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The EU will not stand by Iran and the JCPOA. Here’s why.

Despite their anger European leaders will not risk rupture of their links with the US because of Iran

Alexander Mercouris

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Ever since Donald Trump’s announcement that the US would pull out of the Joint Comprehensive Plan of Action (“JCPOA”) with Iran and would unilaterally impose across-the-board sanctions on that country, a procession of European leaders including the leaders of the US’s most powerful European allies – Britain, France and Germany – have publicly declared their intention to stand by the JCPOA.

There is also brave talk of the EU creating safeguards for European companies which in defiance of the US continue to trade or do business with Iran.

President Rouhani of Iran – who has a big personal stake in the JCPOA, which he personally negotiated – has for his part said that Iran will for the time being abide by the terms of the JCPOA whilst it waits to see how Europe will react.

In the meantime the talk of the EU standing up to the US over the JCPOA has increased talk – or hope – that a corner in US-EU relations has been turned, and that the EU will henceforth increasingly defy the US, making Donald Trump’s decision to pull out of the JCPOA a further step in the decline of US power.  These words of Craig Murray’s may stand as a good example

We are yet to see the detail, but by all precedent Trump’s Iran sanctions will also sanction third country companies which trade with Iran, at the least through attacking their transactions through US financial institutions and by sanctioning their US affiliates.

But at a time when US share of the world economy and world trade is steadily shrinking, this encouragement to European and Asian companies to firewall and minimise contact with the US is most unlikely to be long term beneficial to the US. In particular, in a period where it is already obvious that the years of the US dollar’s undisputed dominance as the world currency of reference are drawing to a close, the incentive to employ non-US linked means of financial transaction will add to an already highly significant global trend.

In short, if the US fails to prevent Europe and Asia’s burgeoning trade with Iran – and I think they will fail – this moment will be seen by historians as a key marker in US decline as a world power.

I do not share these expectations or these hopes.

Whilst there is no doubt European leaders are deeply shocked by Donald Trump’s announcement of a pullout from an international agreement in negotiating which the EU played a large part, I strongly doubt that they will find the courage or the willpower to defy the US by in effect encouraging their companies to continue to do business with Iran.

It should be said that even with such active encouragement it is unlikely in my opinion that big European companies like Daimler or Airbus will risk US fines by continuing to do business with Iran.  Even if European governments were to guarantee them against any losses caused by such fines, they would worry about losing access to the US market, which utterly dwarfs Iran’s.

Given the head of steam that has built up inside the Trump administration against Iran, only if the EU were to threaten publicly to impose reciprocal sanctions on US businesses doing business in the European Single Market might there be a real possibility of the US being deterred from imposing penalties on European companies which continue to do business with Iran.

Frankly I think there is no prospect of that happening because there is no unanimity within the EU behind it (Poland and the Baltic States would certainly oppose it) whilst I am sure that even the big EU states – Britain, Germany, France, and Italy – would in the end be unwilling to risk an all out rupture with the US on such an issue.

Quite simply, though the Europeans are anxious to trade with Iran and to do business with Iran, Iran is not big enough, and trade with Iran is not important enough, to make the risk of an all-out rupture with the US worthwhile.

I am sure that the Europeans – angry though they certainly are – will therefore in the end knuckle down, and do as the US tells them to do.

That almost certainly means that the JCPOA is doomed.  The Iranians have made clear that they will not stick with it if there are no economic benefits to them from doing so.  I expect within a few weeks – as it becomes increasingly clear that the EU is not prepared to defy the US – that the Iranian nuclear programme will resume with a vengeance.

At that point the danger of a US, Israeli and Saudi attack on Iran will grow.

In fact this episode has been a profoundly humiliating one for Europe, exposing the extent of its powerlessness.

Not only did Donald Trump ignore pleas to stand by the JCPOA from the US’s closest European allies – Merkel, Macron and May – but he apparently did not even inform them in advance of the sweeping sanctions on Iran which he had decided to impose.

The European leader who has come out worst from this affair is France’s vain and foolish President Emmanuel Macron.

Macron appears to have genuinely believed that he had forged some sort of personal relationship with Trump, and that France’s contribution to the US’s recent strike on Syria had made this bond even stronger.

In reality what Macron’s recent trip to Washington has done is simply expose the extent to which Donald Trump and the US take neither him nor France seriously.  All his pleas were ignored, whilst his fawning behaviour towards Trump apparently went down badly back home.

As for Angela Merkel, she at least avoided in her trip to Washington the disastrous optics of Macron’s visit.  She is far too skilled and experienced a politician to be caught out in that way.

However no-one should be in any doubt that it is Merkel’s disastrous leadership of Germany and of Europe which has brought Europe to this pass.

Ever since she became German Chancellor she has repeatedly sacrificed European and German interests in order to avoid rocking the boat with the US.

In July 2014 she took the fateful step of supporting the US’s demand for sectoral sanctions against Russia even though these were contrary to German economic interests, in effect legitimising the US practice of imposing unilateral sanctions without the agreement of the UN Security Council.  That makes it all but impossible to see how she can realistically oppose such sanctions now.

The contrast with Margaret Thatcher – who in the 1980s vigorously opposed unilateral US sanctions intended to block Russian pipeline projects – is instructive.

In fact European behaviour over the JCPOA has been a textbook case of appeasement.

Instead of telling Donald Trump that a unilateral withdrawal from the JCPOA would be contrary to international law – which it is – and that Europe would strongly oppose US withdrawal from an international agreement which was not only working but with which Iran is abiding, European leaders like Merkel, Macron and May instead told Trump that they agreed with him that the JCPOA was in some way “imperfect” and would have to be “improved”.

Needless to say that not only failed to persuade Donald Trump to stick with the JCPOA; it almost certainly emboldened him, convincing him that he is right to pull out of it.

Donald Trump’s decision to pull out of the JCPOA and to impose sweeping unilateral sanctions on Iran will undoubtedly embitter European opinion against the US.  It is also likely to make Europe more resistant to any further US pressure to ramp up sanctions against Russia.  Unlike trade with Iran, European and especially German trade with Russia is indispensable for the European and German economies, which explains why constant US pressure on Germany to pull out of the Nord Stream 2 project has been resisted.

In the longer term this episode probably will harden further the anti-US trend in voting on the part of European electorates, though it is worth pointing out that some of the right wing ‘populist’ European politicians who have benefitted from this process are not friends of Iran’s.

However in the immediate term Iran’s economic salvation as it finds itself under renewed sanctions pressure will come not from Europe but from Russia and China and the other Eurasian states.

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FBI recommended Michael Flynn not have lawyer present during interview, did not warn of false statement consequences

Flynn is scheduled to be sentenced on Dec. 18.

Washington Examiner

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Via The Washington Examiner…


Former FBI Deputy Director Andrew McCabe, who arranged the bureau’s interview with then-national security adviser Michael Flynn at the White House on Jan. 24, 2017 — the interview that ultimately led to Flynn’s guilty plea on one count of making false statements — suggested Flynn not have a lawyer present at the session, according to newly-filed court documents. In addition, FBI officials, along with the two agents who interviewed Flynn, decided specifically not to warn him that there would be penalties for making false statements because the agents wanted to ensure that Flynn was “relaxed” during the session.

The new information, drawn from McCabe’s account of events plus the FBI agents’ writeup of the interview — the so-called 302 report — is contained in a sentencing memo filed Tuesday by Flynn’s defense team.

Citing McCabe’s account, the sentencing memo says that shortly after noon on Jan. 24 — the fourth day of the new Trump administration — McCabe called Flynn on a secure phone in Flynn’s West Wing office. The two men discussed business briefly and then McCabe said that he “felt that we needed to have two of our agents sit down” with Flynn to discuss Flynn’s talks with Russian officials during the presidential transition.

McCabe, by his own account, urged Flynn to talk to the agents alone, without a lawyer present. “I explained that I thought the quickest way to get this done was to have a conversation between [Flynn] and the agents only,” McCabe wrote. “I further stated that if LTG Flynn wished to include anyone else in the meeting, like the White House counsel for instance, that I would need to involve the Department of Justice. [Flynn] stated that this would not be necessary and agreed to meet with the agents without any additional participants.”

Within two hours, the agents were in Flynn’s office. According to the 302 report quoted in the Flynn sentencing document, the agents said Flynn was “relaxed and jocular” and offered the agents “a little tour” of his part of the White House.

“The agents did not provide Gen. Flynn with a warning of the penalties for making a false statement under 18 U.S.C. 1001 before, during, or after the interview,” the Flynn memo says. According to the 302, before the interview, McCabe and other FBI officials “decided the agents would not warn Flynn that it was a crime to lie during an FBI interview because they wanted Flynn to be relaxed, and they were concerned that giving the warnings might adversely affect the rapport.”

The agents had, of course, seen transcripts of Flynn’s wiretapped conversations with Russian then-ambassador Sergey Kislyak. “Before the interview, FBI officials had also decided that if ‘Flynn said he did not remember something they knew he said, they would use the exact words Flynn used … to try to refresh his recollection. If Flynn still would not confirm what he said … they would not confront him or talk him through it,'” the Flynn memo says, citing the FBI 302.

“One of the agents reported that Gen. Flynn was ‘unguarded’ during the interview and ‘clearly saw the FBI agents as allies,'” the Flynn memo says, again citing the 302.

Later in the memo, Flynn’s lawyers argue that the FBI treated Flynn differently from two other Trump-Russia figures who have pleaded guilty to and been sentenced for making false statements. One of them, Alexander Van der Zwaan, “was represented by counsel during the interview; he was interviewed at a time when there was a publicly disclosed, full-bore investigation regarding Russian interference in the 2016 election; and he was given a warning that it is a federal crime to lie during the interview,” according to the memo. The other, George Papadopoulos, “was specifically notified of the seriousness of the investigation…was warned that lying to investigators was a ‘federal offense’…had time to reflect on his answers…and met with the FBI the following month for a further set of interviews, accompanied by his counsel, and did not correct his false statements.”

The message of the sentencing memo is clear: Flynn, his lawyers suggest, was surprised, rushed, not warned of the context or seriousness of the questioning, and discouraged from having a lawyer present.

That is all the sentencing document contains about the interview itself. In a footnote, Flynn’s lawyers noted that the government did not object to the quotations from the FBI 302 report.

In one striking detail, footnotes in the Flynn memo say the 302 report cited was dated Aug. 22, 2017 — nearly seven months after the Flynn interview. It is not clear why the report would be written so long after the interview itself.

The brief excerpts from the 302 used in the Flynn defense memo will likely spur more requests from Congress to see the original FBI documents. Both House and Senate investigating committees have demanded that the Justice Department allow them to see the Flynn 302, but have so far been refused.

In the memo, Flynn’s lawyers say that he made a “serious error in judgment” in the interview. Citing Flynn’s distinguished 30-plus year record of service in the U.S. Army, they ask the judge to go along with special counsel Robert Mueller’s recommendation that Flynn be spared any time in prison.

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Macron offers crumbs to protestors in bid to save his globalist agenda (Video)

The Duran Quick Take: Episode 36.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a quick look at French President Macron’s pathetic display of leadership as he offers protestors little in the way of concessions while at the same time promising to crack down hard on any and all citizens who resort to violence.

Meanwhile France’s economy is set for a deep recession as French output and production grinds to a halt.

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Via Zerohedge


As if Brussels didn’t have its hands full already with Italy and the UK, the European Union will soon be forced to rationalize why one of its favorite core members is allowed to pursue populist measures to blow out its budget deficit to ease domestic unrest while another is threatened with fines potentially amounting to billions of euros.

When blaming Russia failed to quell the widespread anger elicited by his policies, French President Emmanuel Macron tried to appease the increasingly violent “yellow vests” protesters who have sacked his capital city by offering massive tax cuts that could blow the French budget out beyond the 3% budget threshold outlined in the bloc’s fiscal rules.

Given the concessions recently offered by Italy’s populists, Macron’s couldn’t have picked a worse time to challenge the bloc’s fiscal conventions. As Bloomberg pointed out, these rules will almost certainly set the Continent’s second largest economy on a collision course with Brussels. To be clear, Macron’s offered cuts come with a price tag of about €11 billion according to Les Echos, and will leave the country with a budget gap of 3.5% of GDP in 2019, with one government official said the deficit may be higher than 3.6%.

By comparison, Italy’s initial projections put its deficit target at 2.4%, a number which Europe has repeatedly refused to consider.

Macron’s promises of fiscal stimulus – which come on top of his government’s decision to delay the planned gas-tax hikes that helped inspire the protests – were part of a broader ‘mea culpa’ offered by Macron in a speech Monday night, where he also planned to hike France’s minimum wage.

Of course, when Brussels inevitably objects, perhaps Macron could just show them this video of French police tossing a wheelchair-bound protester to the ground.

Already, the Italians are complaining.  Speaking on Tuesday, Italian cabinet undersecretary Giancarlo Giorgetti said Italy hasn’t breached the EU deficit limit. “I repeat that from the Italian government there is a reasonable approach, if there is one also from the EU a solution will be found.”

“France has several times breached the 3% deficit. Italy hasn’t done it. They are different situations. There are many indicators to assess.”

Still, as one Guardian columnist pointed out in an op-ed published Tuesday morning, the fact that the gilets jaunes (yellow vest) organizers managed to pressure Macron to cave and grant concessions after just 4 weeks of protests will only embolden them to push for even more radical demands: The collapse of the government of the supremely unpopular Macron.

Then again, with Brussels now facing certain accusations of hypocrisy, the fact that Macron was pressured into the exact same populist measures for which Italy has been slammed, the French fiasco raises the odds that Rome can pass any deficit measure it wants with the EU now forced to quietly look away even as it jawbones all the way from the bank (i.e., the German taxpayers).

“Macron’s spending will encourage Salvini and Di Maio,” said Giovanni Orsina, head of the School of Government at Rome’s Luiss-Guido Carli University. “Macron was supposed to be the spearhead of pro-European forces, if he himself is forced to challenge EU rules, Salvini and Di Maio will jump on that to push their contention that those rules are wrong.”

While we look forward to how Brussels will square this circle, markets are less excited.

Exhausted from lurching from one extreme to another following conflicting headlines, traders are already asking if “France is the new Italy.” The reason: the French OAT curve has bear steepened this morning with 10Y yields rising as much as ~6bp, with the Bund/OAT spread reaching the widest since May 2017 and the French presidential election. Though well below the peaks of last year, further widening would push the gap into levels reserved for heightened political risk.

As Bloomberg macro analyst Michael Read notes this morning, it’s hard to see a specific near-term trigger blowing out the Bund/OAT spread but the trend looks likely to slowly drift higher.

While Macron has to fight on both domestic and European fronts, he’ll need to keep peace at home to stay on top. Remember that we saw the 10Y spread widen to ~80bps around the May ’17 elections as concerns of a move toward the political fringe played out in the markets, and the French President’s popularity ratings already look far from rosy.

And just like that France may have solved the Italian crisis.

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Watch: Democrat Chuck Schumer shows his East Coast elitism on live TV

Amazing moment in which the President exhibits “transparency in government” and shows the world who the Democrat leaders really are.

Seraphim Hanisch

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One of the reasons Donald Trump was elected to the Presidency was because of his pugnacious, “in your face” character he presented – and promised TO present – against Democrat policy decisions and “stupid government” in general.

One of the reasons President Donald Trump is reviled is because of his pugnacious, “in your face” character he presented – and promised TO present – in the American political scene.

In other words, there are two reactions to the same characteristic. On Tuesday, the President did something that probably cheered and delighted a great many Americans who witnessed this.

The Democrats have been unanimous in taking any chance to roast the President, or to call for his impeachment, or to incite violence against him. But Tuesday was President Trump’s turn. He invited the two Democrat leaders, presumptive incoming House Speaker Nancy Pelosi, and Senate Minority Leader Chuck Schumer, and then, he turned the cameras on:

As Tucker Carlson notes, the body language from Schumer was fury. The old (something)-eating grin covered up humiliation, embarrassment and probably no small amount of fear, as this whole incident was filmed and broadcast openly and transparently to the American public. Nancy Pelosi was similarly agitated, and she expressed it later after this humiliation on camera, saying, “It’s like a manhood thing for him… As if manhood could ever be associated with him.”

She didn’t stop there. According to a report from the New York Daily News, the Queen Bee took the rhetoric a step below even her sense of dignity:

Pelosi stressed she made clear to Trump there isn’t enough support in Congress for a wall and speculated the President is refusing to back down because he’s scared to run away with his tail between his legs.

“I was trying to be the mom. I can’t explain it to you. It was so wild,” Pelosi said of the Oval Office meet, which was also attended by Vice President Pence and Senate Minority Leader Chuck Schumer (D-N.Y.). “It goes to show you: you get into a tinkle contest with a skunk, you get tinkle all over you.”

This represented the first salvo in a major spin-job for the ultra-liberal San Francisco Democrat. The rhetoric spun by Mrs. Pelosi and Chuck Schumer was desperate as they tried to deflect their humiliation and place it back on the President:

With reporters still present, Trump boasted during the Oval meeting he would be “proud” to shutdown the government if Congress doesn’t earmark cash for his wall before a Dec. 21 spending deadline.

Pelosi told Democrats that Trump’s boisterousness will be beneficial for them.

“The fact is we did get him to say, to fully own that the shutdown was his,” Pelosi said. “That was an accomplishment.”

The press tried to characterize this as a “Trump Tantrum”, saying things like this lede:

While “discussing” a budgetary agreement for the government, President Donald Trump crossed his arms and declared: “we will shut down the government if there is no wall.”

While the Democrats and the mainstream media in the US are sure to largely buy these interpretations of the event, the fact that this matter was televised live shows that the matter was entirely different, and this will be discomfiting to all but those Democrats and Trump-dislikers that will not look at reality.

There appears to be a twofold accomplishment for the President in this confrontation:

  1. The President revealed to his support base the real nature of the conversation with the Democrat leadership, because anyone watching this broadcast (and later, video clip) saw it unedited with their own eyes. They witnessed the pettiness of both Democrats and they witnessed a President completely comfortable and confident about the situation.
  2. President Trump probably made many of his supporters cheer with the commitment to shut down the government if he doesn’t get his border wall funding. This cheering is for both the strength shown about getting the wall finished and the promise to shut the government down, and further, Mr. Trump’s assertion that he would be “proud” to shut the government down, taking complete ownership willingly, reflects a sentiment that many of his supporters share.

The usual pattern is for the media, Democrats and even some Republicans to create a “scare” narrative about government shutdowns, about how doing this is a sure-fire path to chaos and suffering for the United States.

But the educated understanding of how shutdowns work reveals something completely different. Vital services never close. However, National Parks can close partly or completely, and some non-essential government agencies are shuttered. While this is an inconvenience for the employees furloughed during the shutdown, they eventually are re-compensated for the time lost, and are likely to receive help during the shutdown period if they need it. The impact on the nation is minimal, aside from the fact that the government stops spending money at the same frenetic pace as usual.

President Trump’s expression of willingness to do this action and his singling out of the Dem leadership gives the Democrats a real problem. Now the entire country sees their nature. As President Trump is a populist, this visceral display of Democrat opposition and pettiness will make at least some impact on the population, even that group of people who are not Trump fans.

The media reaction and that of the Democrats here show, amazingly, that after three years-plus of Donald Trump being a thorn in their side, they still do not understand how he works, and they also cannot match it against their expected “norms” of establishment behavior.

This may be a brilliant masterstroke, and it also may be followed up by more. The President relishes head-to-head conflict. The reactions of these congress members showed who they really are.

Let the games begin.

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