully understand that the ‘moderate opposition’, just like Islamic State, is a loose confederation of dog-eat-dog extremists used to overthrow democratic governments.   The CEPR think-tank outlines

“The U.S. government has been funding the Venezuelan opposition for at least 12 years, including, […] some of the people and organisations involved in the 2002 military coup [to] get rid of the Chávez government and replace it with something more to their liking.  The outside pressure for unity […] has been a serious problem for the Venezuelan opposition. The cables also show that this is a serious concern for the U.S. government.”

Rousseff could have followed Venezuela’s example by creating an executive order, citing threats to the public ownership (privatisation) by any foreign government assets as an act of treason, jailing all congressmen—59% whom are suspected of corruption—and preemptively ending their chicanery.

Other self-proclaimed ‘democracies’ love executive orders; especially the United States.  

Instead, the PT crawled into bed with every single opponent to its democracy, and even the US intelligentsia noted this.  As even a 2011 Brookings Institute report explained

“Contrary to the consensus among scholars and political analysts, unified government in the multiparty [coalition]-based presidential regime might not necessarily lead to an easier life for the newly-elected Brazilian president, Dilma Rousseff-PT, in regard to her relations with the Brazilian Congress.” 

The report continues, predicting her demise:

“With regard to power sharing, she will also be tempted to follow the same path of her political “guru” given that she will be under great pressure to preserve several PT internal factions in power.  […] Thus, disproportionally treating the PMDB and other coalition partners (like PL and PSB) with a small number of cabinet positions and other coalition currencies, as did Lula, might generate growing dissatisfaction within an already fragmented and regionally based key coalition partner.”

These predictions were evident in Temer’s 2015 letter to Rousseff.  Rousseff’s ‘socialist’ government only succeeded in forming a coalition with hardcore capitalists devoid of any profit (and power) motive.

It goes without saying that members of the ALBA rightfully denounced the coup, which mirrored the one that ousted then-President João Goulart in 1964, after his Basic Reforms Plan socialised corporate profits, provoking the anger of US assets within the Brazilian military.

Any amateur socialist who has fumbled through a copy of The State and Revolution understands that the state apparatus, in every government, is used to repress those hostile to it, and Brazil’s true state power wielded that authority on 31st August 2016.

Brazil created a welfare state similar to the British Labour Party, where former PM Clement Attlee attempted to build socialism in the vacuum of capitalism; there is nothing revolutionary about that.

Without ownership of the means of production, a common ideology, strong international  friendships, an effective defence of public capital, and worker representation, there can be no socialism.

Simply put, revolutions have no business in bourgeois hands.  With Rousseff gone and protesters at the mercy of unbridled privatisation, Brazil should recall former Uruguayan president Jose Murcia’s words as he entrusted Venezuela with MERCOSUR:

“Politics must prevail over law and legality”.

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Russia tests IMPRESSIVE new missile by blowing up a fleet of warships (VIDEO)

Russian military forces continue to display amazing proficiency in combat testing, no doubt sending a strong message to the world.

Seraphim Hanisch

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The UK’s tabloid The Sun published a news piece detailing, the efficacy of Russia’s new Kh-35U anti-ship missile platform:

Footage released by Russia’s defence ministry showed the capabilities of the country’s Kh-35U anti-ship missiles. They were fired from a Su-34 long range strike aircraft and managed to sink a group of ships which were imitating a group of enemy vessels.

The training exercise was a triumph with all eight launches successfully striking the intended targets.

Russia’s Ministry of Defence said: “Su-34 multifunctional fighter-bombers carried out practical launches of the newest guided anti-ship missiles Kh-35U. All in all eight launches were carried out; all missiles successfully hit targets.

Russian officials claim the state-of-the-art Kh-35 is immune to any enemy attack.

To that end, these videos give some eyes-on perspective to the efficacy of these missile systems.

This video is equally impressive (there is no sound, so do not think there is a problem here.)

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The claim that the Zvezda Kh-35U systems are invulnerable to enemy attack lies in several factors: The system has an operating temperature range between -40C and +50C. It is capable of launch in extremely high humidity environments, and can operate in windspeeds over 40 mph. It is a mobile launch platform, capable of easy movement.

The missile itself is a subsonic cruise missile, sometimes, as shown here, equipped with a rocket booster for launch. The missile’s aerodynamic configuration is optimized for sea-surface skimming, and so enhances its stealthy profile. Its guidance algorithms are also highly secure, and the missile can rely on external guidance for much of its flight and switch to internal homing guidance once it is in range to lock on target itself.

Sputnik News notes that the missile is now adapted for use with the Sukhoi T-50 (Su-57) stealth fighter, further insulating it from detection by enemy forces:

Speaking to Russia’s Izvestia newspaper in an interview published on Friday, Nikolai Vasilyev, chief designer at Tactical Missiles Corporation, the company that designs the missiles, explained why Russia’s prospective opponents fear the Kh-35, and how the Pentagon once tried to get their hands on them.

Speaking about the Kh-35’s widespread deployment in the Russian Navy, and its popularity in other countries, including Algeria, India, Iran and Vietnam, among others, Vasilyev said that the high regard for the missile comes down in part to its universality.

“The Kh-35E is Russia’s first universalized missile which can be used from various types of carriers,” the chief engineer noted. “Before it, the classical approach was for different weapons systems…(aircraft, helicopters, ships and coastal defense systems) to use specially-created missiles for each. The development of such weapons was a very costly affair. Therefore, in order to optimize spending, it was decided to create a universalized missile that could be used from airplanes, helicopters, ships, coastal defense complexes and, in case of urgent need, from submarines.”

Today, Vasilyev noted, the main competitors to the Kh-35E include the American Harpoon and the French Exocet anti-ship missiles. Sweden and China have their own developments, the RBS-15 and the C-801, respectively, while Japan and North Korea are making an effort to develop them. “In general, any modern state engaged in maintaining the combat readiness of its military must have such weapons,” the engineer said.

Asked to provide his assessment of how the Kh-35E would fare against the capabilities of these foreign analogues, Vasilyev explained that the fact that many sufficiently powerful countries without a domestic anti-ship missile program capability purchase the Russian weapons is a sign of their worth.

“Until recently, the American Harpoon was considered the top missile [in this class]. But the US supplied it only to its closest allies. For this reason, many countries went with ‘budget’ models, including Exocet and Chinese analogues like the C-801. I have often taken part in negotiations with foreign customers. For me as a developer, it’s nice to hear when customers reach the conclusion that the Kh-35E is one of the best in its class. I can state with all responsibility that the Kh-35E and its Kh-35U modification not only hold their own against the foreign missiles, but in many respects are superior to them.”

Asked to list the specific advantages of the Kh-35E, Vasilyev explained that first and foremost, it comes down to the weapon’s immunity to enemy countermeasures. 

The biggest secret to any missile is its ability to resist enemy interference, that is, its resistance against jamming. Jamming includes active measures, when a missile’s homing device is jammed with a powerful radio-electronic signal. There are also passive jamming measures – chaffing — including finely cut pieces of foil, fiberglass, etc. These are shot into the air, and the miniature radar homing device onboard the missile receives a huge number of signals, preventing it from finding its real target.”

“A missile’s combat effectiveness is determined by two factors,” Vasilyev said. “The first factor is the missile itself, and its ability to hit targets. For example, a single missile will be enough to destroy a missile boat displacing 500-1,500 tons. But to reach this vessel, it will be necessary to send eight missiles, for example. Seven of them will be either shot down, or blocked by the enemy’s electronic warfare systems. Only one will pass through and find its target. The stronger a missile’s jamming resistance, the less missiles are needed. The use of highly protected warheads allows us to halve the amount of missiles necessary – to send not eight missiles, but only four.”

The second criterion for a missile’s effectiveness is the relative cost ratio between the weapon and its target, the senior engineer explained. “The engineering solutions providing our missiles with countermeasures resistance capability are a state secret. But what I can tell you is that the knowhow used in the Kh-35E is notably higher than that of its foreign analogues, including Harpoon.

One more video describing the system follows:

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Rod Rosenstein hangs on to post, but not without pain

Media outlets worldwide jump on story of Rosenstein resignation, which although untrue, still points at his recent wiretap controversy.

Seraphim Hanisch

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When news broke that Rod Rosenstein had given his verbal resignation to the White House Chief of Staff, news outlets all over the world jumped on this story, including us here at The Duran. The initial breaking story turned out not to be so – and Mr. Rosenstein is still holding the post of Deputy Attorney General. But the day was no less chaotic for him, and although the initial story may be premature, it is still clear that an upheaval is definitely in progress.

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To go over the events since the initial story, this is what we know so far:

  • From CNBC:Deputy Attorney General Rod Rosenstein will remain in his job at least until Thursday, when he is scheduled to sit down with President Donald Trump to discuss his future at the Justice Department, the White House says.Yet the fact that Rosenstein went to work at the Justice Department at all on Tuesday morning was noteworthy, coming on the heels of a whirlwind 24 hours marked by competing reports that Rosenstein’s firing was imminent, that he had already resigned, and that he planned to resign after being summoned to the White House on Monday.”
  • From Wired: “What was already set up to be one of the biggest, most consequential weeks of Donald Trump’s presidency—as the Commander-in-Chief chaired a UN meeting in New York, the Capitol in Washington braced for a showdown over Supreme Court nominee Brett Kavanaugh—saw the intensity rise to seemingly historic levels by noon Monday, as news outlets raced to report the long anticipated denouement of Deputy Attorney General Rod Rosenstein.Nevertheless, the momentary firing-that-wasn’t likely marks the postponement of an impending crisis, rather than a permanent escape.

    The fall of Rod Rosenstein—the man who in his first weeks in office helped justify the firing of FBI Director James Comey and then appointed Comey’s predecessor, Robert Mueller, to be the special counsel leading the investigation into Russia’s role in the 2016 presidential election—appeared to happen as Ernest Hemingway once said about going bankrupt: gradually, then suddenly.

    Gradually, because ultimately it has never seemed a question of if Rosenstein would be fired, but when—and how far along Mueller would be by the time Rosenstein got canned. Reporters across Washington had prewritten “Rosenstein is fired” stories numerous times, as the tensions between the White House and the Justice Department ebbed and flowed over the last two years. (Most recently, The Wall Street Journal had actually sung the praises of the Trump-Rosenstein dynamic: “It’s fantastic,” President Trump said of their relationship in August.)

  • Fox News’ Howard Kurtz made his comments in this video piece, which also, incidentally, included further reports on the disintegration of the Kavanaugh lynching attempt by Democrats, also covered here on The Duran:

Interestingly enough, Mr. Kurtz notes the Rosenstein media scrabble as “a day of sloppy, and sometimes overreaching, journalism.” This of course is true, as so many outlets jumped on this story. However, unlike the Kavanaugh sexual-abuse fabrication job being orchestrated by Alinsky-acolyte Democrats, the Rosenstein affair at least has some direct connections to reality.

Mr. Rosenstein no doubt raised some eyebrows and hackles at the White House on Friday, when a report from The New York Times claimed that he had once mused over the thought of becoming a human wiretap, meeting with – and recording – President Trump, to give evidence of how unhinged Mr. Trump allegedly was. Further the report claimed that Mr. Rosenstein questioned Donald Trump’s “fitness for office,” a popular soundbite line among Democrats and globalists who seek to unseat the President by the invocation of the 25th Amendment (or any other possible means). CNBC continues:

The report sent shockwaves through the Justice Department and the White House, further straining what was already a messy relationship between the president and his DOJ. Trump has made no attempt to hide his disdain for Sessions, whom the president holds personally responsible for the escalation of the Russia probe. Moreover, it was Rosenstein himself who appointed Robert Mueller to lead the inquiry after Trump fired then-FBI Director James Comey in May 2017.

NBC News reported that Rosenstein and White House Counsel Don McGahn discussed the possibility of his resigning over the Times story, but that Rosenstein made it clear to McGahn that if Trump wanted to fire him, the president would need to speak to him directly about it, face to face.

NBC also reported that sometime over the weekend, Trump decided not to fire Rosenstein after all, in part because of the political firestorm it would ignite, just weeks from the November elections.

On Monday morning, however, the news site Axios incorrectly reported that Rosenstein had “verbally resigned” over the weekend, giving the strong impression that Rosenstein was quitting of his own accord, and that his departure was already a done deal. (Axios, for its part, said Tuesday that its initial report Monday “conveyed too much certainty to a fluid situation by presenting Rosenstein’s resignation as a done deal.”)

Axios and other outlets are now all in sync once again, with the present status being that Mr. Rosenstein is planning to meet with the President on Thursday after his return from New York, where he is attending the United Nations General Assembly. There does appear to be a lot to talk about. However, at this point, all that really remains is to wait.

The MSM is wild with speculation, of course, but at this point the better course is probably just to wait and see what happens.

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Europe Unveils “Special Purpose Vehicle” To Bypass SWIFT, Jeopardizing Dollar’s Reserve Status

Creating “a defensible banking architecture” is the end goal for the Europeans, China and Russia.

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Via Zerohedge


In a stunning vote of “no confidence” in the US monopoly over global payment infrastructure, one month ago Germany’s foreign minister Heiko Maas called for the creation of a new payments system independent of the US that would allow Brussels to be independent in its financial operations from Washington and as a means of rescuing the nuclear deal between Iran and the west.

Writing in the German daily Handelsblatt, Maas said “Europe should not allow the US to act over our heads and at our expense. For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system,” he wrote.

Maas said it was vital for Europe to stick with the Iran deal. “Every day the agreement continues to exist is better than the highly explosive crisis that otherwise threatens the Middle East,” he said, with the unspoken message was even clearer: Europe no longer wants to be a vassal state to US monopoly over global payments, and will now aggressively pursue its own “SWIFT” network that is not subservient to Washington’s every whim.

Many discounted the proposal as being far too aggressive: after all, a direct assault on SWIFT, and Washington, would be seen by the rest of the world as clear mutiny against a US-dominated global regime, and could potentially spark a crisis of confidence in the reserve status of the dollar, resulting in unpredictable, and dire, consequences.

However, despite the diplomatic consequences, Europe was intent on creating some loophole to the US ability to weaponize the global currency of account at will, something observed most recently as part of Trump’s latest sanctions on Iran, and as a result, late on Monday, the European Union said that it would establish a special payment channel to allow European and other companies to legally continue financial transactions with Iran while avoiding exposure to U.S. sanctions.

The move, as the WSJ notes, “is a direct rebuke of President Trump’s policy on Iran and his decision to withdraw from the nuclear deal in May,” and sets the stage for a confrontation between the U.S. and Europe over the treatment of Iran, the payment for Iran oil, and potentially, jeopardizing the reserve currency status of the dollar itself.

While keeping SWIFT as is, for now, the EU’s foreign-policy head Federica Mogherini side by side with Iran’s Foreign Minister Javad Zarif announced a “special purpose vehicle” jointly, in English and Farsi, after a meeting at the U.N. of the parties still committed to the deal—Iran, EU, U.K., France, Germany, Russia and China. In fact, everyone but the US.

EU foreign policy chief Federica Mogherini (r), speaking alongside Iranian Foreign Minister Mohammad Javad Zarif

According to Mogherini, the plan to create the SPV “will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran, and this will allow European companies to continue trade with Iran” despite Trump’s opposition.

As Bloomberg’s Leonid Bershidsky explains, with Iran sanctions back, it is clear to the Europeans (as well as the Chinese and Russians) that any future transactions with Iran must go through entities insulated from the American financial system.

In a July 2018 report, Axel Hellman of the European Leadership Network think tank and Esfandyar Batmanghelidj of the Iranian company Bourse & Bazaar proposed “a new banking architecture” in response to the U.S. sanctions, relying on the existing system of “gateway banks,” such as the Hamburg-based Europaeisch-Iranische Handelsbank, and the European branches of private Iranian bank. “A further third category of gateway banks can be envisioned,” they wrote, “which would comprise of special purpose vehicles established by European governments, or as part of public-private partnerships in order to facilitate Iran trade and investment.”

The new plan focuses on this third option.

Mogherini further indicated that Germany, France and the U.K. would set up a multinational state-backed financial intermediary that would deal with companies interested in Iran transactions and with Iranian counter-parties. Such transactions, presumably in euros and pounds sterling, would not be transparent to American authorities. European companies dealing with the state-owned intermediary technically might not even be in violation of the U.S. sanctions as currently written.

And, in a potentially massive development, the system would be likely be open to Russia and China as well as it would enable the world’s economies to trade with each other, fully independent of SWIFT.

Europe would thus provide an infrastructure for legal, secure sanctions-busting — and a guarantee that the transactions would not be reported to American regulators.

That said, Washington would not be without recourse, although at that point, all the U.S. could do is sanction the participating countries’ central banks or SWIFT for facilitating the transactions (if the special purpose vehicle uses SWIFT, rather than ad hoc messaging).

That, Hellman and Batmanghelidj wrote, would be self-defeating: “There are two possible outcomes if these institutions proceed to work with Iran despite U.S. secondary sanctions. Either U.S. authorities fail to take enforcement action given the massive consequences for the operations and integrity of the American financial system, serving to “defang” the enforcement threats and reduce the risk of European self-sanctioning on the basis of fear, or U.S. authorities take such an enforcement action, a step that would only serve to accelerate European efforts to create a defensible banking architecture that goes beyond the Iran issue alone.”

Europe, naturally, needs a “neutral” pretext to implement this SPV, and that would be Brussels’ desire to continue transacting with Iran:

“We are not backing down [on the Iran nuclear agreement],” said a European diplomat. He said the speeches of European leaders at a Security Council meeting Mr. Trump is hosting on Wednesday on nonproliferation, including Iran, will reflect the Monday night statement.

Additionally, as basis for the potentially revolutionary development, the participants of the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action or JCPOA, “underlined their determination to protect the freedom of their economic operators to pursue legitimate business with Iran.”

While the details of the SPV mechanism — which would be set up in future meetings with technical experts — were still to be determined, with the United States and the dollar dominating so much of global trade the statement said the new mechanism would “facilitate payments related to Iran’s exports (including oil) and imports, which will assist and reassure economic operators pursuing legitimate business with Iran.”

“In practical terms, this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world,” she told reporters.

As a result of Trump’s aggressive new sanctions on Iran, and potentially more sanctions after November as Trump hinted during his UN speech, European companies have been flocking out of Iran’s market and ending contracts to avoid risking U.S. sanctions.  Meanwhile, Iran – which has argued that the 2015 deal entitled the Islamic Republic to benefit from lifting of sanctions and to enter the world market – has seen its economy stumble, with the currency collapsing almost daily against the U.S. dollar since the U.S. exited the deal.

Telegraphing that Europe will continue cooperation with Iran despite US sanctions, Mogherini said Iran has remained fully committed to its obligations under the nuclear deal, as certified by a dozen reports from U.N.’s nuclear watchdog, the International Atomic Energy Agency. She also hailed the 2015 agreement as a major achievement for diplomacy and nonproliferation and “deeply regrets” what she called the unilateral withdrawal of the U.S. from the deal.

* * *

In any case, creating “a defensible banking architecture” may well be the end goal for the Europeans, China and Russia, anyway because, as noted above, Iran is merely a convenient pretext: after all, the nuclear agreement is one of the few things that unite the EU, China and Russia against the U.S.

But, as Bershidsky notes, “working to undermine the dollar’s global dominance isn’t ultimately about Iran at all. In his recent State of the European Union speech, European Commission President Jean-Claude Juncker called for strengthening the euro’s international role and moving away from traditional dollar invoicing in foreign trade.”

China and Russia have long sought the same thing, but it’s only with Europe, home of the world’s second biggest reserve currency, that they stand a chance of challenging American dominance.

While it remains to be seen if the “special purpose vehicle” would entice European companies such as France’s Total or Germany’s Daimler to get back into business with Iran remains to be seen, the optics of the move by the European Union together with China and Russia to defy the U.S. signaled continued criticism of the Trump administration for its decisions on Iran.

More importantly, it strikes at the heart of the current economic and financial system which is held together by the dollar. By providing an alternative, the global #resistance sets the stage for what potentially could be the ascendancy of other global reserve currencies, and/or a world of bilateral trade agreements which bypass both the US Dollar and Swift entirely, eliminating Washington’s “veto powers” on global trade.

Given U.S. law enforcement’s wide reach, there would still be a risk involved, and European governments may not be able to protect the companies from it. Some firms will be tempted to try the new infrastructure, however, and the public isn’t likely to find out if they do.  In any case, in response to Trump’s aggressive foreign policies and “weaponization” of the dollar, it is worthwhile for Europe, Russia and China to experiment with dollar-free business.

But this brings up the bigger point: no currency’s international dominance has lasted forever, and there’s no reason for the U.S. dollar to be the exception to this rule.

Meanwhile, as Bershidsky concludes, “Trump’s confidence in his ability to weaponize the dollar against adversaries and stubborn allies alike could eventually backfire for the U.S. as efforts to push the dollar off its pedestal grow ever more serious.”

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