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Hillary Clinton just planted a bomb under American Democracy

The email scandal is merely the latest saga in a completely disastrous election for which Hillary Clinton is ultimately responsible but for which in the whole US political class must share in the blame.

Alexander Mercouris

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My memory of US Presidential elections extends back to the Presidential election of 1972, which Richard Nixon won by a landslide.

That election victory rapidly unravelled, to the point where Nixon was forced to resign and had to be pardoned of potential criminal charges by his own handpicked successor Gerald Ford.  As a result the 1972 election has become a byword for corruption and scandal, and was until recently often spoken of as the most corrupt election in modern US history, since at least the disputed election of 1876.

The election of 2016 has however in almost every respect exceeded the worst of the election of 1972.  Moreover in contrast to 1972 it is impossible to see a happy outcome. 

One individual more than any other bears responsibility for this debacle: Hillary Clinton.

The first thing to say about Hillary Clinton is that she should not be a candidate for the Presidency at all. 

Her catastrophic misjudgements about the Iraq and Libyan wars, her public gloating over the public torture and murder of Gaddafi, the utter failure of her attempted health reforms during her husband’s Presidency, and the email scandal (about which more below), in any remotely well functioning system ought to have disqualified her for the highest public office.

The list of Hillary Clinton’s failures I have just outlined is carefully selected to include only those things which are matters of public record.  There are also persistent rumours of corruption and ill-health.  Like most fair minded people I would pay no heed to these were it not that Hillary Clinton’s own compulsively secretive and manipulative behaviour so often fosters suspicion where there are no grounds for it.

Speaking for myself, I noticed this unfortunate character trait way back in the 1990s, during the so-called Whitewater scandal. 

After spending an inordinate amount of time untangling the web of allegations in this overly complex affair, I came to the clear view that Hillary Clinton and her husband were entirely guiltless, and that what had happened was that far from perpetrating a fraud or murdering people or doing any of the other lurid things they were accused of, they had themselves been the innocent victims of a deluded and incompetent fraudster.  

Listening to Hillary Clinton’s interviews at the time I remember being completely baffled that she seemed incapable of straightforwardly saying this, even though it was so obviously true that if she had said it, it would have immediately killed off the whole scandal, and might even have won for her and her husband some sympathy.

It is this compulsively secretive and manipulative behaviour which – combined with a total absence of personal charm – is the reason for the American people’s dislike and distrust of her. 

This same unattractive pattern of behaviour was on full display during the Goldman Sachs affair. 

Hillary Clinton’s refusal to disclose her private speeches to Goldman Sachs inevitably fuelled speculation that there was some dark secret in them that she was trying to hide.  

When Wikileaks eventually published excerpts from the speeches, it turned out that there was no dark secret.  Had the speeches been published quietly after Hillary Clinton announced her intention to stand for the Presidency, like most politicians’ speeches they would have vanished without trace.

If Hillary Clinton feared they would damage her because some of the things she said in them are at odds with things she has said in public, then that shows what a poor politician she is, and how little trust she has in the good sense of the American people.  It shows that she assumes most people care about the details of what politicians say in their speeches, and that they expect a level of consistency in their politicians, which in my experience they never do.

To be clear, it was Hillary Clinton’s refusal to publish the speeches, not their content, that has done her damage, demonstrating to the public what an insecure and manipulative personality she is.

For the record I personally find the Hillary Clinton in the excerpts of the Goldman Sachs speeches an altogether more reassuring individual than the one she has presented to the public.  

Like Nixon before her, in private she talks in a far more open and straightforward way than she does when is talking in public.  In private she comes across – as Nixon did – as worldly, intelligent and well-informed, if also somewhat cynical and ruthless.  Far better that in my opinion than the hardline ideological Cold Warrior and warmongering American Exceptionalist of Hillary Clinton’s public statements.

It would be expecting altogether too much of a person as compulsively secretive and manipulative as this to suppose that Hillary Clinton would try to win the Presidency in a simple and straightforward way.  Needless to say she has not done so, and – like Nixon – I frankly doubt she knows how. 

The result is things we have not seen in a US Presidential election since 1972.  The DNC leak shows how the machinery of the Democratic Party was subverted to defeat the challenge from Bernie Sanders; and the Podesta leak shows a whole range of other ‘dirty tricks’ – including incidentally the manipulation of polling samples to make Hillary Clinton seem more popular than she really is.

Meanwhile the systematic way in which the news media has been recruited to become her cheerleaders is nothing short of scandalous.

By far the most irresponsible and dangerous Hillary Clinton has done is however to accuse a foreign power – Russia – of meddling in the election in order to prevent her winning, and to impose Donald Trump on the American people.

This is dangerous and irresponsible at so many levels that it is difficult to know where to start. 

Firstly, it is not true.  There is no evidence Donald Trump is a Russian agent or has any connection to Russia, or that Russia backs him.   All the ‘evidence’ cited to prove he is and that it does – down to the misquotation of a single comment of Putin’s and the claims about Trump’s supposed Russian business connections – has proved to be so unconvincing that even Hillary Clinton has stopped talking about it.

Secondly, it is polluting the US political system by using agencies of the US government to spread this false story.

I have previously put on record my own strong doubts that Russia is behind the DNC and Podesta leaks.  Now Craig Murray – a former British ambassador who (unlike me) is a personal friend of Julian Assange – has come forward to say that he knows 100% as fact that Russia is not behind the leaks (see here). 

Craig Murray is a man of proven integrity who as a former senior diplomat has handled classified intelligence material and who therefore knows how to separate fact from fiction.  If he says he knows 100% for sure that Russia is not responsible for the DNC and Podesta leaks, then given the sources he has that is good enough for me, as it should be for all reasonable people.

What that must means is that the recent statement by US intelligence that Russia is behind the leaks is untrue.  I have previously discussed the deeply manipulative language used in this statement, which in fact proves that US intelligence does not have the evidence to back up what it says. 

I have also pointed out that it is actually unprecedented for US intelligence to interfere in a US election in this way. 

Now that we have Craig Murray’s confirmation that the claim of Russian responsibility for the leaks made in the statement is untrue, we can judge even more clearly what a deeply dishonest document this statement is.

The big question is what persuaded US intelligence to make this statement?  Based on everything we know, the suspicion has to be that Hillary Clinton and her campaign, almost certainly with the help of senior officials in the Obama administration, somehow persuaded US intelligence to put out this statement in order to swing the election in her favour. 

If so then it should be said clearly that using the nation’s intelligence services to spread a false story in order to defeat a political opponent in a democratic election is a far worse thing than anything Richard Nixon ever did, whether during the 1972 election campaign or at any other point in his career.

Thirdly, these false claims about Russia are corrupting public debate, making a proper discussion of the US’s vital relationship with Russia – a nuclear superpower – all but impossible.  

The result is that the ‘realist’ positions that are now becoming associated with Donald Trump – which have a long and respectable history in US foreign policy (they were the policies of John F. Kennedy in the months immediately before he was assassinated, of Lyndon Johnson, of Nixon and Kissinger, of Ronald Reagan in his second term, and of George H.W. Bush) – are no longer being taken seriously, since they are being associated with a man who has all but been called a traitor.

Fourthly, these false claims complicate relations with Russia almost beyond reason. 

How can either Donald Trump or Hillary Clinton now negotiate with Putin when the first has been publicly all but accused of being Putin’s agent and the other is being presented as the President that Putin tried to stop?  How – if Hillary Clinton becomes President and tries to make a deal with Putin – does she explain it to her supporters after all the things she has said about him?

Fifthly, and most dangerous of all, making this completely false claim is planting a bomb under the legitimacy of whoever is going to be the next President of the United States.

If that person is Donald Trump, then he will have to contend with the fact that he is the candidate Hillary Clinton, her campaign, most of the political establishment, nearly all the media, and the US intelligence community, have publicly claimed Russia is helping to win. 

How  in that case, if Trump does win, would he as President be able to command the respect and loyalty of the foreign policy bureaucracy, of the intelligence community, of the military, of the media, and of Congress, when they have all been told that he is the preferred candidate and quite possibly the agent of a foreign power?  Would they not see it as their duty to obstruct and disobey him at every turn, so as to stop him selling out the country to his foreign puppet-masters?

How does Trump contend with the insinuation, which will be hanging over his Presidency from the first day if he is elected, that it was only because of Russian help (right down to the hacking of voting machines) that he won, and that he is not therefore the true choice of the American people?  Would not Trump have to fear possible impeachment proceedings in the event that he made the smallest mistake, with many Americans feeling that any steps were justified to remove a President who they had been told was the agent of a hostile power?

If the next President is Hillary Clinton then the situation is scarcely any better.  

Hillary Clinton would in that case know that she won the Presidency on a lie: that Russia was trying to help her opponent win and that it was the patriotic duty of Americans to vote for her in order to stop him.

Would she not then have the constant fear of what might happen if (or rather when) the lie was found out, and if US intelligence was asked by Congress to explain the statement it made, and the circumstances under which it made it?  

Would Hillary Clinton not in that case also have to worry about the possibility of impeachment if the whole truth about this sordid affair ever came out?

Which brings me to the subject of Hillary Clinton’s emails.

I am not an expert on the US law in question.  However it looks to me like a standard law for the handling of classified or confidential material, of which there are many.  As is common with such laws, it is a law of what the British call “strict liability” ie. motive is irrelevant, and a crime is automatically committed if the the terms of the law are breached. 

What that means is that it is technically irrelevant whether Hillary Clinton breached the terms of the law intentionally or carelessly (as she says).  If she breached the terms of the law then she is or should be guilty of the crime set out in it.

I think it is fair to say that most people familiar with this law agree that Hillary Clinton was very fortunate not to have been prosecuted when the FBI first investigated her over the emails.  Most of these people also agree that anyone else in the same position would almost certainly have been prosecuted if they had done the same thing.

As it happens Hillary Clinton not only failed to provide any remotely satisfactory explanation of why she used a private server in breach of the terms of the law, but she has also admitted deleting tens of thousands of emails (apparently on the grounds they were “private”) and of having destroyed hard drives to make retrieval of these emails impossible.  

Again I think it is fair to say that most people who know about these things would expect in those circumstances a prosecution for obstruction of justice; and that most of these people think that Hillary Clinton is either very privileged or very lucky that no such prosecution was brought against her. 

Hillary Clinton is by all accounts a very capable lawyer.  As a lawyer she would have been required to keep clients’ information confidential as a normal part of her work.  Hillary Clinton was also one of the lawyers involved in the hearings of the Watergate scandal, in which mishandling of confidential information was a central issue.  She cannot therefore claim to be ignorant about these sort of issues.  

Hillary Clinton has also served in the White House as a member of her husband’s administration, and was a US Senator before Obama appointed her US Secretary of State, when the scandal of the emails took place.  Again the handling of secret and confidential information would have been a normal part of her work.

We are therefore talking about someone who has been handling confidential and classified information all her working life, and who is or should be fully aware of the relevant rules and protocols involved in handling it, and of the legal consequences of not abiding by them. 

Speaking as someone who has also had experience of handling confidential information, I can say that after a time observing the proper protocols becomes second nature.  It is well-nigh incredible to me – and I suspect to many other people – that this was not so in Hillary Clinton’s case.

It is also well-nigh incredible to me that a lawyer as experienced as Hillary Clinton would not in the event of an FBI investigation immediately take steps to ensure that all the evidence – meaning of course all the emails – was tracked down, carefully preserved, and handed over immediately to the FBI.  That tens of thousands of emails were instead deleted, that hard drives were destroyed, and that emails should now be turning up months later in a laptop in the possession of the estranged husband of a senior aide who is being investigated on sex crime charges, would be quite literally beyond belief were it not actually happening.

What makes all this even more bizarre is that Donald Trump was already hinting broadly last year that Huma Abedin, the aide in question, was a security risk.  According to the Financial Times Trump tweeted last year

“Huma Abedin, the top aide to Hillary Clinton and wife to major perv Anthony Weiner, was a major security risk as a collector of info … ”

If that was a pure guess on Trump’s part then it was an astonishingly shrewd one.  If however – as has to be more likely – rumours were already circulating about Abedin and her husband illegally possessing classified information as long ago as a year ago – so that the rumours even reached Donald Trump – then Hillary Clinton and her staff were doubly culpable in not following them up and in not informing the FBI about them.

However the single most extraordinary fact about this whole affair is that someone who has been investigated by the FBI for such a gross breach of security should be running for President at all.  At any other time in US history such a scandal would surely have disqualified the individual involved from running for the highest office irrespective of whether criminal charges were eventually brought against them or not.

Which brings me back to my original point about this whole disastrous election.

Hillary Clinton should never have been the Democratic Party’s candidate for the Presidency.  It is very troubling that neither she nor Bill Clinton were able to see this for themselves.  Quite simply Hillary Clinton has far too much ‘back story’, and far too many character flaws, to be a fit person to be President.

What however has turned this whole election into a complete disaster is that the entire US political establishment – not just the Democratic Party establishment but even a large part of the Republican Party establishment, the greater part of the US news media, and large parts of the US bureaucracy including as we have seen the intelligence services – has chosen to disregard this fact, and has bent over backwards not just to make it possible for Hillary Clinton to stand for President, but to help her win.  

In doing so the US political establishment has sought to impose on the American people an obviously unfit person for President, whom the American people distrust and don’t want.  

Needless to say this has involved an almost grotesquely biased media campaign against Donald Trump, a deeply flawed candidate in many ways but one against whom no one has ever proved any serious transgression.  Speaking of Donald Trump, it speaks volumes of the cynicism that now hangs over this election that there are apparently serious people who sincerely believe – and apparently with good cause – that he was actually put up to stand for the Republican nomination by no less a person than Bill Clinton as a spoiler in order to damage the Republicans’ chances and to help his wife win.

The great tragedy is that unlike Watergate there is no possible happy ending to this story. 

Whereas in Nixon’s case the corrupt practices that eventually brought him down were the work of a small group of people around Nixon, making it possible for the political system to emerge unscathed from the scandal caused by his actions, the way Hillary Clinton’s campaign has managed to involve the entire US political establishment means that this time the whole US political system is implicated in her wrongdoing.  

The result is that come January the American people will have as their President either someone who they have been told is a traitor, or someone who many of them believe is a crook.

Truly, the American Republic is now living through dark times.

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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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