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America fears China’s geo-political power more than China’s economic might

Economically, the US had similar issues with Japan in the 1980s as it does with China today, but hardly anyone in the US spoke of ‘war’ with Japan then. This is due to the difference in Japan’s geo-political position vis-a-vis that of China.

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The Bannonite wing of the new American right is angry about China. The anger stems primarily from the fact that China’s manufacturing has outpaced that of the US and economies similar to that of the US, which in turn has arguably been a cause of US industrial decline.

Steve Bannon recently gave a speech in the Chinese island of Hong Kong where he stated that while the US is at “economic war” with China, but that nevertheless he and Donald Trump admire China and President Xi Jinping in particular.

In this sense, Bannon has admitted the hypothesis I recently offered that many in the US are jealous of Chinese economic strength and wish that the US might be able to replicate a similar success story among its declining industrial base which still has a great deal of latent potential.

READ MORE: Steve Bannon’s China Syndrome reveals America’s jealousy of a China that is ‘great again’

In this sense, while Bannon’s talk of ‘war’ is worrying, his honestly is nevertheless, refreshing. Furthermore his genuine affection for the American working class is admirable and honourable, even if attacking China is not necessarily the best way to express such feelings.

Bannon’s remarks exist at a time when the neo-con faction of the so-called US right (a deceptive term if there even was one, but one which still is pervasive), don’t particularly care about the US industrial working class. However, they do care about US military hegemony and consequently, they are keen on disrupting China’s growing super-power status. Because China’s ascent to the position of global leadership, along with a renewed Russia and a still strong, though declining US, is largely fuelled by China’s economic engine, the neo-cons likewise seek to do whatever they can to disrupt China’s economic progress.

China’s One Belt–One Road is a testament to the fact that China seeks to use economic cooperation in order to diversify its national interests and increase its economic wealth and consequently, its influence. This contrasts with the Russian model of effective diplomacy based geo-political leadership and the US model of neo-imperialist proxy wars/hybrid wars.

In this sense, there are important economic similarities, but key geo-strategic differences between America’s current position via-a-vis China and America’s position vis-a-vis Japan in the 1980s and 1990s.

Made in Japan

In the 1960s and early 1970s, the moniker “Made in Japan” stood for cheap goods that were generally of lesser quality via-a-vis their western counterparts.

By the end of the 1970s, “Made in Japan” meant goods, particularly in respect of electronics and motor vehicles that were often superior to their US counterparts, all while still being more affordable and more reliable.

By the late 1980s, many Americans were complaining of Japan “dumping” their goods at US ports. At this time, Japanese money flowed into American cities and a combination of economic uncertainty mixed with what can only be described as latent anti-Japanese sentiments dating back to Pearl Harbor and the US experience in the Second World War in the Pacific, led to an anti-Japanese backlash that is hardly ever discussed today.

An article from the New York Times originally published on 14 August 1987, titled “U.S. Takes New Tack On Japanese Dumping”, states the following,

“In an action that could speed up price increases on products imported from Japan, the Commerce Department has found that two Japanese companies have been selling roller bearings at illegally low prices.

The case was brought because many Japanese companies have put off raising prices to compensate for the much higher value of the yen against the dollar. Instead, they preferred to absorb costs resulting from a strong yen and even sell at a loss, rather than lose market share.

This is the first time Washington has moved in a significant way to penalize Japan for following this course. Higher Duties Possible

The yen has risen against the dollar by more than 60 percent since February 1985, which should mean that Japanese products would cost much more in the United States than before.

But some bearing prices failed to rise at all during the investigation period, between March 1 and Aug. 31 of last year.

Should the ruling be affirmed, it would result in higher customs duties on the imported bearings, which have a variety of industrial uses, especially in transportation equipment.

But many analysts said the case could set a precedent for other industries in which the dollar’s decline has failed to improve their ability to compete against the Japanese.

The decision comes as the trading relationship between the United States and Japan has been strained by the Toshiba Machine Company’s sale of sensitive military goods to the Soviet Union and a disagreement between Washington and Tokyo, now partially settled, over the dumping of computer chips. Looking for ‘Fair Value’

Koichi Haraguchi, information counselor at the Japanese Embassy, said it was ”not appropriate” for his Government to comment because this was an ”internal action taken in accordance with U.S. dumping law.”

The duties are intended to raise the Japanese selling prices to what the Commerce Department has determined to be ”fair value.” This is computed on the basis of the exporters’ home market price, his selling price in other markets outside the United States, his cost of production and other factors including a margin of profit.

The department singled out two Japanese companies for sales of tapered roller bearings. It said that the Koyo Seiko Company was selling bearings at 70.44 percent below the computed fair value and that the NTN Toyo Bearing Company was selling bearings for 47.05 percent less”.

In summary, in the 1980s and into the 1990s, many in the US were upset with Japan for selling  goods to the US, which in spite of the strength of the Yen versus the Dollar, were still sold cheaply to US consumers due to Japan implementing a strategy based on volume rather than an instant Dollar for Dollar profit.

Déjà vu +

Today, an equal and opposite charge is levelled against China. China is accused of dumping high quality and/or much sought after goods on US soil for prices that generally are better than that of the domestic competition. Interestingly, where Japan was lambasted by the US for a strong Yen, China is inversely lambasted for having an allegedly weak Yuan.

This general attitude towards Chinese monetary policy is succinctly expressed in a piece from the Global Finance School economic news website:

“China periodically announces that it will float the value of the Yuan, which has traditionally been pegged to the U.S. Dollar. The Chinese central government has so far not made any serious changes. Many countries have legitimate reasons for a fixed exchange rate, but a large, economically powerful country like China should have the strength to maintain a stable currency in the open market without manipulation. Economists suggest the Yuan is undervalued by 15% to 40%, though it is hard to accurately conclude. The People’s Bank of China currently holds $3.2 trillion of foreign-exchange reserves.

How does China keep the Yuan weak? By buying US currency and treasury notes on the open market, China keeps demand for the US dollar high. They can afford to buy and hold so much US currency due to their huge trade surplus with America, and they buy US currency roughly equal to this surplus. To keep the influx of dollars from increasing the Chinese money supply, China “sterilizes” the dollar purchases by selling bonds to Chinese investors like commercial banks. By boosting the dollar, still one of the most powerful worldwide currencies, the Yuan looks weak in relation. For the last few years China has maintained the value of their currency at just under 7 Chinese Yuan to $1. Today $1 equals 6.54 Yuan. Something close to 5 Yuan to the dollar might be a better valuation based on other market factors.

The cheap Yuan gives China an unfair advantage in the export market, encouraging the United States’ growing trade deficit with China and keeping goods in markets like India from competing locally.

Holding so much US currency gives China a lot of power over the dollar, and thus the US economy. What if China’s central bank decided to sell a large amount of US dollars and treasury notes all at once? The dollar could drop, leaving the US economy gasping for breath.

Unnaturally cheap goods and services from China hurt growing economies like India. India has a trade deficit of $19.2 billion with China. India has the potential to manufacture and sell lower priced goods, if the Rupee could compete with the Yuan.

By making other currencies relatively expensive, the booming Chinese population is discouraged from importing goods from other countries, including India, the United States, and Europe, because the cost is artificially inflated. This restricts a balance in trade and increases other countries trade deficits with China”.

This analysis fails to take into account the fact that in almost all sectors, China’s industrial infrastructure is vastly more advanced than that of India, in spite of India’s development in such areas. Simultaneous to this, the article does not take into account the fact that US industry is in need of large scale modernisation and that modern EU industry is among the most regulated in world history. These are not value judgements on any of these economies or cultures, but they are the objective realities.

However, the article does display the angry attitude that many have towards China maintaining an monetary policy that has merely taken advantage of America’s large national debt combined with the fact that the US refuses to peg the Dollar against a metallic standard as many US monetary conservatives like Ron Paul have suggested for decades.

In short, whether competing against a vibrant 1980s style Japanese economy that could outproduce the US in spite of a high valued Yen or in competing with a China capable of a titanic industrial output irrespective of the valuation of the Yuan versus the Dollar, many of the same complaints have been made.

The geo-political X-factor 

Few Americans in the 1980s or 1990s spoke of “war” with Japan, whether economic or otherwise. The reason for this is due to the fact that Japan is a geo-political ally of the United States and has been so consistently since 1945.

If America cracked down on Japanese imports too severely, it would have made for an awkward geo-political situation that the US had invested greatly in on many fronts.

By contrast, China’s expansion while fuelled by its economic might, has wide ranging geo-political implications. If One Belt–One Road and cooperative monetary initiatives from the BRICS as well as other groups can help create a trading, financial and monetary system wherein the US Dollar, US dominated World Bank, US ally dominated IMF and US military alliances that are often prerequisite for doing deals with the US can be bypassed; the US will have increasingly little to offer the wider developing world and frankly the wider global east as a whole.

READ MORE: BRICS in talks to create own cryptocurrency in another blow to US Dollar

This is what America fears most. Far from propping up the Dollar, China with its gold reserves, Dollar reserves and the impetus to begin trading with Asian and Eurasian partners in local currencies, could do more damage to US hegemony than the dumping of anyone’s goods at US ports could ever hope to achieve.

READ MORE: 2017 BRICS Declaration: Emphasis on a results based, ideology free model of global economic cooperation and development

In this sense, America’s implicit fear is that Chinese initiatives could transform into a proverbial all-purpose lubricant which oils the machine of global trade, global finance and global monetary exchange. In so doing, China could undermine America’s role as the de-facto international financial and monetary hub. So goes the Federal Reserve, so goes America. This is especially the case since the US did so little to protect its manufacturing  base from internal crises  in the late 20th century. This has left America widely exposed to pressures from the international monetary and financial markets without the safety net of a strong domestic base for industrial production.

Japan’s success in the 1980s and China’s success today, demonstrate that if one has a modern, skilled and dynamic industrial base, one can whether the storms of both ends of the monetary valuation spectrum and still manage to have a powerful working economy that produces much sought after goods on world markets as well as domestically.

One of China’s biggest markets is its still partly untapped domestic market. This is something that is often forgotten in western discussions about China, as is the fact that increased Chinese labour costs mean that the idea of ‘cheap Chinese labour’ is no longer a reality. Mexico for example now has cheaper labour costs than does China. This is why many “American” cars are no manufactured in Mexico.

The idea that the Chinese economy only succeeds because of cheap labour and an ‘undervalued’ Yuan is a fallacy that only harms the ostensibly pro-western causes of those making the allegations.

The classic American export

In reality, the two most dynamic heavy industries in the US at the moment are the defence industry and the energy sector. This ironically is how many critics of Russia in the US, including John McCain have used to lambaste Russia, a country whose economy is actually diversifying far more than it is given credit for.

In this sense, exporting war is important for the United States and from different perspectives, both the neo-cons/neo-libs and Bannonites realise this. If America makes the machines of war and little else, war itself becomes an export commodity. In this sense, the US has also lost the moral argument to One Belt–One Road, a program which implicitly requires peace and stability along its trading routes.

A solution

There is a way to peacefully make America great again, so to speak. America could inject the same amounts of capital into its consumer industrial base as it does in respect of the defence industry. If the US did this, it could in surprisingly short order (if managed properly) become a respected and respectable competitor to the dynamic economies of Asia and Eurasia, in spite of the value of the Dollar, as Japan proved in respect of the Yen.

Here though, the outsourcing acolytes among the neo-cons/neo-libs would kick up a fuss and thus far the Bannonites haven’t produced a concrete manifesto for such plans. Such plans would however be vastly more productive than the neo-con hybrid wars or Bannonite economic wars against China could ever hope to be.

The world’s geo-political realities have become America’s foreign policy problems, all because the US is too busy pointing fingers at successful economies rather than investing in its own. The fault here lies with the American political culture.

Protectionist Ross Perot once talked of a “giant sucking sound” that would take jobs and economic vitality away from America if NAFTA was signed. NAFTA was signed and while the deal is deeply flawed, the biggest giant sucking sound of all is the one coming from the Washington D.C. swamp which no one America seems capable of draining.

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Voltaire
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Voltaire

While China builds on a global scale…

The United States kills, maims and destroys on a global scale…

Simon
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Simon

Exactly. And all this angst in the USA about China is far too late.
I realised that years ago when I first visited China and saw their shining cities of the future, their awesome infrastructure.
In comparison the US looks as if it is still stuck in the 70s.
China is already the premier economy on earth.

KateAJones
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KateAJones

Boost your earnings on Google & make $99/hour by working from a home computer.
on friday I bought a gorgeous Chrysler when I got my check for $9277 this munth. it’s actualy the most comfortable job Ive ever had . I actually started seven months/ago and almost straight away got over $99, per/hr . check
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André De Koning
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André De Koning

Succinctly put and an interesting article!

louis robert
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louis robert

The “peaceful” solution proposed, like all genuinely peaceful solutions the Empire could come up with, entails the abandonment of Empire. That will not happen. The Empire will simply continue on seeking world hegemony through full spectrum dominance, blaming all the while others like e.g. China and Russia for its own mistakes and failures, more and more often threatening the world with nuclear war in the demented hope of maintaining itself as number one in an American world. That imperial strategy is doomed. China has already defeated the Empire at its own game. In tomorrow’s world the game will be China’s… Read more »

JNDillard
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JNDillard

The swamp won’t and can’t be drained until there is a Constitutional convention. The basic rules of the game have to be changed fundamentally.

stevek9
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stevek9

This is largely due to the de-facto status of the dollar as the worlds ‘reserve’ currency. Countries around the World, including China want to hold dollars, which requires a trade surplus. They have to manipulate the value of their currency to maintain that. In addition, competing in the most open market in the World (the US) helps with industrial development, as it is extremely competitive. China no longer needs to run these big surpluses, and in fact their people would live much better if they did not. Real goods improve standards of living, not numbers in computers at the US… Read more »

Shahna
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“In so doing, China could undermine America’s role as the de-facto
international financial and monetary hub. So goes the Federal Reserve,
so goes America.”
———————–
They’re doing it. It’s happening. Good.
So phuck off and goodbye.

hvaiallverden
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hvaiallverden

Amen to it all.

PS: louis r, is equally good.
cheers

peace

RoHa
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RoHa

Even in the early 1960s, those of us who were keen on photography (as I was when I was a boy) knew that “Made in Japan” on photographic equipment meant high quality, good design, reasonable price, and incomprehensible instruction manuals.

Daisy Adler
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Daisy Adler

“China’s manufacturing has outpaced that of the US”

2016: US exported goods to China worth $115 billion, and imported from China for $463 billion. Trade deficit for US – $348 billion.
From the beginning of 2017: US exports to China – $69 billion, imports from China – $273 billion. So far, the trade deficit – $204 billion.
Besides, China holds $1.4 trillion of US debt. If they decided to reclaim the money, US must declare bankruptcy as it cannot pay that much back, as US currency reserve being of $116 billion.

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Parliament Seizes Control Of Brexit From Theresa May

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Schaeuble, Greece and the lessons learned from a failed GREXIT (Video)

The Duran Quick Take: Episode 117.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris examine a recent interview with the Financial Times given by Wolfgang Schäuble, where the former German Finance Minister, who was charged with finding a workable and sustainable solution to the Greek debt crisis, reveals that his plan for Greece to take a 10-year “timeout” from the eurozone (in order to devalue its currency and save its economy) was met with fierce resistance from Brussels hard liners, and Angela Merkel herself.

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Via FT

“Look where we’re sitting!” says Wolfgang Schäuble, gesturing at the Berlin panorama stretching out beneath us. It is his crisp retort to those who say that Europe is a failure, condemned to a slow demise by its own internal contradictions. “Walk through the Reichstag, the graffiti left by the Red Army soldiers, the images of a destroyed Berlin. Until 1990 the Berlin Wall ran just below where we are now!”

We are in Käfer, a restaurant on the rooftop of the Reichstag. The views are indeed stupendous: Berlin Cathedral and the TV Tower on Alexanderplatz loom through the mist. Both were once in communist East Berlin, cut off from where we are now by the wall. Now they’re landmarks of a single, undivided city. “Without European integration, without this incredible story, we wouldn’t have come close to this point,” he says. “That’s the crazy thing.”

As Angela Merkel’s finance minister from 2009 to 2017, Schäuble was at the heart of efforts to steer the eurozone through a period of unprecedented turbulence. But at home he is most associated with Germany’s postwar political journey, having not only negotiated the 1990 treaty unifying East and West Germany but also campaigned successfully for the capital to move from Bonn.

For a man who has done so much to put Berlin — and the Reichstag — back on the world-historical map, it is hard to imagine a more fitting lunch venue. With its open-plan kitchen and grey formica tables edged in chrome, Käfer has a cool, functional aesthetic that is typical of the city. On the wall hangs a sketch by artists Christo and Jeanne-Claude, who famously wrapped the Reichstag in silver fabric in 1995.

The restaurant has one other big advantage: it is easy to reach from Schäuble’s office. Now 76, he has been confined to a wheelchair since he was shot in an assassination attempt in 1990, and mobility is an issue. Aides say he tends to avoid restaurants if he can, especially at lunchtime.

As we take our places, we talk about Schäuble’s old dream — that German reunification would be a harbinger of European unity, a step on the road to a United States of Europe. That seems hopelessly out of reach in these days of Brexit, the gilets jaunes in France, Lega and the Five Star Movement in Italy.

Some blame Schäuble himself for that. He was, after all, the architect of austerity, a fiscal hawk whose policy prescriptions during the euro crisis caused untold hardship for millions of ordinary people, or so his critics say. He became a hate figure, especially in Greece. Posters in Athens in 2015 depicted him with a Hitler moustache below the words: “Wanted — for mass poverty and devastation”.

Schäuble rejects the criticism that austerity caused the rise of populism. “Higher spending doesn’t lead to greater contentment,” he says. The root cause lies in mass immigration, and the insecurities it has unleashed. “What European country doesn’t have this problem?” he asks. “Even Sweden. The poster child of openness and the willingness to help.”

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I glance at the menu — simple German classics with a contemporary twist. I’m drawn to the starters, such as Oldenburg duck pâté and the Müritz smoked trout. But true to his somewhat abstemious reputation, Schäuble has no interest in these and zeroes in on the entrées. He chooses Käfer’s signature veal meatballs, a Berlin classic. I go for the Arctic char and pumpkin.

Schäuble switches seamlessly back to the eurozone crisis. The original mistake was in trying to create a common currency without a “common economic, employment and social policy” for all eurozone member states. The fathers of the euro had decided that if they waited for political union to happen first they’d wait forever, he says.

Yet the prospects for greater political union are now worse than they have been in years. “The construction of the EU has proven to be questionable,” he says. “We should have taken the bigger steps towards integration earlier on, and now, because we can’t convince the member states to take them, they are unachievable.”

Greece was a particularly thorny problem. It should never have been admitted to the euro club in the first place, Schäuble says. But when its debt crisis first blew up, it should have taken a 10-year “timeout” from the eurozone — an idea he first floated with Giorgos Papakonstantinou, his Greek counterpart between 2009 and 2011. “I told him you need to be able to devalue your currency, you’re not competitive,” he says. The reforms required to repair the Greek economy were going to be “hard to achieve in a democracy”. “That’s why you need to leave the euro for a certain period. But everyone said there was no chance of that.”

The idea didn’t go away, though. Schäuble pushed for a temporary “Grexit” in 2015, during another round of the debt crisis. But Merkel and the other EU heads of government nixed the idea. He now reveals he thought about resigning over the issue. “On the morning the decision was made, [Merkel] said to me: ‘You’ll carry on?’ . . . But that was one of the instances where we were very close [to my stepping down].”

It is an extraordinary revelation, one that highlights just how rocky his relationship with Merkel has been over the years. Schäuble has been at her side from the start, an éminence grise who has helped to resolve many of the periodic crises of her 13 years as chancellor. But it was never plain sailing.

“There were a few really bad conflicts where she knew too that we were on the edge and I would have gone,” he says. “I always had to weigh up whether to go along with things, even though I knew it was the wrong thing to do, as was the case with Greece, or whether I should go.” But his sense of duty prevailed. “We didn’t always agree — but I was always loyal.”

That might have been the case when he was a serving minister, but since becoming speaker of parliament in late 2017 he has increasingly distanced himself from Merkel. Last year, when she announced she would not seek re-election as leader of the Christian Democratic Union, the party that has governed Germany for 50 of the past 70 years, Schäuble openly backed a candidate described by the Berlin press as the “anti-Merkel”. Friedrich Merz, a millionaire corporate lawyer who is the chairman of BlackRock Germany, had once led the CDU’s parliamentary group but lost out to Merkel in a power struggle in 2002, quitting politics a few years later. He has long been seen as one of the chancellor’s fiercest conservative critics — and is a good friend of Schäuble’s.

Ultimately, in a nail-biting election last December, Merkel’s favoured candidate, Annegret Kramp-Karrenbauer, narrowly beat Merz. The woman universally known as “AKK” is in pole position to succeed Merkel as chancellor when her fourth and final term ends in 2021.

I ask Schäuble if it’s true that he had once again waged a battle against Merkel and once again lost. “I never went to war against Ms Merkel,” he says. “Everybody says that if I’m for Merz then I’m against Merkel. Why is that so? That’s nonsense.”

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The conclusion of Russiagate, Part I – cold, hard reality

The full text of Attorney General William P Barr’s summary is here offered, with emphases on points for further analysis.

Seraphim Hanisch

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The conclusion of the Russiagate investigation, led by Special Counsel Robert Mueller, was a pivotal media watershed moment. Even at the time of this writing there is a great deal of what might be called “journalistic froth” as opinion makers and analysts jostle to make their takes on this known to the world. Passions are running very high in both the Democrat / anti-Trump camps, where the reactions range from despondency to determined rage to not swallow the gigantic red pill that the “no collusion with Russia” determination offers. In the pro-Trump camp, the mood is deserved relief, but many who support the President are also realists, and they know this conflict is not over.

Where the pivot will go and what all this means is something that will unfold, probably relatively quickly, over the next week or two. But we want to offer a starting point here from which to base further analysis. At this time, of course, there are few hard facts other than the fact that Robert Mueller III submitted his report to the US Attorney General, William Barr, who then wrote and released his own report to the public Sunday evening. We reproduce that report here in full, with some emphases added to points that we think will be relevant to forthcoming pieces on this topic.

The end of the Mueller investigation brings concerns, hopes and fears to many people, on topics such as:

  • Will President Trump now begin to normalize relations with President Putin at full speed?
  • In what direction will the Democrats pivot to continue their attacks against the President?
  • What does this finding to to the 2020 race?
  • What does this finding do to the credibility of the United States’ leadership establishment, both at home and abroad?
  • What can we learn about our nation and culture from this investigation?
  • How does a false narrative get maintained so easily for so long, and
  • What do we do, or what CAN we do to prevent this being repeated?

These questions and more will be addressed in forthcoming pieces. But for now, here is the full text of the letter written by Attorney General William Barr concerning the Russia collusion investigation.

Dear Chairman Graham, Chairman Nadler, Ranking Member Feinstein, and Ranking Member Collins:
As a supplement to the notification provided on Friday, March 22, 2019, I am writing today to advise you of the principal conclusions reached by Special Counsel Robert S. Mueller and to inform you about the status of my initial review of the report he has prepared.
The Special Counsel’s Report
On Friday, the Special Counsel submitted to me a “confidential report explaining the prosecution or declination decisions” he has reached, as required by 28 C.F.R. § 600.8(c). This report is entitled “Report on the Investigation into Russian Interference in the 2016 Presidential Election.” Although my review is ongoing, I believe that it is in the public interest to describe the report and to summarize the principal conclusions reached by the Special Counsel and the results of his investigation.
The report explains that the Special Counsel and his staff thoroughly investigated allegations that members of the presidential campaign of Donald J. Trump, and others associated with it, conspired with the Russian government in its efforts to interfere in the 2016 U.S. presidential election, or sought to obstruct the related federal investigations. In the report, the Special Counsel noted that, in completing his investigation, he employed 19 lawyers who were assisted by a team of approximately 40 FBI agents, intelligence forensic accountants, and other professional staff. The Special Counsel issued more than 2,800 subpoenas, executed nearly 500 search warrants, obtained more than 230 orders for communication records, issued almost 50 orders authorizing use of pen registers, made 13 requests to foreign governments for evidence, and interviewed approximately 500 witnesses.
The Special Counsel obtained a number of indictments and convictions of individuals and entities in connection with his investigation, all of which have been publicly disclosed. During the course of his investigation, the Special Counsel also referred several matters to other offices for further action. The report does not recommend any further indictments, nor did the Special Counsel obtain any sealed indictments that have yet to be made public. Below, I summarize the principal conclusions set out in the Special Counsel’s report.
Russian Interference in the 2016 U.S. Presidential Election.
The Special Counsel’s report is divided into two parts. The first describes the results of the Special Counsel’s investigation into Russia’s interference in the 2016 U.S. presidential election. The report outlines the Russian effort to influence the election and documents crimes committed by persons associated with the Russian government in connection with those efforts. The report further explains that a primary consideration for the Special Counsel’s investigation was whether any Americans including individuals associated with the Trump campaign joined the Russian conspiracies to influence the election, which would be a federal crime. The Special Counsel’s investigation did not find that the Trump campaign or anyone associated with it conspired or coordinated with Russia in its efforts to influence the 2016 U.S. presidential election. As the report states: “[T]he investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities.”
The Special Counsel’s investigation determined that there were two main Russian efforts to influence the 2016 election. The first involved attempts by a Russian organization, the Internet Research Agency (IRA), to conduct disinformation and social media operations in the United States designed to sow social discord, eventually with the aim of interfering with the election. As noted above, the Special Counsel did not find that any U.S. person or Trump campaign official or associate conspired or knowingly coordinated with the IRA in its efforts, although the Special Counsel brought criminal charges against a number of Russian nationals and entities in connection with these activities.
The second element involved the Russian government’s efforts to conduct computer hacking operations designed to gather and disseminate information to influence the election. The Special Counsel found that Russian government actors successfully hacked into computers and obtained emails from persons affiliated with the Clinton campaign and Democratic Party organizations, and publicly disseminated those materials through various intermediaries, including WikiLeaks. Based on these activities, the Special Counsel brought criminal charges against a number of Russian military officers for conspiring to hack into computers in the United States for purposes of influencing the election. But as noted above, the Special Counsel did not find that the Trump campaign, or anyone associated with it, conspired or coordinated with the Russian government in these efforts, despite multiple offers from Russian-affiliated individuals to assist the Trump campaign.
Obstruction of Justice.
The report’s second part addresses a number of actions by the President most of which have been the subject of public reporting that the Special Counsel investigated as potentially raising obstruction-of-justice concerns. After making a “thorough factual investigation” into these matters, the Special Counsel considered whether to evaluate the conduct under Department standards governing prosecution and declination decisions but ultimately determined not to make a traditional prosecutorial judgment. The Special Counsel therefore did not draw a conclusion one way or the other as to whether the examined conduct constituted obstruction. Instead, for each of the relevant actions investigated, the report sets out evidence on both sides of the question and leaves unresolved what the Special Counsel views as “difficult issues” of law and fact concerning whether the President’s actions and intent could be viewed as obstruction. The Special Counsel states that “while this report does not conclude that the President committed a crime, it also does not exonerate him.”
The Special Counsel’s decision to describe the facts of his obstruction investigation without reaching any legal conclusions leaves it to the Attorney General to determine whether the conduct described in the report constitutes a crime. Over the course of the investigation, the Special Counsel’s office engaged in discussions with certain Department officials regarding many of the legal and factual matters at issue in the Special Counsel’s obstruction investigation. After reviewing the Special Counsel’s final report on these issues; consulting with Department officials, including the Office of Legal Counsel; and applying the principles of federal prosecution that guide our charging decisions, Deputy Attorney General Rod Rosenstein and I have concluded that the evidence developed during the Special Counsel’s investigation is not sufficient to establish that the President committed an obstruction-of-justice offense. Our determination was made without regard to, and is not based on, the constitutional considerations that surround the indictment and criminal prosecution of a sitting president.
In making this determination, we noted that the Special Counsel recognized that “the evidence does not establish that the President was involved in an underlying crime related to Russian election interference,” and that, while not determinative, the absence of such evidence bears upon the President’s intent with respect to obstruction. Generally speaking, to obtain and sustain an obstruction conviction, the government would need to prove beyond a reasonable doubt that a person, acting with corrupt intent, engaged in obstructive conduct with a sufficient nexus to a pending or contemplated proceeding. In cataloguing the President’s actions, many of which took place in public view, the report identifies no actions that, in our judgment, constitute obstructive conduct, had a nexus to a pending or contemplated proceeding, and were done with corrupt intent, each of which, under the Department’s principles of federal prosecution guiding charging decisions, would need to be proven beyond a reasonable doubt to establish an obstruction-of-justice offense.
Status of the Department’s Review
The relevant regulations contemplate that the Special Counsel’s report will be a “confidential report” to the Attorney General. See Office of Special Counsel, 64 Fed. Reg. 37,038, 37,040-41 (July 9, 1999). As I have previously stated, however, I am mindful of the public interest in this matter. For that reason, my goal and intent is to release as much of the Special Counsel’s report as I can consistent with applicable law, regulations, and Departmental policies.
Based on my discussions with the Special Counsel and my initial review, it is apparent that the report contains material that is or could be subject to Federal Rule of Criminal Procedure which imposes restrictions on the use and disclosure of information relating to “matter[s] occurring before grand jury.” Fed. R. Crim. P. 6(e)(2)(B) Rule 6(e) generally limits disclosure of certain grand jury information in a criminal investigation and prosecution. Id. Disclosure of 6(e) material beyond the strict limits set forth in the rule is a crime in certain circumstances. See, e.g. 18 U.S.C. 401(3). This restriction protects the integrity of grand jury proceedings and ensures that the unique and invaluable investigative powers of a grand jury are used strictly for their intended criminal justice function.
Given these restrictions, the schedule for processing the report depends in part on how quickly the Department can identify the 6(e) material that by law cannot be made public. I have requested the assistance of the Special Counsel in identifying all 6(e) information contained in the report as quickly as possible. Separately, I also must identify any information that could impact other ongoing matters, including those that the Special Counsel has referred to other offices. As soon as that process is complete, I will be in a position to move forward expeditiously in determining what can be released in light of applicable law, regulations, and Departmental policies.
* * *
As I observed in my initial notification, the Special Counsel regulations provide that “the Attorney General may determine that public release of” notifications to your respective Committees “would be in the public interest.” 28 C.F.R. § 600.9(c). I have so determined, and I will disclose this letter to the public after delivering it to you.
Sincerely,
William P. Barr
Attorney General

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