On the very day of the imperial ruling by the Hague Court of Arbitration against China on the Philippines’ claim over the South China Sea, CSIS, the neocon center in Washington, DC, held a full-day forum on the South China Sea, beginning with a keynote by Sen. Dan Sullivan (R-AK). Sullivan, Sen. John McCain’s cohort on the Senate Armed Services Committee, gave a speech which would have fit well at a Nazi Nuremberg rally, only to be then exposed by EIR’s Bill Jones as a spokesman and hitman for the British Empire in its modern guise of the bipartisan war hawks backing Obama’s war mobilization against Russia and China.

Sullivan, like many others at the CSIS conclave, repeated Defense Secretary Ash Carter’s line that the US military can and will “fly, sail and operate wherever international law allows.” He had the gall to say that the US wants to use its military power so that “wars of aggression will be relegated to the past.” He said that the Founding Fathers wrote “freedom of navigation” into our Declaration of Independence against a tyrant that restrained that freedom, and that we are continuing that defense of freedom of navigation today with our military in the South China Sea.

EIR’s Washington bureau chief, Bill Jones, said that for him history was important, as one of his forefathers had been killed in that same American Revolution, and that he had a correction to make on Sullivan’s history lesson. “Our founding fathers had revolted against a British Empire,” Jones said, “the Lord of the Seas at the time, which also claimed that they represented the “rule of law”, THEIR law, and we had insisted that we had the right to determine our own destiny.” “Now we seem to have adopted the roll of the British Empire and are insisting China do the same thing. Think of how China is viewing this from the standpoint of their own history. If we follow up on your proposal to build up our military forces in the region on behalf of “freedom of navigation,” or any other pretext, this will lead to war,” Jones said.

Sullivan was thoroughly destabilized, as the audience was silent and clearly nervous.

“We don’t set the rules,” he finally babbled. “We may be the leaders, but this is the rules-based order. To say we are some sort of dictator is wrong. We disagree on that. We want freedom of navigation and commerce. More and more countries are calling on us to help because we are trusted. Look at the NATO meeting last week [!]. They trust us, that we have no territorial demands, they need our help to fight back against nations that use coercion, like Russia and now China.”

The very next question was posed by Defense News, whose reporter said: “In following up that last question, you said that now we should send two aircraft carrier groups to be permanently deployed in the region. Isn’t that going to be an escalation which leads to further tension?” Again Sullivan stood exposed, responding defensively: “I don’t view our country standing with our allies militarily, for trade and commerce, as some kind of a threat.”

The Nuremberg rally proceeded, nonetheless, in lock-step.

[All quotations above are close paraphrases of the respective comments.] 

Speaking at CSIS after the conclusion of CSIS’s day-long drumbeat for war, Cui Tiankai, the Chinese ambassador to the United States, gave a rather thorough response to Tuesday’s decision by the Arbitration Court.

“China rejects the court’s decision,” Cui said, because “the case violates the general practice on having the states themselves consent to proceed to arbitration.” Secondly, he noted, the court “exceeded its authorization since territorial issues are not subject to UNCLOS.” The decision to take the case was a matter of “professional incompetence’ and “questionable interpretation”. In addition, he added “it was not done in good faith.”  “UNCLOS,” he said, “calls for mutual cooperation and understanding. But this was an attempt to use the legal system for an extraneous purpose. It will also undermine the willingness of nations to engage in negotiations in order to resolve territorial disputes.”  “Abusing the arbitration procedures in this way will weaken the motivation of states to negotiate. It will intensify conflicts and even cause confrontation. In effect, it will undermine international law,” he said.

He then went on, regarding the deployment of U.S. warships to the region. “Sending these carriers and bombers is a manifestation of the law ‘might makes right’,” Cui said. “Therefore China has to oppose and reject it. This is in the true spirit of international law. And if it happens to us, it could happen to anyone.” “China,” he said, “would not use international bodies in that way, but they would defend their sovereignty. Because if any country fails to defend its sovereignty, it has no dignity to speak of.”

And the problem did not begin with China, he said. China and other countries had been well on the way to overcome their differences. “The tensions started to rise five or six years ago when we started to hear about the ‘pivot’,” Cui said. “And has anybody benefited from this? I don’t think so. If economic growth is weakened, everybody will be hurt,” he warned. “And to those who hereby think they have a ‘free ride’ because of this, I urge them go to Iraq and to Syria and see how things worked out there. Be careful what you wish for,” he said.

Cui also noted that China was not the first, but rather the last country to build structures on the islands and reefs, which were in their territorial claims, and the facilities they built, like lighthouses, benefited all. On freedom of navigation he distinguished between freedom of navigation for commercial vessels, which have never been threatened by China, and military vessels.  “China supports the freedom of navigation for commercial vessels since commerce is extremely important for China. The deployment of naval warships, on the other hand, could actually threaten the freedom of navigation for commercial vessels.” “Negotiations and consultation offer the most successful way to resolve the issues,” Cui said. “Peace cannot be brought by a fleet of aircraft carriers,” he said.

The Permanent Court of Arbitration at the Hague Tuesday issued a unanimous, provocative, and over-reaching decision in the South China Sea arbitration case filed by the previous government of the Philippines. The Tribunal ruled against China on all major points, surprising even backers of the initial Philippine filing. This is the ruling which Obama and crew have claimed for months that China must obey or the US will “enforce” by military means, whether any of the South China Sea nations wish it or not.

The Court acknowledged that it has no mandate to rule on sovereignty over land territory and does not delimit any boundary between the Parties, but then proceeded to de facto rule on sovereignty. The Tribunal “concluded that there was no legal basis for China to claim historic rights within the sea areas falling within the ‘nine-dash line’,” which China has historically considered its sovereign territory. So, too, the Tribunal ruled that “it could—without delimiting a boundary— declare that certain sea areas are within the exclusive economic zone of the Philippines, because those areas are not overlapped by any possible entitlement of China.” This ruling rested on the incredible finding that the 110 acre Taiping Island, occupied by Taiwan and housing a military garrison, a hospital, and a farm, is not an island at all, but just a rock, and therefore is not granted the 200-mile Exclusive Economic Zone due any island. That 200-mile zone overlaps the other Spratly islands and reefs. Thus the magic of the “impartial Court.”

China never recognized the Arbitration Court’s right to even take up the case, and Tuesday the Chinese Foreign Ministry reiterated what the government has been stating for months: China “solemnly declares that the award is null and void and has no binding force. China neither accepts nor recognizes it.”

President Rodrigo Duterte’s government in the Philippines, which has put forward, since it was sworn in at the end of June, a policy of resolving disputes with China on the basis of dialogue on mutual economic development, responded to the ruling with caution. Presidential Communications Secretary Martin Andanar stated that the Solicitor General would study the decision and provide the President with “a complete and thorough interpretation in five days,” and Presidential spokesperson Ernesto Abella specified that no public statements would be issued until the matter had been thoroughly discussed.

The Wall Street Journal quickly published a perspective for how the ruling can be used to overturn Duterte’s policy of working with China, and line up all of Southeast Asia against China. Citing “experts,” Wall Street’s rag asserted that Duterte can’t appear weak in defending Philippine sovereignty now that the Court has ruled (especially that the ruling gave the Philippines sovereignty over one of the artificial islands built up by China), and so will have to bow to the alleged “overwhelming public opinion” against China in the country.

The U.S. lawyer who represented the previous Philippine government’s filing at the Hague, Paul Reichler, of the U.S. law firm Foley Hoag LLP, told journalists after the ruling that it would encourage other countries in the region to stand up to China. As reported in the Journal, Reichler insists “the Tribunal’s ruling not only benefits the Philippines, it also benefits other states bordering the South China Sea like Indonesia, Malaysia and Vietnam. If China’s nine-dash line is invalid as to the Philippines, it is equally invalid to those states and, indeed, the rest of the international community.”

A two minute teaser of last week’s Washington, D.C. press conference held in anticipation of the Hague’s ruling. The event featured EIR’s Bill Jones and participation from Helga Zepp-LaRouche. See the full event here.

Statement issued by Helga Zepp- LaRouche, Chairwoman of the German Civil Rights Movement Solidarity (BüeSo), on July 12, 2016.

The imminent threat of the bankruptcy of Deutsche Bank is certainly not the only potential trigger for a new systemic crisis of the trans-Atlantic banking system, which would be orders of magnitude more deadly than the 2008 crisis, but it does offer a unique lever to prevent a collapse into chaos.

Behind the SOS launched by the chief economist of Deutsche Bank, David Folkerts-Landau, for an EU program of €150 billion to recapitalize the banks, lurks the danger openly discussed in international financial media, that the entire European banking system is de facto insolvent, and is sitting on a mountain of at least €2 trillion of non-performing loans. Deutsche Bank is the international bank which, with a total of €55 trillions of outstanding derivative contracts and a leverage factor of 40:1, even outdoes Lehman Brothers at the time of its collapse, and therefore represents the most dangerous Achilles heel of the system. Half of DB’s balance sheet, which has plummeted 48% in the past 12 months and is down to only 8% of its peak value, is made up of level-3 derivatives, i.e., derivatives amounting to circa €800 billion without a market valuation.

It probably came as a surprise to many that Lyndon LaRouche called today for Deutsche Bank to be saved through a one-time increase in its capital base, because of the systemic implications of its threatened bankruptcy. Neither the German government with its GDP of €4 trillion, nor the EU with a GDP of €18 trillion, would be able to control the domino effect of a disorderly bankruptcy.

The one-time capital injection, LaRouche explained, is only an emergency measure which needs to be followed by an immediate reorientation of the bank, back to its tradition which prevailed until 1989 under the leadership of Alfred Herrhausen. To actually oversee such an operation, a management committee must be set up to verify the legitimacy and the implications of the obligations, and finalize its work within a given timeframe. That committee should also draw up a new business plan, based on Herrhausen’s banking philosophy and exclusively oriented to the interests of the real economy of Germany.

Alfred Herrhausen was the last actually creative, moral industrial banker of Germany. He defended, among other things, the cancellation of the unpayable debt of developing countries, as well as the long-term credit financing of well-defined development projects. In December 1989, he planned to present in New York a plan for the industrialization of Poland, which was consistent with the criteria used by the Kreditanstalt fuer Wiederaufbau (KfW) for the post-1945 reconstruction of Germany, and would have offered a completely different perspective than the so-called “reform policy,” or shock therapy, of Jeffrey Sachs.

Watch LaRouchePAC’s feature film, The Lost Chance of 1989

Herrhausen was assassinated on November 30, 1989 by the “Third Generation of the Red Army Fraction,” whose existence has yet to be proven to this day. It happened only two days after Chancellor Helmut Kohl, who counted Herrhausen among his closest advisors, had presented his ten-point program for gradually overcoming the division of Germany [between East and West]. The cui bono of the terrorist attack remains one of the most fateful issues in the modern history of Germany, and one which urgently needs to be clarified.

The fact is that Herrhausen’s successors introduced a fundamental paradigm change in the bank’s philosophy, which brought Deutsche Bank into the wild world of profit maximization at all costs, and also into countless unpunishable and punishable legal entanglements, which those responsible have avoided until now, mainly because of the “too big to fail” premises.

The transformation of Deutsche Bank into a global investment bank with the highest derivatives exposure, combined with the simultaneous credit crunch for German small and medium-sized enterprises, is symptomatic of the folly which has led to the current catastrophe.

We must now act with resolution, but not in the way Folkerts-Landau proposes, that is, not with more of the same medicine, which would certainly kill the patient. Although it has mainly operated over the past years out of London and New York, Deutsche Bank is too important for the German economy, and therefore for Germany, and ultimately for the fate of all of Europe. Its reorganization in the spirit of Alfred Herrhausen is not only the key to overcoming the banking crisis, but also for averting the acute danger of war.

Herrhausen’s assassination has gone unpunished. However, there exists “the dreaded might, that judges what is hid from sight,” which is the subject of Friedrich Schiller’s poem “Die Kraniche des Ibykus.” The Erinyes have begun their dreadful dance.^{1Friedrich Schiller, “Die Kraniche des Ibykus”}

It is now incumbent upon all those who, in addition to the family, have suffered from the assassination of Herrhausen, upon the representatives of the Mittelstand, of the German economy and the institutional representatives of the German population, to honor his legacy and to seize the tremendous opportunity which is now offered to save Germany.

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