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Russian missile system ‘very capable’ of shooting down US planes: DNI James Clapper — No war over Syria if Hillary Clinton is elected

The intense anti-Russian campaign in the West is a sign of weakness rather than strength. The Russian air defence system in Syria has closed down the US’s military options. Hillary Clinton knows it and her policies in Syria if she is elected President will be simply a continuation of Obama’s.

Alexander Mercouris

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October 2016 will one day be recognised as one of those months – like October 1962 and October 1973 – when the world passed through a period of great danger.

The cause of the danger was the collapse in September of the Kerry-Lavrov agreement and the resulting stand-off this October between the US and Russia in Syria. 

This culminated in high level discussions within the US government about possible attacks on Syrian army bases, followed by public threats from Russia to shoot down US aircraft if such attacks took place.  As The Duran reported – but as the Western media has conspicuously failed to do – following these threats from Russia, the US backed down.

These events have been barely reported in the West.  Instead what we have witnessed is a deafening cacophony of abuse of Russia for its actions in Syria, with the country baselessly accused of war crimes, and with things written and said about its political leadership which go far beyond what was written and said even during the height of the Ukrainian crisis in 2014.

At one level this abuse is an attempt to embarrass the Russians to call off the Syrian army’s offensive on the Jihadi held districts of eastern Aleppo. 

However it undoubtedly also reflects the huge anger and sense of humiliation in Washington and in certain other Western capitals caused by the US climbdown earlier in the month.

The intensity of the media campaign against Russia is however creating something of a climate of fear, with most people unaware that the most dangerous moment of the crisis has in fact already passed. 

Much of this fear is centred on the personality of Hillary Clinton, now widely expected to be the next US President. 

Based on her record and her statements, she is widely supposed to be a hardline foreign policy hawk who has never seen a war she didn’t like or want to join, and who is widely expected to escalate dramatically the confrontation with Russia in Syria and elsewhere.

Many also point to Hillary Clinton’s known previous support for a no fly zone in Syria, and her comments on the campaign trail, which many see as suggesting that she plans one still.

Is all this however true?  Is the greatest moment of confrontation between the US and Russia in Syria still to come?  Will things really get far more dangerous if Hillary Clinton becomes President?  Are we really looking at World War III?

In my opinion these fears are wrong.  The great confrontation has already taken place, and it took place this October.  A direct clash between the US and the Russian militaries in Syria was avoided, and there is now no possibility that it will happen.

What this means is that there is now no possibility of Hillary Clinton imposing a no fly zone on Syria or of her ordering an armed confrontation with the Russians there.  Nor is there any chance of Barack Obama doing so in the few months left to him.  Nor is there any chance of either Obama or Hillary supporting Boris Johnson’s hare-brained idea for a no bombing zone in Syria, or of either of Obama or Hillary Clinton ordering US attacks on Syrian military bases.   

The reason none of these things will happen is because the US’s uniformed military opposes all of them.  In the face of the US military’s opposition none of them can happen.

The reason the US military opposes these schemes is because they would all require the US military to take on the very extensive and very sophisticated air defence system the Russians have set up in Syria.  The US military has made it absolutely clear that it is completely opposed to doing this.

In the days immediately following the US climbdown brave reports appeared in parts of the media which claimed the US military is confident of its ability to take on and defeat the Russian air defence system.   

It did not however take long for a report to appear in The Washington Post – obviously sourced from the US military – which made it clear that this is not the case. 

The Washington Post article, in addition to giving a comprehensive picture of the scale of the Russian air defence system in Syria, contains a frank admission that the US military is far from confident of its ability to defeat it

“While there is some disagreement among military experts as to the capability of the Russian systems, particularly the newly deployed S-300, “the reality is, we’re very concerned anytime those are emplaced,” a U.S. Defense official said. Neither its touted ability to counter U.S. stealth technology, or to target low-flying aircraft, has ever been tested by the United States.  “It’s not like we’ve had any shoot at an F-35,” the official said of the next-generation U.S. fighter jet. “We’re not sure if any of our aircraft can defeat the S-300.””

Since this article appeared in The Washington Post information has trickled out showing just how formidable the Russian defence system in Syria actually is.

Whatever the precise purpose of the Russian military’s complaint about the alleged Belgian air raid on Hasajek, it does at least show that the Russians can now track US and NATO aircraft as they take off from their bases in Jordan, and almost certainly from Incirlik air base in Turkey as well. 

The Israeli newspaper Haaretz has also admitted that the Russian air defence system is restricting the operations of the Israeli force, with the US based internet journal Al-Monitor reporting – based obviously on information provided by Israeli sources – that

“The S-300 and S-400 missile systems that Russia put in place cover all of Israel up to the southern Negev. Russian radar will immediately lock on Israeli jets taking off from any base, except for the Uvda air force base near the southern city of Eilat, and their flight patterns will be under constant surveillance. That is how the Russians keep an eye on the Israeli air force’s activities over “hotspots” along the borders between Syria and Lebanon. Should he want to, Putin can simply push a button and turn the lives of Israeli pilots and the commanders who sent them on offensive strikes in Syria into a living hell.”

(bold italics added)

Meanwhile we know US intelligence is advising the US government that the Russians not only have the capability to shoot down US aircraft, but are not bluffing when they say they will do so.   No less a person than Director of National Intelligence James Clapper, speaking to the Council of Foreign Relations on Tuesday 25th October 2016, has said as much

“I wouldn’t put it past them (NB: the Russians – AM) to shoot down an American aircraft if they felt that was threatening to their forces on the ground.  The system they have there is very advanced, very capable and I don’t think they’d do it – deploy it – if they didn’t have some intention to use it.”

The Washington Post article confirms that the US military was always reluctant to impose a no fly zone over Syria because of Syria’s sophisticated air defences. 

In the face of the vastly more sophisticated air defence system the Russians have created in Syria the option of declaring a no fly zone over Syria or of undertaking any of the other US military options that have been talked about in Syria for all practical purposes no longer exists.

In saying this I realise some people continue to imagine terrifying scenarios of the US swamping the Russian air defence system in Syria by launching hundreds of aircraft and missiles against it whilst daring Russia to escalate.  In the real world of political and military decision making, it beggars belief the US military would be prepared to do this in view of the heavy casualties and the possibility of uncontrolled escalation it would risk.  There is simply no chance of the US military willingly engaging in a military confrontation with the Russians in Syria and risking World War III in order to rescue a gang of Al-Qaeda led Jihadi terrorists in Aleppo and to fulfil some people’s fantasies of regime change there.

None of this is going to change if Hillary Clinton is elected President in November. 

Whilst Hillary Clinton could in theory try to order the US military to take military action and risk confrontation with the Russians in Syria against its wishes, in practical political terms doing this is all but impossible since it would leave her catastrophically exposed in the very likely event that something went badly wrong.  In addition Hillary Clinton would almost certainly face a massive groundswell of opposition from Congress and the nation, which would surely dwarf the one that caused Obama to back off his proposed missile strikes against Syria in 2013, if she tried to do such a completely reckless thing. Hillary Clinton, whatever her faults, is far too experienced a politician to take on these well-nigh unbelievable risks.   

It is not as if Hillary Clinton does not know the huge risks of ordering military action in Syria.  Here is what she said about them back in 2013, when she discussed the prospects of imposing a no fly zone in Syria during a private speech to Goldman Sachs

“They (NB: the Syrians – AM) are getting more sophisticated thanks to Russian imports. To have a no-fly zone you have to take out all of the air defense, many of which are located in populated areas.  So our missiles, even if they are standoff missiles so we’re not putting our pilots at risk—you’re going to kill a lot of Syrians.  So all of a sudden this intervention that people talk about so glibly becomes an American and NATO involvement where you take a lot of civilians.

In Libya we didn’t have that problem. It’s a huge place.  The air defenses were not that sophisticated and there wasn’t very—in fact, there were very few civilian casualties.  That wouldn’t be the case.  And then you add on to it a lot of the air defenses are not only in civilian population centers but near some of their chemical stockpiles.  You do not want a missile hitting a chemical stockpile.”

Note that Hillary Clinton said all these things back in 2013, long before the Russians deployed their own vastly more sophisticated air defence system in Syria.  If she had doubts about the wisdom of military action in Syria in 2013, then she will have far greater doubts about it now

If a President as belligerent and confrontational as George W. Bush was unable to order the US military to attack Iran against its wishes – as he undoubtedly wanted – then there is no possibility Hillary Clinton – who despite her reputation is neither stupid nor a fanatic – can order the US military against its wishes to attack the Russian military in Syria now.

What then of Hillary Clinton’s supposed campaign statements about wanting a no fly zone in Syria? 

When these are read carefully it becomes clear that Hillary Clinton plans no such thing.  Here is what she had to say on the subject during her third debate with Donald Trump

“First of all, I think a no-fly zone could save lives and could hasten the end of the conflict. I’m well aware of the really legitimate concerns you have expressed from both the president and the general. This would not be done just on the first day. This would take a lot of negotiation, and it would also take making it clear to the Russians and the Syrians that our purpose here was to provide safe Zones on the ground.”

(bold italics added)

In other words what Hillary Clinton is really supporting is not a no fly zone across the whole of Syria, but a “safe zone” within Syria the terms of which would be negotiated with the Syrians and the Russians. 

That is of course exactly what the Turks – with US support – are already busy setting up in north east Syria through their Operation Euphrates Shield.

In fact the more carefully Hillary Clinton’s comments are analysed the clearer it becomes that her policies if elected would be essentially the same as those of the current Obama administration. 

In her private 2013 comments to Goldman Sachs she made it clear that her preferred way of working in Syria was not through direct confrontation with the Syrians but covertly – in other words by arming and aiding the famously elusive “moderate rebels” in Syria in exactly the way the US under Obama has been doing

“And there is still an argument that goes on inside the administration and inside our friends at NATO and the Europeans.  How do intervene—my view was you intervene as covertly as is possible for Americans to intervene.  We used to be much better at this than we are now.”

(bold italics added)

However in her final third debate with Donald Trump she let slip that she is no more keen for Jihadis to get hold of sophisticated weapons (including by implication anti aircraft weapons) than Obama is, even if she tried to hide the fact by making a bizarre point about terrorists being prevented from buying guns across the counter in the US

“That’s why I want to have an intelligence surge that protect us here at home while we have to go after them from the air, on the ground, online. Why we have to make sure here at home we don’t let terrorists buy weapons. If you’re too dangerous to fly, you’re too dangerous to buy a gun.”

This is consistent with what Hillary Clinton said in 2013 to the Jewish United Fund Advance & Major Gifts Dinner, where she admitted that the large scale presence of militant Jihadi groups sponsored by Saudi Arabia and Qatar in Syria has made distinguishing between “moderate rebels” and Jihadi militants – and preventing weapons supplied to “moderate rebels” from falling into the hands of Jihadi militants – all but impossible

“Some of us thought, perhaps, we could, with a more robust, covert action trying to vet, identify, train and arm cadres of rebels that would at least have the firepower to be able to protect themselves against both Assad and the Al-Qaeda-related jihadist groups that have, unfortunately, been attracted to Syria. That’s been complicated by the fact that the Saudis and others are shipping large amounts of weapons—and pretty indiscriminately—not at all targeted toward the people that we think would be the more moderate, least likely, to cause problems in the future, but this is another one of those very tough analytical problems.”

Overall it is impossible to see any real difference between the policies Hillary Clinton advocates and those Barack Obama is already following in Syria. 

Like Barack Obama Hillary Clinton does not intend to impose a no fly zone.  Like Barack Obama Hillary Clinton is wary of supplying sophisticated weapons to the “moderate rebels” in case they might fall into the hands of Jihadi militants.  Hillary Clinton does want to set up a “safe zone” in Syria, which she believes (almost certainly wrongly) will give her “leverage” over the Russians in future negotiations about Syria’s future.  However she realises this has to be negotiated with the Russians, and besides it is what Erdogan and Obama are already busy trying to set up in north east Syria through Operation Euphrates Shield, so far with only very partial success.

Even Hillary Clinton’s immediately declared objectives are the same as Obama’s.  Like Obama her priority is not regime change in Damascus or the capture of Aleppo; it is the capture first of Mosul and then of Raqqah

“The goal here is to take back Mosul. It’s going to be a hard fight. I’ve got no illusions about that. And then continue to press into Syria to begin to take back and move on Raqqah, which is the ISIS headquarters.”

It is no coincidence that shortly after these comments the Obama administration openly discussed plans to capture Raqqah. 

The similarity of positions on Syria between Obama and Hillary Clinton in fact reveals an important truth about a future Hillary Clinton administration: it would not be a new administration at all, but rather it would be an extension of the present one.

This is not surprising.  Hillary Clinton and Barack Obama worked closely together when Hillary Clinton was Obama’s Secretary of State.  Obama obviously wants her to win the election and is pulling out all the stops to help her.  it is a certainty she is being consulted about administration policy and has a role in making it, and that issues like the capture of Mosul and Raqqah are discussed with her.

Just as Obama is less of a dove than he sometimes likes to pretend, so Hillary Clinton is less of a hawk than she sometimes wants people to think.  It is often overlooked that Obama and Hillary Clinton are both lawyers.  Both are skilled at using language to give a sometimes misleading impression of what they are about.

There is no doubt about the huge anger and of the sense of humiliation in Washington at the climbdown Russia forced on the US this October. 

There is also no doubt that there are lots of people in the US foreign policy establishment who yearn for a President who will “put Putin in his place” and who will take a more confrontational line with Russia on Syria and elsewhere.  These people unfortunately have achieved a lock-grip on the US and Western media, and this enables them to a great degree to shape the public discussion with the result that they have a disproportionate influence on policy.

Unfortunately Hillary Clinton has chosen to fight her election campaign by pandering to these people.  The result is that she gives the impression of intending a more confrontational policy in Syria than a careful analysis of her words shows she really does.  Thus she has fostered the impression that she is looking to impose a no fly zone on Syria when a careful analysis of her words shows she intends no such thing.

This is going to create many problems for Hillary Clinton if she does win the election.  However that does not change the fact, which Hillary Clinton certainly knows, that following the events of this October a direct military confrontation between the US and the Russians in Syria because of the opposition of the US military quite simply cannot happen.  The US is not going to declare a no fly zone over Syria, or ride to the rescue of the Jihadis in Aleppo, or take any other military steps there beyond those it has already taken, whether Hillary Clinton is elected US President in November or not.

What we are unfortunately  likely to see is a case of more of the same, even though that is a same which has already repeatedly failed.  Thus we can expect more attempts to identify and train “moderate” Jihadis and to supply them with more weapons – this time inside the Turkish controlled “safe zone” that is being created for them – and perhaps more efforts to redirect the more radical Jihadis from Iraq to Syria to cause more trouble for the Russians and for the Syrian government.

In my opinion these policies – which are simply continuations of the policies the US has been following in Syria ever since the war started there more than four years ago – are unsustainable, and are bound eventually to fail.  With the populous areas of western Syria and the main cities all likely to fall soon under the secure control of the internationally recognised Syrian government, these policies cannot achieve regime change in Syria.  If the US persists with them the US far more than Russia risks becomes bogged down in Syria in a war it cannot win.  As a matter of fact there are tell-tale signs this is already happening, with the US plan to advance on Raqqah already causing problems with the US’s Turkish ally.

Putting all that aside, the sound and fury of the current anti-Russian campaign should not mislead us.  It is not a reason for fear. It is a product of weakness and failure, not of confidence and strength.  Its exceptionally high volume and its ferocious tone are the product of the US’s feelings of humiliation and failure in Syria following the events of this October. It is after all natural for someone who feels defeated to over-compensate by being over-assertive, and that is what we are witnessing now.

 Certainly the anti-Russian campaign is not a sign the US is about to go to war with Russia, whether in Syria or anywhere else.  On the contrary it is a reflection of the fact war cannot happen precisely because the US in the form of the Russian air defence system in Syria is now faced with an adversary it is not confident it can defeat at any remotely acceptable cost.

Irrespective of whether Hillary Clinton wins the Presidency in November, that is the reality.  The moment of greatest danger in the Syrian crisis has passed.

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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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