TBR News June 3, 2017

Jun 03 2017

The Voice of the White House  

Washington, D.C. June 3 , 2017:” “No one knows precisely when the Cold War ended.  It could have been November 9th, 1989, when the Berlin Wall began to crumble.  Or a month later, on December 3rd, when President George Bush (41) and Soviet leader Mikhail Gorbachev convened a summit in Malta aboard the Russian cruiser Maxim Gorky.

Exactly how this war was won is less known.  Truth is, the Operations Directorate of the Central Intelligence Agency (CIA), ran four strategies concurrently that harmonized better than Crosby, Stills, Nash & Young.  So well, in fact, that the Soviet Union collapsed ten years ahead of what CIA’s Intelligence Directorate had forecast:

Strategy One:  In the mid-1970s CIA embarked on a program to “educate” a new generation of Soviet leaders.  Hope for ending the Cold War lay with the “boomers.”  The old fogies in the Kremlin seemed to understand this, too, which is why they passed leadership to sick, dying men.  Leonid Brezhnev could barely stand for the last eight years of his life, while the Soviet system stagnated.  His successor Yuri Andropov was already dying from liver disease when he took over.  And his replacement, Konstantin Chernenko, was practically a living corpse.

Finally, at the urging of Foreign Secretary Andrei Gromyko, a younger man was chosen:  Mikhail Gorbachev.

Gorby’s closest adviser was Alexandre Yakovlev, who had probably been working for CIA since 1959 when he studied at Columbia University.  The Soviets sent their brightest brains to the United States for higher education—and many were recruited.

How was that so easy?  Most Soviets who arrived in the USA to study were smart enough to realize, despite their Leninist indoctrination, that communism as practiced in their Motherland was a cruel fraud.  CIA’s biggest challenge was getting them to return to Moscow, to climb the professional ladder.

Slowly, a network of influence was constructed in every professional arena:  politics, banking, industry, scientific research, media, and, of course, the KGB.

Slowly, in their respective arenas, moles chewed away at communist rule.

Strategy Two:  Ronald Reagan’s Strategic Defense Initiative (“Star Wars”) scared the Soviets stupid.  They were already spending most of their money on their military-industrial complex instead of ensuring that people got fed.  The U.S. essentially said, “Now you have to spend a whole lot more!”

The Soviets did not have a whole lot more, but were scraping to sustain what they had.  The arms race was over at that point.

And it was all based on a bluff.  The U.S. wasn’t spending anywhere near what the Soviets believed it was spending on “Star Wars.”  Through tactical disinformation, President Reagan made them believe he was capable of anything.  The CIA did not want the Soviets to give up the arms race; it wanted to bankrupt them out of existence.

After President Reagan’s “joke” into a live microphone—“We begin bombing in five minutes”–KGB Chairman Vladimir Kryuchkov convinced himself it was only a matter of time before our president would launch missiles, and Mr. Kryuchkov thus created Operation RYAN—a top priority secret mission to establish precisely when, not if, a U.S. sneak attack would occur.  Their operatives scurried around in circles trying to pinpoint something that did not exist.  It drove them nuts, while CIA proceeded with…

Strategy Three:  CIA wanted an Eastern-Bloc country that would pull off what Hungary had attempted in 1956 and Czechoslovakia twelve years later.  Soviet leaders had grown old and weary and sick, and their system had become stymied in apparatchik ineptitude.  And further quagmired in Afghanistan, a war they could never win, which depleted their military muscle and took their eye off the ball (Eastern Europe).  CIA studied the possibilities, from the Baltic to the Black Sea.  It settled on Poland, whose elements had synchronized:  A fiercely independent people devoted not to communism but Catholicism (92 percent); a dissatisfied intelligentsia; a labor force on the verge of rebellion.  All CIA had to do was stand back and watch—and be ready to jump when…

The volcano erupted in August 1980 at the shipyards in Gdansk and evolved into a Solidarity movement that paralyzed the country.  CIA saw to it that Poland’s intelligentsia jumped onto the bandwagon.  With that, the government capitulated.  But Solidarity tried to do too much too fast; a military crackdown was inevitable.  However, telecommunications had come a long way since the Prague Spring of 1968.  People the world over could see on live TV the harsh, oppressive reality of communism and martial law.

Solidarity went underground.  Through the Vatican, CIA channeled millions of dollars to the outlawed Solidarity movement, giving it technology to interrupt state TV news broadcasts with announcements like, “Don’t believe these liars!”

The Soviets, beleaguered by Afghan polo (which featured captured Russian officers as the puck), were horrified.  They knew they were looking at their own future.

Strategy Four:  CIA chipped away at the Soviet federal structure in all of the enslaved republics, from the Baltics to the Stans, firing up nationalist fervor, destabilizing the system for mass secession—an implosion.

The Soviets roundly deserved this.  Moscow had exploited all of these republics to the max, trading their natural resources for foreign currency banked in Moscow, with only a pittance trickling back to the republics.  Not only did the Kremlin not care about the people it governed, it did not care what happened to their environment.  The Aral Sea in Central Asia dried into a desert because of an ill-conceived Soviet policy to maximize Uzbekistan’s cotton crop.

The leaders of these republics did not need for CIA to point this out to them; they simply needed secret reassurance as they strove for self-determination.

Of much less help was the State Department, which wanted to deal with the republics through Moscow.  Not only was this easier for them then, say, creating new embassies and posting diplomats to Tashkent, Tbilisi, and Bishkek, etc, but it did not wish to embarrass the Kremlin.

Yet through CIA’s guidance, a new generation of leaders in the republics was poised to establish their independence.

And so the Cold War ended in late 1989.  Its demise created the erroneous impression—conveyed by Congress and the media—that the world had become safe for all Americans; time to spend less money on intelligence and security; time to become lazy and complacent—all through the 1990s.

James Joyce had a line for that:  “In moments of happiness, don’t despair, tragedy lurks around the next corner.”

Around the next corner came 9/11.

And the Saudi-organized and CIA-trained IS.”

Table of Contents

  • Illinois bond payments face court-ordered spending threat
  • This Ramadan Could be Even Bloodier Than Previous Years
  • Hacked Emails Show Top UAE Diplomat Coordinating With Pro-Israel Think Tank Against Iran
  • ‘Give them a pill’: Putin accuses US of hysteria over election hacking inquiry
  • Donald Trump’s Triumph of Stupidity
  • Billionaire Koch brothers lurk behind Trump Paris deal pull-out, but endgame is murky
  • Goldman Sachs applies for Saudi equities trading license: sources
  • Orban launches personal battle with Soros over Hungary

 Illinois bond payments face court-ordered spending threat

June 2,  2017

by Karen Pierog

Reuters

Chicago-Cash-strapped Illinois, with the worst state credit rating in U.S. history, faces more potential financial pressures next week when a federal judge rules whether the government must accelerate $300 million in monthly Medicaid-related payments.

Being forced to make those payments sooner could weaken the state’s ability to meet its obligations to pay investors who have bought its debt both before and during political gridlock that has left it without a proper budget for the past two fiscal years.

The state’s political gridlock shows no sign of easing as the Democrat-led legislature and the Republican governor failed to agree a budget for a third year before ending the spring legislative session on Wednesday, triggering rating downgrades and causing bond prices to plunge and yields to soar.

Since it doesn’t have a budget, Illinois operates in part under a system of state and federal court-ordered consent decrees that take spending discretion away from the state. This raises concerns that debt service on the state’s bonds may get squeezed by additional court-ordered payments.

While State Comptroller Susana Mendoza has latitude to decide which bills get paid, the court orders are increasingly limiting her options.

Abdon Pallasch, Mendoza’s spokesman, said a court ruling requiring an estimated $300 million more a month in core priority payments would be a tough challenge.

“We could reach a tipping point any time now where the court-mandated payments exceed the revenue coming in,” he said.

Illinois has accumulated a $14 billion pile of unpaid bills, equivalent to 40 percent of its general fund revenue.

Plaintiffs in one federal consent decree have asked a U.S. District Court judge to order Illinois to give a higher priority for medical care provider payments to ensure continued access for Medicaid recipients.

Tom Yates, executive director of the Legal Council for Health Justice, who is representing Illinois Medicaid recipients in the case, said a ruling is expected on Tuesday unless a resolution is reached with the state.

Illinois has argued that if the motion is granted, the state “will not have sufficient funds on hand to make all of the core priority payments.”

Each month, priority payments of $1.85 billion are allocated to schools, local governments, payroll, bonds and consent decrees, consuming 90 percent of Illinois’ monthly revenue, according to a court document filed by the state.

YIELD SPREAD RECORD, JUNK ON THE HORIZON.

On Thursday, both S&P Global Ratings and Moody’s Investors Service downgraded the state’s credit rating to just one notch above junk status, a level that caused the yield spread on Illinois bonds over the benchmark to hit the widest in history.

One of those ratings could fall to junk soon after the July 1 start of the state’s fiscal 2018 year if there is still no budget, according to S&P, which said Illinois risks entering “a negative credit spiral” that would exacerbate its fiscal distress.

Bond investors have taken comfort in an Illinois law that requires 1/12th of the next principal payment and 1/6th of the next interest payment – about $226 million – to be placed each month into a fund to retire the state’s $26 billion of outstanding general obligation bonds.

“The bond payments are pretty sacrosanct around here,” Pallasch said, adding that policy is not expected to change.

Illinois GO bonds due in 10 years now yield an all-time high of 258 basis points more than the muni market’s triple-A benchmark. For the state’s 20-year bonds, the spread hit a record 232 basis points, according to Municipal Market Data, a unit of Thomson Reuters. This indicates Illinois’ borrowing costs are ratcheting higher.

If Illinois becomes the first state with a junk credit rating, the situation would get even worse.

“Many investors require investment grade ratings, so a rating reduction to the BB category could trigger selling pressure and higher yields and credit spreads,” Janney Investment Strategy Group said in a report on Friday.

Concern is growing that debt service could be crowded out by an increase in other mandated payments.

S&P warned an expansion of the monthly core priority payments could call into question the state’s ongoing willingness to fund its GO bond payments given the state’s inadequate revenue base, particularly in the event of a deteriorating economy.

John Humphrey, co-head of credit research at Gurtin Municipal Bond Management, said there is a risk some of Illinois’ core priorities will get reduced payments.

“This entire situation is unprecedented and the road ahead is very unclear,” he said.

(Reporting by Karen Pierog; Editing by Daniel Bases and Cynthia Osterman)

 This Ramadan Could be Even Bloodier Than Previous Years

May 30, 2017

by Patrick Cockburn

The Unz Review

Ice cream and blood mingle on the floor after a bomb exploded outside an ice cream shop in the Karada district of Baghdad  as people broke their fast during the first day of Ramadan.

A bewildered young girl wanders through the wreckage, past the smashed yellow tables and benches where at least 26 people have just been been killed and dozens injured by an Isis bomber.

Bombings are usually worse in Baghdad in Ramadan, but they never stop during the rest of the year. Last year in Ramadan some 340 civilians were killed in the explosion of a single car in Baghdad.

Loss of life is all the greater because crowds of people are walking the streets after eating in the comparative cool of the evening.

This year the slaughter of civilians may be even worse than in the past in Iraq and Syria because Isis is losing the two largest urban centres still partly held by its fighters.

After six months of savage street fighting, Isis are penned back into part of the Old City in Mosul where the close-packed buildings and alleys, so narrow that two people cannot walk abreast, are ideal for Isis guerrilla fighters.

The largest Isis stronghold in Syria, Raqqa on the Euphrates, is isolated by Kurdish-led forces backed by US airpower.

Isis is on the retreat as is al-Qaeda in its different guises, but neither group is going out of business and they still have several tens of thousands of fanatical and experienced fighters.

Keep in mind that the Iraqi and Syrian armies, the main military forces fighting Isis, along with the Syrian and Iraqi Kurds, are all short of combat troops so it is difficult for them to consolidate their victories on the ground. Isis has suffered heavy losses in fighters and territory, but it can return to guerrilla warfare combined with systematic terrorism at home and abroad.

From the Isis point of view the future is not entirely bleak. They are still able to sow fear by murdering civilians, mostly Shia and Christians, from Manchester to Baghdad and beyond.

Their name is on every lip, even if it is being execrated. Moreover, Isis and al-Qaeda have always relied on the internecine hatreds of their enemies to help them survive as much as their own strength.

Donald Trump’s trip to Saudi Arabia and Israel has aided them by exacerbating the struggle between Sunni and Shia and Saudi Arabia and Iran.

Paradoxically, Isis at the height of its strength in 2014/15, after it had captured Mosul, so frightened all whom it targeted that it imposed a degree of unity or at least non-belligerence on its diverse enemies.

As Isis is perceived to weaken, its opponents become less terrified and recall other grievances against other rivals.

The Iraqi government and the non-Kurds of Iraq recall that the Kurds took advantage of the initial Isis victories in 2014 to grab territories long disputed between Kurds and Arabs.

In Syria, there is likewise a race by all parties and their foreign sponsors to over-run territory in eastern Syria previously held by Isis.

As Ramadan begins there is little expectation of violence receding in much of the Muslim world.

Nation states remain weak and there  is an escalation of sectarian differences in places where warfare has faded from the new agenda such as in the southern Philippines.

Some episodes, like the Saudi security forces siege the Shia town of Awamiya in eastern Saudi Arabia and escalating clashes in Bahrain are little reported. In Yemen lack of clean water has led to 52,000 cases of cholera and 471 dead from the disease.

These wars may ebb and flow, but there is little sign of peace returning.

Hacked Emails Show Top UAE Diplomat Coordinating With Pro-Israel Think Tank Against Iran

June 3 2017

by Zaid Jilani and  Ryan Grim

The Intercept

The email account of one of Washington’s most connected and influential foreign operatives has been hacked. A small tranche of those emails was sent this week to media outlets, including The Intercept, HuffPost and The Daily Beast, with the hacker promising to release a trove publicly.

The hotmail account belongs to the UAE’s ambassador to the United States, Yousef Al-Otaiba, and The Intercept can confirm it is the one he used for most Washington business. HuffPost confirmed at least one of the emails as authentic and the UAE has confirmed that Otaiba’s account was indeed hacked.

Otaiba’s influence derives largely from his pocketbook, as the ambassador is well known for throwing lavish dinner parties, galas, and hosting powerful figures on extravagant trips. Several Christmases ago, he sent out iPads as gifts to journalists and other Washington power players as gifts. There’s no telling what kind of messages might reside in that inbox.

The hackers used a .ru email address, associated with Russia, and referred to themselves as GlobalLeaks, tying themselves to DCLeaks, a website that previously released Democratic emails. The intelligence community has said DCLeaks is a Russian-operated website, which means that the Otaiba hackers are either connected with Russia or trying to give the impression that they are.

Russia and the Gulf monarchies, client states of the United States, are longtime rivals, backing opposing sides in Syria and clashing for decades over Iran, a Russian client state and a Gulf enemy.

The emails provided so far to the The Intercept show a growing relationship between the United Arab Emirates and the pro-Israel, neoconservative think tank called the Foundation for Defense of Democracies (FDD).

On the surface, the alliance should be surprising, as the UAE does not even recognize Israel. But the two countries have worked together in the past against their common adversary, Iran.

On March 10 of this year, FDD CEO Mark Dubowitz authored an email to both the UAE’s ambassador to the United States, Yousef Al-Otaiba, and FDD Senior Counselor John Hannah — a former deputy national security adviser to Vice President Dick Cheney — with the subject line “Target list of companies investing in Iran, UAE and Saudi Arabia.”

“Dear, Mr. Ambassador,” Dubowitz wrote. “The attached memorandum details companies listed by country which are doing business with Iran and also have business with the UAE and Saudi Arabia. This is a target list for putting these companies to a choice, as we have discussed.”

Dubowitz’s attached memorandum includes a lengthy list of “non-U.S. businesses with operations in Saudi Arabia or UAE that are looking to invest in Iran.”

The list includes a number of major international firms, including France’s Airbus and Russia’s Lukoil.

Presumably, the companies are being identified so that the UAE and Saudi Arabia can pressure them over investing in Iran, which is seeing an expansion of foreign investment following the 2015 nuclear deal.

Israel and the Gulf monarchies have grown closer in recent years, as both sides fear that Iran is moving closer to normalization with the West and will therefore increase its own influence and power in the region. But admissions of the alliance between the two are still rare in public. One high-level Israeli official, discussing the relationship on background for a previous HuffPost profile of Otaiba, laid out the politics of it. “Israel and the Arabs standing together is the ultimate ace in the hole. Because it takes it out of the politics and the ideology. When Israel and the Arab states are standing together, it’s powerful,” he said.

The hacked emails demonstrate a remarkable level of backchannel cooperation between a leading neoconservative think tank — FDD is funded by pro-Israel billionaire Sheldon Adelson, an ally of Israeli Prime Minister Benjamin Netanyahu who is one of the largest political donors in the United States  — and a Gulf monarchy.

Hannah and Otaiba are frequently chummy in the exchanges. On August 16 of last year, Hannah sent Otaiba an article claiming that the UAE and FDD were both responsible for the brief military coup in Turkey. “Honored that we’re in your company,” Hannah wrote to Otaiba.

In another email exchange in late April of this year, Hannah complains to Otaiba that Qatar — a rival Gulf government that has clashed with the UAE in recent months over various issues — is hosting a meeting of Hamas at an Emirati-owned hotel. Otaiba responds that it’s not the Emirati government’s fault, and that the real issue is the U.S. military base in Qatar, “How’s this, you move the base then we’ll move the hotel :-).”

The emails detail the proposed agenda of an upcoming meeting between FDD and UAE government officials that is scheduled for June 11-14. Dubowitz and Hannah are listed as attending, as well as Jonathan Schanzer, FDD vice president for research. UAE officials requested for meetings include Sheikh Mohammed bin Zayed, the crown prince who commands the armed forces.

The agenda includes extensive discussion between the two on Qatar. They are scheduled to discuss, for instance, “Al Jazeera as an instrument of regional instability.” (Al Jazeera is based in Qatar.)

There is also “discussion of possible U.S./UAE policies to positively impact Iranian internal situation”; included among the list of policies are “political, economic, military, intelligence, and cyber tools,” which are also brought up as a possible response to “contain and defeat Iranian aggression.”

FDD has been involved in shaping Mideast policy debate during the Trump administration, so it is likely that the UAE views it as an important conduit to pressure Trump to adopt its more hawkish line on Iran. David Weinberg, a senior fellow at the organization, was quoted last month as saying that the UAE is “ecstatic” about the Trump administration’s approach to the region.

“They have been looking for some time for an American partner to push-back against Iran,” he told Arabianbusiness.com. “They are looking for America to turn rhetoric into action.”

Otaiba has also developed a close relationship with President Trump’s son-in-law and adviser Jared Kushner. The two first met last June at the behest of Thomas Barrack, a billionaire investor and Trump backer. A Politico article last February described Kushner as “in almost constant phone and email contact” with the ambassador.

Whatever the UAE’s agenda, it isn’t promoting democracy. From the previous profile:

As protests spread in Egypt, Otaiba pushed the White House hard to support Mubarak, without success. After the Muslim Brotherhood came to power in a democratic election, he filled the inbox of Phil Gordon, the White House’s top Middle East adviser, with missives savaging the Brotherhood and its backers in Qatar. (Gordon declined to comment.) “He’d robo-email people,” says the former White House aide. “You can be sure when Yousef has something to say on a topic like that, high-level people throughout the State Department and in the White House are going to hear it, in very similar if not identical emails.”

We’re now getting a sense of what those emails looked like. In an email sent on July 3, 2013, shortly after the Egyptian military deposed elected Muslim Brotherhood-backed president Mohamed Morsi, Otaiba lobbied former Bush administration officials Stephen Hadley — now a consultant at RiceHadleyGates — and Joshua Bolten on his view on Egypt and the wider Arab Spring.

“Countries like Jordan and UAE are the ‘last men standing’ in the moderate camp. The arab spring has increased extremism at the expense of moderation and tolerance,” he lamented.

He described Morsi’s overthrow in glowing tones. “Today’s situation in Egypt is a second revolution. There more people on the streets today than January of 2011. This is not a coup, this is revolution 2.0. A coup is when the military imposes its will on people by force. Today, the military is RESPONDING to people’s wishes.”

Egypt today is a virtual dictatorship. And a close ally of both the U.S. and the UAE.

‘Give them a pill’: Putin accuses US of hysteria over election hacking inquiry

Russian president calls allegations of interference in US presidential election ‘useless and harmful chatter’ at St Petersburg economic forum

June 2, 2017

by Alec Luhn

The Guardian

Moscow-Vladimir Putin has said the US needs to stop the “useless and harmful chatter” about Russian interference in the presidential election, arguing that Donald Trump’s electoral strategy was entirely responsible for his victory.

Speaking at the St Petersburg economic forum, Putin claimed there was no concrete evidence for US intelligence agencies’ allegations of Russian hacking, and said cyber specialists “can make anything up and blame anyone”.

The Russian president added that this “attempt to solve internal political issues using instruments of foreign policy” was damaging international relations.

“The problem is not here, the problem is within American politics. Trump’s team was more effective in the electoral campaign,” Putin told the event’s moderator, the US television presenter Megyn Kelly.

“In all honesty, I myself sometimes thought that the guy was going too far, but it turned out he was right: he found an approach to those groups of the population and those groups of voters he counted on, and they came and voted for him,” Putin said.

Hillary Clinton’s campaign team was blaming the Russians rather than admitting its own mistakes, he said.

“It’s easier to say we are not guilty, the Russians are guilty … It reminds me of antisemitism: the Jews are guilty of everything,” Putin said at the end of his comments, which drew titters from the audience.

“If the information about the Democratic party favouring Clinton was true, is it really important who leaked it?” he asked, echoing his previous statements on Russian hacking.

US intelligence agencies say Russian spies hacked into a wide range of institutions and agencies during the US election campaign. They have accused two Kremlin spy agencies – the GRU and the FSB – of hacking Democratic party emails and giving them to the website WikiLeaks.

Earlier this week, Putin for the first time allowed that “patriotically minded” Russian hackers could have been responsible for the hack, but then argued that the cyber-attacks could have been contrived to point the finger at Moscow.

Kelly’s repeated questions about the investigations into Trump’s ties with Russia provoked one of Putin’s most fiery performances in years, laced with numerous jokes at the Americans’ expense.

Asked about Russian officials meeting with members of Trump’s team during the campaign and transition, Putin declared they had just shared “general words about building relations” and that allegations of collusion were “some kind of hysteria, and you guys just can’t stop”.

“Do we need to give you a pill? Does anyone have a pill? Give them a pill, really, honestly. It’s surprising,” he said, raising a laugh even out of the impassive Indian PM, Narendra Modi, who was seated next to him.

Austria’s chancellor, Christian Kern, and Moldova’s president, Igor Dodon, also took part in the discussion.

Besides praising Trump’s electoral campaign, Putin refused to condemn the US president’s decision to withdraw the US from the Paris climate accord, making light of the issue and questioning whether the countries of the world were really “in a position to halt climate change”.

“Somehow we here aren’t feeling that the temperature is really rising, but we should be thankful to President Trump. There was snow in Moscow today; [in St Petersburg], it’s rainy and cold – now we can blame all this on him and American imperialism,” Putin joked.

Putin told Kelly, in English, “Don’t worry, be happy,” assuring her that the agreement would take effect in 2021, so there was still “plenty of time to reach an agreement”.

It wasn’t clear what he was referring to in this comment, since the accord took effect in November 2016.

One area where Putin was critical of Trump’s policy was regarding the US president’s demand that Nato members raise their military spending to 2% of GDP.

“If they aren’t planning to attack anyone, then why increase spending? That of course worries us,” Putin said.

Donald Trump’s Triumph of Stupidity

German Chancellor Angela Merkel and other G-7 leaders did all they could to convince Trump to remain part of the Paris Agreement. But he didn’t listen. Instead, he evoked deep-seated nationalism and plunged the West into a conflict deeper than any since World War II.

June 2,2017

by Christian Esch, Konstantin von Hammerstein, Julia Amalia Heyer, Christiane Hoffmann, Horand Knaup, Peter Müller, Ralf Neukirch, René Pfister, Christoph Scheuermann, Christoph Schult, Samiha Shafy and Gerald Traufetter

SPIEGEL

Until the very end, they tried behind closed doors to get him to change his mind. For the umpteenth time, they presented all the arguments — the humanitarian ones, the geopolitical ones and, of course, the economic ones. They listed the advantages for the economy and for American companies. They explained how limited the hardships would be.

German Chancellor Angela Merkel was the last one to speak, according to the secret minutes taken last Friday afternoon in the luxurious conference hotel in the Sicilian town of Taormina — meeting notes that DER SPIEGEL has been given access to. Leaders of the world’s seven most powerful economies were gathered around the table and the issues under discussion were the global economy and sustainable development.

The newly elected French president, Emmanuel Macron, went first. It makes sense that the Frenchman would defend the international treaty that bears the name of France’s capital: The Paris Agreement. “Climate change is real and it affects the poorest countries,” Macron said.

Then, Canadian Prime Minister Justin Trudeau reminded the U.S. president how successful the fight against the ozone hole had been and how it had been possible to convince industry leaders to reduce emissions of the harmful gas.

Finally, it was Merkel’s turn. Renewable energies, said the chancellor, present significant economic opportunities. “If the world’s largest economic power were to pull out, the field would be left to the Chinese,” she warned. Xi Jinping is clever, she added, and would take advantage of the vacuum it created. Even the Saudis were preparing for the post-oil era, she continued, and saving energy is also a worthwhile goal for the economy for many other reasons, not just because of climate change.

But Donald Trump remained unconvinced. No matter how trenchant the argument presented by the increasingly frustrated group of world leaders, none of them had an effect. “For me,” the U.S. president said, “it’s easier to stay in than step out.” But environmental constraints were costing the American economy jobs, he said. And that was the only thing that mattered. Jobs, jobs, jobs.

At that point, it was clear to the rest of those seated around the table that they had lost him. Resigned, Macron admitted defeat. “Now China leads,” he said.

Still, it is likely that none of the G-7 heads of state and government expected the primitive brutality Trump would stoop to when  announcing his withdrawal from the international community. Surrounded by sycophants in the Rose Garden at the White House, he didn’t just proclaim his withdrawal from the climate agreement, he sowed the seeds of international conflict. His speech was a break from centuries of Enlightenment and rationality. The president presented his political statement as a nationalist manifesto of the most imbecilic variety. It couldn’t have been any worse.

A Catastrophe for the Climate

His speech was packed with make-believe numbers from controversial or disproven studies. It was hypocritical and dishonest. In Trump’s mind, the climate agreement is an instrument allowing other countries to enrich themselves at the expense of the United States. “I was elected to represent the citizens of Pittsburgh, not Paris,” he said. Trump left no doubt that the well-being of the American economy is the only value he understands. It’s no wonder that the other countries applauded when Washington signed the Paris Agreement, he said. “We don’t want other leaders and other countries laughing at us anymore. And they won’t be. They won’t be.”

Trump’s withdrawal is a catastrophe for the climate. The U.S. is the second-largest emitter of greenhouse gases — behind China — and is now no longer part of global efforts to put a stop to climate change. It’s America against the rest of the world, along with Syria and Nicaragua, the only other countries that haven’t signed the Paris deal.

But the effects on the geopolitical climate are likely to be just as catastrophic. Trump’s speech provided only the most recent proof that discord between the U.S. and Europe is deeper now than at any time since the end of World War II.

Now, the Western community of values is standing in opposition to Donald Trump. The G-7 has become the G-6. The West is divided.

For three-quarters of a century, the U.S. led and protected Europe. Despite all the mistakes and shortcomings exhibited by U.S. foreign policy, from Vietnam to Iraq, America’s claim to leadership of the free world was never seriously questioned.

That is now no longer the case. The U.S. is led by a president who feels more comfortable taking part in a Saudi Arabian sword dance than he does among his NATO allies. And the estrangement has accelerated in recent days. First came his blustering at the NATO summit in Brussels, then the disagreement over the climate deal in Sicily followed by Merkel’s speech in Bavaria, in which she called into question America’s reliability as a partner for Europe. A short time later, Trump took to Twitter to declare a trade war — and now, he has withdrawn the United States from international efforts to combat climate change.

A Downward Pointing Learning Curve

Many had thought that Trump could be controlled once he entered the White House, that the office of the presidency would bring him to reason. Berlin had placed its hopes in the moderating influence of his advisers and that there would be a sharp learning curve. Now that Trump has actually lived up to his threat to leave the climate deal, it is clear that if such a learning curve exists, it points downward.

The chancellor was long reluctant to make the rift visible. For Merkel, who grew up in communist East Germany, the alliance with the U.S. was always more than political calculation, it reflected her deepest political convictions. Now, she has — to a certain extent, at least — terminated the trans-Atlantic friendship with Trump’s America.

In doing so, the German chancellor has become Trump’s adversary on the international stage. And Merkel has accepted the challenge when it comes to trade policy and the quarrel over NATO finances. Now, she has done so as well on an issue that is near and dear to her heart: combating climate change.

Merkel’s aim is that of creating an alliance against Trump. If she can’t convince the U.S. president, her approach will be that of trying to isolate him. In Taormina, it was six countries against one. Should Trump not reverse course, she is hoping that the G-20 in Hamburg in July will end 19:1. Whether she will be successful is unclear.

Trump has identified Germany as his primary adversary. Since his inauguration in January, he has criticized no country — with the exception of North Korea and Iran — as vehemently as he has Germany. The country is “bad, very bad,” he said in Brussels last week. Behind closed doors at the NATO summit, Trump went after Germany, saying there were large and prosperous countries that were not living up to their alliance obligations.

And he wants to break Germany’s economic power. The trade deficit with Germany, he recently tweeted, is “very bad for U.S. This will change.”

An Extreme Test

Merkel’s verdict following Trump’s visit to Europe could hardly be worse. There has never been an open break with America since the end of World War II; the alienation between Germany and the U.S. has never been so large as it is today. When Merkel’s predecessor, Chancellor Gerhard Schröder, refused to provide German backing for George W. Bush’s invasion of Iraq, his rebuff was limited to just one single issue. It was an extreme test of the trans-Atlantic relationship, to be sure, but in contrast to today, it was not a quarrel that called into question commonly held values like free trade, minority rights, press freedoms, the rule of law — and climate policies.

To truly understand the consequences of Trump’s decision, it is important to remember what climate change means for humanity — what is hidden behind the temperature curves and emission-reduction targets.

Climate change means that millions are threatened with starvation because rain has stopped falling in some regions of the planet. It means that sea levels are rising and islands and coastal zones are flooding. It means the melting of the ice caps, more powerful storms, heatwaves, water shortages and deadly epidemics. All of that leads to conflicts over increasingly limited resources, to flight and to migration.

In the U.S., too, there were plenty of voices warning the president of the consequences of his decision, Trump’s daughter Ivanka and her husband Jared Kushner among them. Others included cabinet members like Secretary of State Rex Tillerson and Secretary of Energy Rick Perry, along with pretty much the country’s entire business elite.

Companies from Exxon and Shell to Google, Apple and Amazon to Wal-Mart and PepsiCo all appealed to Trump to not isolate the U.S. on climate policy. They are worried about international competitive disadvantages in a world heading toward green energy, whether the U.S. is along for the ride or not. Google, Microsoft and Apple have long since begun drawing their energy from renewable sources, with the ultimate goal of complete freedom from fossil fuels. Wind and solar farms are booming in the U.S. — and hardly an investor can be found anymore for coal mining.

A long list of U.S. states, led by California, have charted courses that are in direct opposition to Trump’s climate policy. According to a survey conducted by the Chicago Council on Global Affairs, almost three-quarters of Americans are opposed to withdrawing from the Paris Agreement.

The Absurdity of Trump’s Histrionics

On the other side are right-wing nationalists such as Trump’s chief strategist Stephen Bannon, who deny climate change primarily because fighting it requires international cooperation. Powerful Republicans have criticized the climate deal with the most specious of all arguments. The U.S., they say, would be faced with legal consequences were it to miss or lower its climate targets.

Yet international agreement on the Paris accord was only possible because it contains no punitive tools at all. The only thing signatories must do is report every five years how much progress they have made toward achieving their self-identified climate protection measures.

Therein lies the absurdity of Trump’s histrionics. Nothing would have been easier for the U.S. than to take part pro forma in United Nations climate-related negotiations while completely ignoring climate protection measures at home — which Trump has been doing anyway since his election.

In late March, for example, he signed an executive order to unwind part of Barack Obama’s legacy, the Clean Power Plan. Among other measures, the plan called for the closure of aging coal-fired power plants, the reduction of methane emissions produced by oil and natural gas drilling, and stricter rules governing fuel efficiency in new vehicles. Without these measures, Obama’s goal of reducing greenhouse gas emissions by up to 28 percent by 2025, in comparison to 2005, will hardly be achievable. But Trump is also planning to head in the opposite direction. To make the U.S. less dependent on energy imports, he wants to return to coal, one of the dirtiest energy sources in existence — even though energy independence was largely achieved years ago thanks to cheap, less environmentally damaging natural gas.

German and European efforts will now focus on keeping the other agreement signatories on board, which Berlin has already been working on for several weeks now. Because of the now-visible effects of climate change and the falling prices for renewable energies, German officials believe that the path laid forward by Paris is irreversible.

Berlin officials say that EU member states are eager to move away from fossil fuels, as are China and India. Even emissaries from Russia and Saudi Arabia, countries whose governments aren’t generally considered to be enthusiastic promoters of renewable energy sources, have indicated to the Germans that “Paris will be complied with.” On Thursday in Berlin, Merkel and Chinese Prime Minister Li Keqiang demonstratively reaffirmed their support for the Paris Agreement. Keqiang even spoke of “green growth.”

China and India are likely to not just meet, but exceed their climate targets. China has been reducing its coal consumption for the last three years and plans for over 100 new coal-fired power plants have been scrapped. India, too, is abstaining from the construction of new coal-fired plants and will likely meet its goal of generating 40 percent of its electricity from non-fossil fuels by 2022, eight years earlier than planned. Both countries invest in solar and wind energy and in both, electricity from renewable sources is often cheaper than coal power.

Isolating the American President

The problem is that all of that still won’t be enough to limit global warming to significantly below 2 degrees Celsius, as called for in the Paris deal. Much more commitment, much more decisiveness is necessary, particularly in countries that can afford it. German, for example, is almost certain to fall short of its target of reducing greenhouse gas emissions by at least 40 percent by 2020 relative to 1990.

In Taormina, Chancellor Merkel did all she could to isolate the American president. In the summit’s closing declaration, she wanted to specifically mention the conflict between the U.S. and its allies over the climate pact. Normally, such documents tend to remain silent on such differences.

At the G-20 meeting in Hamburg, Merkel plans to stay the course. She hopes that all other countries at the meeting will stand up to the United States. Even if Saudi Arabia ends up supporting its ally Trump, the end result would still be 18:2, which doesn’t look much better from the perspective of Washington.

Merkel, in any case, is doing all she can to ramp up the pressure on Trump. “The times in which we could completely rely on others are over to a certain extent,” she said in her beer tent speech last Sunday.

It shouldn’t be underestimated just how bitter it must have been for her to utter this sentence, and how deep her disappointment. Merkel, who grew up in the Soviet sphere of influence, never had much understanding for the anti-Americanism often found in western Germany. U.S. dependability is partly to thank for Eastern Europe’s post-1989 freedom.

Merkel has shown a surprising amount of passion for the trans-Atlantic relationship over the years. She came perilously close to openly supporting the 2003 U.S. invasion of Iraq and enjoyed a personal friendship with George W. Bush, despite the fact that most Germans had little sympathy for the U.S. president. Later, Merkel’s response to the NSA’s surveillance of her mobile phone was largely stoic and she also didn’t react when Trump called her refugee policies “insane.”

As such, Merkel’s comments last Sunday about her loss of trust in America were eye-opening. It was a completely new tone and Merkel knew that it would generate attention. Indeed, that’s what she wanted.

A Clear Message to the U.S.

Her sentence immediately circled the globe and was seen among Trump opponents as proof that the most powerful woman in Europe had lost hope that Trump could be brought to reason.

Prior to speeches to her party, such as the one held last Sunday, she always gets a manuscript from Christian Democratic Union (CDU) headquarters in Berlin, but she herself writes the most decisive passages. The comment about Europe’s allies was a clear message to the U.S., but it was also meant for a domestic audience. Her speech marked the launch of her re-election campaign.

Merkel knows that her campaign adversaries from the center-left Social Democrats (SPD) intend to make foreign policy an issue in the election. After all, it has a long history of doing so. Willy Brandt did so well in 1969 and 1972 in part because he called into question the Cold War course that had been charted to that point. Gerhard Schröder managed to win in 2002 in part because of his vociferous rejection of German involvement in the coming Iraq War.

Last Monday, German Foreign Minister Sigmar Gabriel, a senior SPD member, took advantage of a roundtable discussion on migration in the Foreign Ministry to lay into Trump. The largest challenges we currently face, such as climate change, he said, have been made “even larger by the new U.S. isolationism.” Those who don’t resist such a political course, Gabriel continued, “make themselves complicit.” It was a clear shot at the chancellor.

But her speech last Sunday shielded Merkel from possible accusations of abetting Trump, though she nevertheless wants to keep the dialogue going with Washington. Speaking to conservative lawmakers in Berlin on Tuesday, she said that the trans-Atlantic relationship continues to be of “exceptional importance.” Nevertheless, she added, differences should not be swept under the rug.

Merkel realized early on just how difficult it would be to work with the new U.S. president, partly because she watched videos of some of his pre-inauguration appearances. Speaking to CDU leaders in December, she said that Trump was extremely serious about his slogan “America First.”

The chancellor’s image of Trump has shifted since then, but not for the better. The first contacts with the new government in Washington were sobering. When Christoph Heusgen, her foreign policy adviser, met for the first time with Michael Flynn, who was soon to become Trump’s short-lived national security adviser, he was shocked by his American counterpart’s lack of knowledge.

Shattered Hopes

But there were still grounds for optimism. Early on, Merkel thought that the new U.S. government’s naiveite might mean that Trump could be influenced. She was hoping to play the role of educator, an approach that initially looked like it might be successful. In a telephone conversation in January, Merkel explained to Trump the situation in Ukraine. She had the impression that he had never before seriously considered the issue and she was able to convince him not to lift the sanctions that had been placed on Russia.

The new president has likewise thus far refrained from moving the U.S. Embassy in Israel from Tel Aviv to Jerusalem. He has also left the Iran deal alone and revised initial statements in which he had said that NATO was “obsolete.” In the Chancellery, there was hope that Trump could in fact become something like a second-coming of Ronald Reagan.

Those hopes have now been shattered. Because Trump has had difficulty fulfilling many of his campaign promises, he has become even more intransigent. Merkel watched in annoyance as Trump did all he could in Saudi Arabia to avoid upsetting his hosts only to come to the NATO summit and cast public aspersions at his allies. The bad thing about Trump is not that he criticizes partners, says a confidante of Angela Merkel’s, but that in contrast to his predecessors, he calls the entire international order into question.

At one point, Merkel took Trump aside in Sicily to speak with him privately about climate protection and the president told her that he would prefer to delay his decision on the Paris Agreement until after the G-20 in July. You can postpone everything, Merkel replied, but it’s not helpful. She urged that he make a decision prior to the Hamburg summit.

He has now done so.

To the degree that one can make such a claim, Trump has a rather functional view of Merkel. He wants her to increase defense spending and to reduce Germany’s trade surplus with the U.S., even if it is a political impossibility. And he wants Merkel to force other European leaders to do the same, even though Merkel doesn’t possess the power to do so.

In Trump’s world, there are no allies and no mature relationships, just self-interested countries with short-term interests. History means nothing to Trump; as a hard-nosed real-estate magnate, he is only interested in immediate gains. He cares little for long-term relationships.

Two close advisers to the president contributed a piece to the Wall Street Journal this week that can be seen as something like a “Trump Doctrine.” “The world is not a ‘global community,'” wrote Gary Cohn and Herbert Raymond McMaster, Trump’s economic and security advisers. The subtext is clear: The global order, which the United States helped build, belongs to the past. There are no alliances anymore, just individual interests — no allies, just competitors. It was a clear signal to America’s erstwhile Western allies that they can no longer rely on the United States as a partner.

It’s not surprising that Moscow is gleefully scoffing at the losers in Europe. Mariya Sakharova, the Foreign Ministry’s brash spokeswoman, gloated openly Tuesday on Vladimir Solovyov’s popular Russian talk show.

If Europe is going to have to take its fate into its own hands, as Merkel says, that just shows how different things used to be when the Continent simply followed the marching orders given by Washington, she said. “We always thought that the Europeans had united in the European Union — but they were really just standing at attention,” she sneered to the approving giggles of her host.

The open government gloating is indicative of the mood currently prevailing in the Russian capital. For Vladimir Putin, a dream appears to have come true in recent days; Trump could prove to be a godsend. For some time, Moscow has been trying to drive a wedge between the trans-Atlantic alliance. But now it looks as though the American president is doing that job for him.

In the past, the Americans guaranteed Europe’s security with their nuclear and conventional capabilities. Russia would stand to profit the most from a loosening or possible breakup of the trans-Atlantic relationship. If that were to happen, Putin will have been successful in his strategy of undermining the cohesion of liberal Western democracies.

The fact that the process of disintegration would go so fast has surprised even the Russians. “The trans-Atlantic frictions had been obvious for months. But I didn’t expect Merkel to say that Europe needs to free itself from its dependency on the United States,” says Konstantin Kosachev, who chairs the Foreign Affairs Committee of the Federal Council, the upper chamber of Russia’s parliament.

In Brussels, Berlin and many other European capitals, pro-European forces are hoping that Moscow is premature with its celebratory mood. They believe the Trump factor could have the reverse effect and actually serve as a magnet to pull the quarreling Europeans back together.

“We’ve had enough,” says Manfred Weber, the influential German politician who leads the conservative party caucus in the European Parliament. “Despite goodwill, we are at a turning point. We have to seize our own opportunity and show that we are just as prepared to act with our trade policies as we are with defense.”

Indeed, the Trump factor appears to be having an aphrodisiac effect on European defense cooperation efforts. What had seemed nearly impossible only a short time ago has now become plausible. France and Germany have long been pushing for closer military cooperation in Europe. The French are interested in doing so to assert their own claim to leadership on the Continent, alongside the Americans. And the Germans are interested in diverting attention from the fact that they have spent years spending too little on their armed forces.

In the past, it had always been the British and the Eastern Europeans who stood in the way of the joint efforts promoted by Germany and France — for the most part out of fear that an internal European competitor to NATO could result. But Britain’s decision to leave the EU also means that it will no longer be able to block such efforts. The Eastern Europeans, meanwhile, who see themselves as being on the front against Russia, have lost faith in Trump’s pledges to the alliance.

The government in Berlin isn’t the only one taking note of the Estonians’ eagerness for progress on defense cooperation once it assumes the rotating six-month presidency of the European Council in July. The country had previously been largely opposed to deeper European defense cooperation.

No one believes that Europe can ensure its future security on its own. Washington’s military role is too dominant for that. The U.S. spends two and a half times more on defense each year than all the European NATO member states combined. That’s why the unthinkable has always been ignored: That Trump could actually withdraw from NATO. But the climate issue has demonstrated that the unthinkable is not something that Trump shies away from.

Europe’s Military Push

The more unpredictable this major ally becomes, the more the Europeans will have to rely on their own military capabilities. A few weeks ago, they agreed in Brussels to create a joint command center that would be responsible in the future for European training missions in Africa and the naval operation Sophia against human-traffickers in the Mediterranean Sea. After lengthy hesitation, even Britain relented and agreed in the end.

Further projects may follow, including a European medical command, joint officer training and a European logistics hub. The French and the Germans also want to create a joint air transport unit. The Dutch have offered to take leadership of a multinational alliance providing air-to-air refueling and transport aircraft.

On Wednesday, the European Commission plans to present a paper playing out a number of scenarios of what stronger military cooperation in the European Union might look like in 2025, if the EU member states move to more closely coordinate their military activities. Under the scenarios, EU member states would more closely coordinate their military planning and they would also conduct joint exercises on a regular basis.

Even though there is an urgent need for it, the most difficult area of cooperation seems to be that of joint arms procurement. “There are 178 different weapon systems in the EU, compared to 30 in the U.S.,” says European Commission President Jean-Claude Juncker. The result is that Europeans achieve only 15 percent of the efficiency enjoyed by the Americans with their defense spending.

The Germans and the French, especially, would like to cooperate more closely in this area and develop drones, tanks and combat helicopters together. But previous experience has been sobering. The negotiations are taking an eternity and no agreement is in sight.

The EU is not setting out to challenge the U.S. on security policy — it merely wants to become less dependent on the Americans, which is something Washington might support as well.

Trade, on the other hand, could be the subject of major conflicts. German Economics Minister Brigitte Zypries and her senior deputy Matthias Machnig experienced firsthand during a trip to the American capital last week, just how big the chasm is on trade issues. Both politicians, members of the center-left Social Democratic Party (SPD), were shocked after their talks with Republican members of Congress and the president’s trade advisers.

“Some of the Americans we met with have a serious misjudgment about the economy,” Machnig reports. “They believe that the high trade deficit the U.S. has with other countries is largely the product of bad trade deals.” They claim that they are constantly getting defeated in the World Trade Organization’s (WTO) courts. “But the Americans use the WTO system just like every other country to address trade disputes. And they are often successful.” With Trump, he says, the U.S. is already well on its way to self-isolation.

An Opportunity for Europe?

What Trump might call a disaster, could actually present a major opportunity for Europe. The EU could offer an alternative to trading partners feeling snubbed by the Americans. That’s one reason that negotiations have been accelerated for free trade agreements between the EU and Japan and the Mercosur countries of South America. EU Trade Commissioner Cecilia Malmström herself even personally attacked Trump during her recent visit to Mexico. “Now is the time to build bridges, not walls,” she said.

In addition to trade, the EU also wants to fill the vacuum being left behind by the United States on climate protection. “It is Europe’s duty to say: That’s not how it works,” EU Commission President Juncker said on Wednesday in Berlin. “The Americans can’t just leave the climate protection agreement. Mr. Trump believes that because he doesn’t get close enough to the dossiers to fully understand them.”

Juncker says it will take three to four years for the United States to withdraw from the agreement. “We tried to explain that to Mr. Trump in Taormina in clear German sentences. It seems our attempt failed, but the law is the law and it must be obeyed.” He also said that “not everything which is law and not everything in international agreements is fake news.”

In addition to defense, trade and climate protection, there’s a fourth area where the Trump factor could generate some movement. Emancipation from America can only succeed if a way can be found to prevent the common currency from once again becoming the plaything of international financial investors. The introduction of the euro was intended as the crown achievement of the European peace project, but it instead led to massive discord on the Continent during the crisis.

In response, there are numerous proposals on the table for eliminating the design flaws in the currency union. At the core is the question of balancing out the interests of the Northern and Southern European countries. Members in Northern Europe are pushing for fiscal discipline and business innovation, whereas Southern Europe wants to be able to use government borrowing to spur growth if need be.

On Wednesday, the European Commission presented a reflection paper on the future of the euro. Suddenly, many proposals no longer sounded as unrealistic as they did only a few months ago: that of the creation of a post for an EU finance minister and Eurogroup head and a eurozone treasury.

Macron’s Momentum

Much of the recent momentum is attributable to one man: new French President Macron. If he makes good on his pledges and forges ahead with economic reforms in his country, it would make it increasingly difficult for Germany to balk at France’s ideas for the eurozone. Merkel has long hinted as much by saying she would be prepared to make the necessary changes to the European treaties. “We can give the whole situation a new dynamic,” Merkel said during Macron’s recent visit to Berlin.

Whether Europe can succeed in breaking free from the United States will ultimately hinge on Merkel and Macron working together. If Merkel wins the election in September, she will have, together with the new French president, the unique opportunity to give Europe the international credibility that it now lacks, says American historian Anne Applebaum. She says Europe should now develop its own foreign policy, its own security and possibly even its own army. “Shouldn’t a European navy blockade the Libyan coast? Shouldn’t Europeans be thinking about ending the war in Syria? Shouldn’t Europe have a joint strategy to push back against Russian disinformation? All of these things are possible, but only if Europe’s political leaders start working on them now.”

The idea that the Europeans could no longer primarily rely “on others,” that they have to become more active on their own, was Macron’s position even before his election. He wants to create greater capacity for the EU to act, and he wants to adapt its institutions to the new challenges. That’s one reason he appointed Sylvie Goulard, a longtime member of the European Parliament who speaks perfect German, as his defense minister.

“Whether we loudly proclaim our concerns as Europeans or not, the main thing is making it more capable of acting,” says one French diplomat. The French share Merkel’s view that Trump’s Washington is no longer a reliable partner. Macron’s statement before the G-7 that he sees Trump as a “partner” was nothing more than lip service. And French diplomats were appalled by how poorly prepared the Americans were in both Brussels and at the G-7 summit in Taormina.

Still, it’s unlikely that Macron, who has so far proven himself to be quite skillful with mind games, will seek an open conflict with Trump. A trans-Atlantic clash isn’t in his interests. Macron firmly believes in his own persuasiveness, his charm and his seductiveness. At first, he will try to do everything he can to steer Trump where he wants him to go.

And Angela Merkel may find all the things in Macron that she likely sought in vain in his predecessor. Macron could become a reliable and strong partner for Germany. Indeed, there has never before been a French government with as many members possessing deep knowledge of Germany as this one.

Can Merkel Forge Alliance Against Trump?

Will the German chancellor succeed in forging alliances against Donald Trump on the important disputes? It won’t be easy. In terms of climate protection, there is a chance. But it’s much less likely on trade and defense. When it comes to burden sharing within NATO, Trump isn’t alone in his views. And in terms of Germany’s trade surplus, it isn’t clear who will face isolation.

Merkel is now convinced that Europe must take its fate into its own hands. At the same time, Germany also can’t be totally certain who its allies are. When Trump began attacking the Germans behind closed doors in Brussels, it was Macron and Canadian Prime Minister Justin Trudeau, above all, who sprung to the chancellor’s defense. Participants say it was alarming how many NATO members kissed the ground before Trump — and not just the usual suspects from Eastern Europe.

Merkel has many fans. She is the star among liberals around the world. The leftist American press had already begun declaring her the new leader of the free world even before Trump’s election. In an opinion piece this week, Britain’s Guardian  heaped praise on Merkel, noting that “her statesmanship, her ease, her ability to broker deals and relationships is ever more impressive.” But her glorification in the press will do little to help in her test of strength with the world’s most powerful man.

And what about China? The major Asian power is standing in the wings, ready to take over the role of the world’s leading nation, which America appears to be abandoning. At the World Economic Forum in Davos in January, President Xi Jinping sought to present himself as the most powerful advocate of global free trade. Now China also wants to become the leading nation when it comes to climate protection. But officials in Merkel’s Chancellery aren’t harboring many illusions when it comes to the new partner.

At moments when nothing else helps, Merkel these days, it is said, takes a look at her appointment calendar — more specifically at June 17. That Saturday, Merkel plans to fly to Rome, where the pope is hosting a private reception for Protestants. The chancellor wants to present Pope Francis with the goals of her G-20 summit in Hamburg in July, on issues like migration and women’s rights, for example. It doesn’t require much imagination to believe that the two are on the same page when it comes to Trump.

The differences of opinion between the U.S. president and the head of the Catholic Church are no secret. In contrast to Trump, Pope Francis has called for the protection of God’s creation and for the world to battle climate change. “It is inconceivable that the pope did not discuss climate change in his conversation with Trump,” says one person close to the Vatican who has intimate knowledge of Francis’ thinking. But it doesn’t appear to have done anything to help.

Billionaire Koch brothers lurk behind Trump Paris deal pull-out, but endgame is murky

June 2, 2017

RT

Trump’s highly controversial decision to leave the Paris Climate Agreement was well-telegraphed throughout his campaign, but speculation that his one-time detractors the billionaire business mogul Koch brothers were behind the decision is gaining momentum.

“What’s happening behind here is real politics. This is the victory paid and carried out for 20 years by two people: David and Charles Koch. That’s what this is about,” Columbia University professor and Director of the Earth Institute Jeffrey Sachs said in an interview with Bloomberg.

Sachs placed the blame for Trump’s decision squarely on the Koch brothers’ shoulders, claiming: “They have bought and purchased the top of the Republican party… Trump is a tool in this.”

Koch Industries and its subsidiaries are a sprawling conglomerate that comprises everything from chemicals and plastics manufacturing to energy products such as natural gas and petroleum and even fertilizer and ranching, all of which are highly polluting industries that would greatly benefit from decreased regulation and government interference.

Sachs also referenced a recent letter by Republican senators to Trump, thanking him for rolling back regulations through a series of executive orders and throwing their support behind his stance on climate change.

Sachs is not alone in this stance, with prominent Democratic senators expressing similar sentiments online.

Democratic Senator Sheldon Whitehouse, a member of the Senate Environment Committee, pulled no punches in calling out the Koch brothers and their propaganda network in a statement posted on Twitter.

While not alluding directly to the Koch brothers, Democratic Senator Patrick Leahy echoed Whitehouse’s sentiments.

While the Koch brothers did not vocally support Trump on the election trail, it appears they have made their peace with the controversial president and his pro-business policies.

“We’re principled, and if we can’t get comfortable with the policies that are in place, then we’re not going to support them,” Mark Holden, Koch Industries’s top lawyer, said previously as cited by the Washington Post.

Koch Industries is the second-largest privately held company by revenue in the US, according to Forbes, and reportedly spent almost $900 million during the 2016 US presidential race through a variety of canvassing campaigns for a number of candidates.

US Vice President Mike Pence, Environmental Protection Agency leader Scott Pruitt, and Marc Short, the Trump’s director of legislative affairs, all have ties to the Koch network, the Independent reports.

While billionaires throwing money behind their preferred presidential candidates is nothing new, what stands out in this instance is that the Koch brothers’ sphere of influence extends far enough into another billionaire’s domain.

Indeed, energy mogul and former billionaire T. Boone Pickens, a self-professed believer in climate change, applauded Trump for withdrawing from the Paris agreement.

“The Paris Climate Accord is another bad deal negotiated by the Obama administration and America should applaud President Trump’s decision to exit,” Pickens said in a statement published on his website.

While on face value, Trump’s decision may appear to be borderline nihilistic to his critics, including a swathe of tech industry giants and former advisors who have jumped ship in the immediate aftermath, some suggest he may actually be setting up a bigger win in future.

In an Op-Ed piece published by Business Insider, Matthew De Bord suggests that Trump may be opening the door for the introduction of a carbon tax, a major goal of former advisor and Tesla CEO Elon Musk and an idea Trump’s current secretary of state and former ExxonMobil CEO Rex Tillerson has previously endorsed.

Time will tell how the climate agreement fiasco ultimately plays out, but Dan Merica rightly pointed out that, either way, this may ultimately end up a non-issue.

Goldman Sachs applies for Saudi equities trading license: sources

June 2, 2017

by Saeed Azhar

Reuters

DUBAI-Goldman Sachs (GS.N) has applied to Saudi Arabia’s capital markets regulator for a license to trade equities in the kingdom, two sources familiar with the move said, in the latest step by Western banks to expand operations in the country.

Goldman has made the application to the Capital Market Authority (CMA) and a successful outcome could lead to a further expansion of its business in the kingdom, one of the sources said.

Goldman has been operating in Saudi Arabia since 2009 as an agent and underwriter. In 2014, the Saudi Capital Market Authority approved a change in the bank’s profile and it has been authorized to arrange, advise and manage investment funds and portfolios, according to its website.

Further details of the business buildup or hiring plan were not immediately known

Goldman declined to comment, while CMA did not respond to a Reuters request for a comment.

The Wall Street bank’s move indicates growing interest among investment banks and fund managers to expand in Saudi Arabia after the kingdom unveiled plans for oil firm Aramco’s $100 billion initial public offering and introduced a string of reforms since 2015 to attract foreign capital.

Citigroup (C.N) obtained an investment banking license recently which will allow it to return to the kingdom after more than 13 years, while Credit Suisse AG (CSGN.S) is seeking a banking license in the kingdom to build a fully-fledged onshore private banking business.

The opening up of the market and privatization of state-owned companies are part of a reform agenda to diversify the Saudi economy beyond oil by 2030.

The Saudi stock exchange opened itself to direct investment by foreign institutions in mid-2015 and last year eased restrictions on foreign ownership in its stock market in order to improve the investment environment.

The reforms have encouraged international firms such as BlackRock Inc (BLK.N), Citigroup, HSBC (HSBA.L), and Ashmore Group to join the list of institutional investors that can directly trade the market.

(additional reporting by Katie Paul in Riyadh and Aziz El Yaakoubi in Dubai; Editing by Keith Weir)

Orban launches personal battle with Soros over Hungary

Viktor Orban has started a personal propaganda war against George Soros, a billionaire US investor and the Hungarian PM’s top enemy of the state.

June 2, 2017

by Ben Knight

DW

In the United States it’s an alt-right meme, but in Hungary, it’s a poster campaign by the ruling party, Fidesz: a photo-shopped image of George Soros, the Hungarian-born billionaire US investor, as a puppeteer manipulating a center-left leader. But in Budapest it’s not Hillary Clinton pictured dangling on the end of the billionaire’s dastardly strings, but Laszlo Botka, a member of the Hungarian Socialist Party and mayor of Szeged, Hungary’s third-largest city.

The billboard was paid for by Fidelitas, the Fidesz youth organization, and it represents part of a sustained campaign by Hungary’s government party to demonize Soros, and by association the NGOs that receive funding from the Open Society Foundations (OSF), the organization Soros founded in 1984, when Hungary was still under Communist rule.

Marta Pardavi, co-chair of the Hungarian Helsinki Committee, a migrants’ rights NGO that receives funding from the OSF, says the stigmatization has become a dark joke among her friends. “In the past year, it has become a term, an everyday expression, to say ‘agent of Soros.’ This is like a permanent adjective for these NGOs,” she said.

The mafia state

In recent months, Orban has seemed intent on personalizing his clash with Soros – most obviously by launching legislation that could shut down the Soros-founded Central European University. On Thursday, the 84-year-old investor responded in a speech at the Brussels Economic Forum, in which he accused the prime minister of turning Hungary into a “mafia state.”

He sought to frame his policies as a personal conflict between the two of us and has made me the target of his unrelenting propaganda campaign,” Soros said. “He cast himself in the role of the defender of Hungarian sovereignty and me as a currency speculator who used his money to exert control over Hungary in order to profit from it. This is the opposite of who I am.”

Orban, for his part, hurled the insult right back in a regular Friday morning interview with a public broadcaster, describing Soros and the NGOs he helps to fund as “the real mafia.”

The blood wasn’t always this bad. Back in 1989, Orban – like other members of his government – received a Soros-funded scholarship to study at Oxford University in the UK. This was not unusual in the early days of the post-Communist era. “George Soros’ foundation was very instrumental in creating… basically you could say creating democracy in Hungary,” said Pardavi. “He provided opportunities to study for young individuals who were willing to take part in politics around or after the first free elections. It was important to have a new political elite.”

That tradition of supporting Hungarian society continued throughout the intervening years, with Soros’ Open Society Foundations donating breakfasts to school children, ultrasound scanners to hospitals, and $250 million (222 million euros) to found the Central European University. Nor was the new Fidesz government above accepting $1 million from the OSF in 2010 to help clean up a chemical spillage that contaminated the Danube with toxic red sludge.

Are NGOs ideological?

But now the Hungarian government has clearly come to see Soros as a political threat. And Soros, for his part, has also advertised his intentions – having published books that set out his “open society” vision, which is a clear challenge to Fidesz’ nationalist, conservative principles.

As Sandor Lederer, executive director of the corruption watchdog K-Monitor, points out, there are several charitable foundations funding a range of human rights NGOs in Hungary.  Indeed, humanitarian civil society represents an entire sector of the country’s economy. And yet, while other foundations often back the same organizations that Soros does, they never attract Orban’s vitriolic billboard campaigns.

“Soros never intervened in Hungarian politics, but he became present now because the government made him present,” Lederer told DW. “He invests in democracy and open society – which is a value, and Orban is challenging this value. And of course it’s easier for Orban to give the whole thing a face – he’s like Gulen for Erdogan, or Khodorkovsky for Putin.”

Needing and hating civil society

Andras Kovats, director of Menedek, is in an odd position, since his organization receives funding from both OSF and the Hungarian government. As a migrants’ rights association, Menedek is on the receiving end of the government’s anti-NGO propaganda (and Kovats has firsthand experience of the hostility that causes in the public, but the government also pays the organization to help manage its asylum system.

“For example, we provide support for people who are about to leave the country, because they’re waiting for deportation – which is clearly something the government is in line with,” he said. “A well-managed asylum system is still in society’s interests, and the government has not shut down the country’s asylum system,

Menedek sees itself as independent, and Kovats dismisses the notion that taking money from the OSF is “political.”

“The allegation against Soros is that he wants to make an impact on public life – he can’t do it through elected representatives, so he does it indirectly, through unelected actors. I think that’s a big, big fallacy,” he said. “After all, you have to balance the will of the majority with the cohesion of the totality. If an organization helps social cohesion, then it is legitimate.”

 

 

 

 

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