Has the US finished the trap Assad set for Turkey?

The US-Syrian policy forces Ankara to walk a fine line between ISIS, the Assad’s regime, the US, the Kurds and their own interests. We are not ruling out that Erdoğan could declare a state of emergency and postpone new elections. Whatever the result of the power struggle in Ankara may be, Turkey’s military will not accept that the YPG and PKK are armed to the teeth by the US.

From the start of the Syrian civil war in 2011, Turkey and the US supported the insurgency against Assad. Turkey formed a safe haven and provided weapons to groups that have later evolved into ISIS. The US started to organize “Friends of Syria” conferences to support the insurgency in Syria. At these conferences, not only Secretary of State Hillary Clinton lectured Putin on his Middle-East policy, but money was also collected for Jihadists now known as ISIS.

Security analysts who were not blinded by US and European propaganda have already noticed that the Kurds are a hurdle in the chosen strategy. The Kurds did not side with the FSA and the “Friends of Syria” show. They have been engaged in deadly clashes with the US-Turkey backed Jihadists. Kurdish leaders have already been slaughtered by the FSA in 2012. The so called “Friends of Syria” conference in Cairo ended in a brawl between Kurds and Jihadists.

During this period, the relation between Turkey and the Kurdish Regional Government (KRG) in Northern Iraq, improved dramatically. Former BP CEO Tony Hayward visited Erbil and advised the KRG  to build a direct oil pipeline to Turkey, bypassing Iraq’s pipes, enabling the Kurds to export Kurdish oil directly via Turkish port of Ceyhan. The good business relation between Barzani, the prime minister of the KRG  and Erdoğan’s government limited the freedom for the PKK to operate from Northern Iraq.

Under Assad, the PKK had no opportunity to operate from Syria. In 1998, Turkey threatened to invade Syria as a result of the PKK’s staged attacks from Kurdish Syrian areas. Since then, Damascus reined in the Kurds and stopped the PKK operating from Syria, preventing further escalation between Ankara and Damascus.

Assad had (and still has) little power to retaliate against the US-Turkey support for the Jihadist insurgents against his regime. Assad understood that the Kurds in Syria could spoil the fragile Kurdish peace process in Turkey. In 2012 he granted the Kurds in Syria autonomy to retaliate against Turkey. Back then he could not foresee how great this move was, thanks to the rogue and unreliable US policy in the Middle East. Continue reading

Pro Kiev militias are an existential threat to Ukraine’s ruling oligarchs

This week Ukraine’s police has been engaged in heavy fighting with nationalist militias in Mukacheve, near the Hungarian border. Ukrainian nationalist militias see the pro Russian separatists in Eastern Ukraine as the their enemy, but they also despise the ruling oligarchic elite that is still in charge in Ukraine. Most of the pro Ukrainian fighters, like the AZOV battalion, in East Ukraine want to get rid of the current government that still consists of the same elite that mismanaged and has plundered Ukraine for more than two decades.

The political landscape in Ukraine is divided in three groups:

The pro Russian separatists who have a close economic, military and political  relation with Russia are fighting a war against different irregular Militias that have been brought under the umbrella organisation in April 2014, now known as the Ukrainian National Army.

The second group is the most powerful political force in Ukraine, it is made up of the ruling oligarchs that have been mismanaging Ukraine since its independence in 1992. After the Orange revolution and the 2014 Maidan protest the same oligarchs, like Poroshenko, who have ruled Ukraine for more than two decades are still in power. The bloody Maidan protest did not broaden the political base and legitimacy of Ukrainian political system.  The “Yalta European Strategy Conference” and “Pinchuk Foundation” are the platforms used by the oligarchs to discuss their policies for their businesses and Ukraine. These political platforms and organisations are established to discuss Ukraine’s future between Ukrainian oligarchs. These platforms do not have any participants from the Ukrainian working class and are a great example of how the Ukrainian political future is shaped by the arguments and fights between oligarchs among each other. The “Yalta European Strategy conference” and “Pinchuk Foundation” are uniting the Ukrainian oligarchs like Yanukovich, Yatsenyuk, Kuchma and Poroshenko with western business and political leaders like Bill Clinton, Tony Blair and Richard Branson. Continue reading

A Greek exit will establish Berlin as the new geopolitical player to reckon with

If European Monetary Authorities could prevent a Lehman moment in case Greece has to leave the Euro we expect the euro to surge the coming months. Greece exiting the European Monetary Union will establish Berlin as the new geopolitical player to reckon with.

  • We noticed that the euro did not move since news from Greece went from bad to worse. The Greek referendum has even had a negative effect on the Dollar compared to the Japanese Yen.
  • Without Greece, the EMU forms a much tighter political and economical block.
  • It seems that markets are not able to push the Euro much lower.
  • If the ECB is able to manage a Greek exit, an EMU without Greece will strengthen the euro.
  • Greece exiting the EMU will be a victory for German elite and establish German dominance in the European Monetary Union.
  • A Greek exit will expose the relative weakness of the BRICS Bank versus European financial institutions like the EMU. The BRICS Bank fund will not be sufficient to rescue Greece. A BRICS bank not being able to help Greece will expose its relative weakness in comparison to the European financial institutions.

    Euro Dollar exchange rate since the Euro introduction in 2002

    It will be clear that only the ECB and the EMU have the financial capacity to solve problems of the magnitude of Greece.

  • If Germany does not save Greece, it will be a blow to the IMF that will render irrelevant as a paper tiger (紙老虎) unable to solve modern financial problems without the help of the European financial institutions. The IMF is not able to solve Greece’s financial problems and turned out to be ineffective in Ukraine, having an embarrassing tradition of failures in this country. A Greek exit will be a huge blow to the standing of the IMF.
  • Without Greece, Germany could concentrate on Ukraine, which has more value for Germany’s power elite.  Germany, Poland and Ukraine encompass an area of 160 Million inhabitants.
  • Germany will push the EMU in a continuous trade surplus creating a much higher demand for euros world wide. We do not believe the dollar can maintain its dominance by creating a continuous deficit.
  • A Greek exit will be evidence that the US and IMF influence on Berlin is waning.

We do not express our opinion on the validity of Germans policy nor the moral implication of the EMU policy.

Who ordered Tsipras and Varoufakis to change their course?

The US and the IMF are in the driver’s seat again in the Europe political arena. Berlin has no alternative besides accepting the US-IMF proposal for Greece. After Sunday’s referendum in Greece, the country leaving the Euro seems immanent, but since Monday some very odd and unexplained things have happened.

It could be that Tsiparis and Varoufakis suddenly started to understand that the greatly hailed BRICS bank only has a fund of 100 Billion, which is a fraction of the 700 Billion ESM fund. The ESM fund was created by the European Monetary authorities to stabilize the Euro.

The 53 Billion euro Greece urgently needs will immediately drain the BRICS bank fund by more than 50%. Russia and China do not like to see their hailed BRICS bank fund being halved within the same week of its creation.

It is also possible that someone with higher authority than the Greek populace has explained Tsipras and Varoufakis that they are treading in dangerous waters and have to change their course.

After the referendum it seems some invisible hand forced Varoufakis out of office. The same Varoufakis who vowed to resign in case of a “Yes” vote, surprised everyone as he promptly resigned after Greece overwhelmingly voted the opposite.

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How the ECB can dissolve the Greek debt while keeping the full amount on its balance

European Central Bankers should look at their counterpart at the other side of the Atlantic to learn how you can cook the books and solve the problems.
The European Sovereign debt crisis could be solved in the same manner as the US’ Mortgage Crisis.

The ECB is not able to apply a haircut to the Greek Debt because this would erase a part of its balance sheet. The European Central Bank has to dissolve the Greek debt obligation, while at the same time keeping them on their balance sheet.
The FED was confronted with a comparable problem, it started to buy 40 billion dollar Mortgage-backed Securities per month in 2012, while it had already accumulated 834 billion dollar Mortgage-backed Securities. One can wonder if the collateral, the underlying houses of these securities still exists and how bad the cash stream of these securities are.
But given the structure of the MBS, nobody cares.
For the FED it is no problem what the real value of the individual mortgages is, because these securities are mark-to- market and as the FED is the biggest purchaser, it sets the market price. The price of these securities are whatever the FED wants to pay for them when it buys these products and whatever it asks for it if they want to sell them.

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There is no juridical solution for Greece, no matter what they vote

Politicians and geopolitical strategist have to realize that independent Central Banks do not exist, central banks are an integrated part of geopolitics. 

“There is no plan for Greece”, explained Gefira Foundation associate in the European parliament. The mood is split between the Liberals and Socialist. The Liberal faction believes that there is only a solution possible if Greece votes yes, however the Socialist do not believe in a solution whatsoever. They see a yes-outcome as terrible as a no-outcome and fear for the future of the Euro Area.

According to the latest IMF report, Greece needs a much bigger financial support than is assumed by European creditors. Greece is not only in arrears in relation to the IMF, but “the (Greek) government has been accumulating arrears, including unprocessed pension and tax refund claims. The estimated stock stands at over 7 billion and will need to be cleared”. The IMF concluded that Greece will need an other 50 billion Euro Bailout to be able to repay its massive debt, the debt they accumulated during the European economic wonder years. We have noticed that Greece currently is running a public budget surplus.

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