Russia’s Mass Surveillance System

This is very likely a tool to combat Russia’s own jihadists and US hacking, but nevertheless is antithetical to users internet privacy in Russia.  It all depends on how widely the data is used and for what reason.

It can be circumvented in the same way as in the west, by using a VPN service so that ISPs only see an encrypted traffic stream.  End-to-end encryption of messages using something like GPG4USB would still be possible, but using it might cause red flags to be raised.

Ultimately, if you want to the infrastructure of the internet, you are going to have to put up with this.  Is it possible to create another internet where this doesn’t happen? Yes, but … Smartphones are quite capable of running software to create a wireless mesh network, where any phone can be used to relay from one IP address to another, so in an area where there are lots of smartphones (like a city) the mesh would allow messaging between any 2 users.  Assuming enough phones are also paying for internet access, they could relay for everyone else.  There is no obvious software solution at the moment.

http://www.zerohedge.com/news/2017-09-19/wikileaks-publishes-spy-files-russia-detailing-russias-mass-surveillance-system

Wikileaks Publishes “Spy Files Russia” Detailing Russia’s Mass Surveillance System

Perhaps in an attempt to refute recurring allegations that it has traditionally focused on exposing only US state secrets, if not being an outright covert and subversive Moscow front, today Wikileaks released a new cache of documents which it claims detail surveillance apparatus used by the Russian state to spy on Internet and mobile users. It’s the first time the organization has leaked material directly pertaining to the Russian state.

The full datadump can be found here.

In its summary of the cache of mostly Russian-language documents, Wikileaks claims they show how a long-established Russian company which supplies software to telcos is also installing infrastructure – with the government’s blessing – that enables Russian state agencies to tap into, search and spy on citizens’ digital activity, suggesting a similar state-funded mass surveillance program to the one utilized by the U.S.’s NSA or by GCHQ in the U.K. (both of which were detailed in the 2013 Snowden disclosures).

And speaking of, shortly following the publication, another famous whistleblower, one also exiled and currently residing in Russia, Edward Snowden tweeted “Plot twist: @Wikileaks publishes details on Russia’s increasingly oppressive internet surveillance industry.”

To be sure, arguments have already broken out on Twitter suggesting that Wikileaks/Assange is trying to deflect from charges that it is a front for the Kremlin by finally dumping “something” on Russia. (see this tweet comment thread as one example). Making matters more complicated, it’s not possible at this point to verify the value or veracity of the latest Wikileaks document release.

The documents published today by Wikileaks (there are just 34 “base documents” in this leak) relate to a St. Petersburg-based company, called Peter-Service, which it claims is a contractor for Russian state surveillance. According to Tech Crunch, the company was set up in 1992 to provide billing solutions before going on to become a major supplier of software to the mobile telecoms industry.

Wikileaks writes:

The technologies developed and deployed by PETER-SERVICE today go far beyond the classical billing process and extend into the realms of surveillance and control. Although compliance to the strict surveillance laws is mandatory in Russia, rather than being forced to comply PETER-SERVICE appears to be quite actively pursuing partnership and commercial opportunities with the state intelligence apparatus.

As a matter of fact PETER-SERVICE is uniquely placed as a surveillance partner due to the remarkable visibility their products provide into the data of Russian subscribers of mobile operators, which expose to PETER-SERVICE valuable metadata, including phone and message records, device identifiers (IMEI, MAC addresses), network identifiers (IP addresses), cell tower information and much more. This enriched and aggregated metadata is of course of interest to Russian authorities, whose access became a core component of the system architecture.

One of Wikileaks’ media partners for the release, the Italian newspaper La Repubblica reports that the documents cover “an extended timespan from 2007 to June 2015”, and describes the contents as “extremely technical”. It also caveats that the documents do not mention Russia’s spy agency, the FSB, but rather “speak only of state agencies”, a formula it asserts “certainly includes law enforcement, who use metadata for legal interception”. It also says the documents do “not clarify what other state apparatus accesses those data through the solution of the St. Petersburg company”.

Wikileaks says that under Russia law operators must maintain a Data Retention System (DRS), which can store data for up to three years. La Repubblica reports that Peter-Service’s DRS stores telephone traffic data and “allows Russian state agencies to query the database of all stored data in search of information” — which it specifies can include calls made by a certain telephone company’s customer; payment systems used; the cell phone number to which a user is calling.

“The manuals published by WikiLeaks contain the images of interfaces that allow you to search within these huge data fields, so access is simple and intuitive,” it adds.

Some technical details:

  • According to Wikileaks, Peter-Service’s DRS solution can handle 500,000,000 connections per day in one cluster. While the claimed average search time for subscriber related-records from a single day is ten seconds. “State intelligence authorities use the Protocol 538 adapter built into the DRS to access stored information,” it adds.
  • Peter-Service has also apparently developed a tool called TDM (Traffic Data Mart) — which allows the database to be queried to determine “where users’ data traffic is stored in order to understand visited sites, forums, social media”, as well as how much time is spent on a certain site and the electronic device used to access it.
  • Wikileaks describes TDM as “a system that records and monitors IP traffic for all mobile devices registered with the operator”,  and says it maintains a list of categorized domain names — “which cover all areas of interest for the state. These categories include blacklisted sites, criminal sites, blogs, webmail, weapons, botnet, narcotics, betting, aggression, racism, terrorism and many more”.
  • “Based on the collected information the system allows the creation of reports for subscriber devices (identified by IMEI/TAC, brand, model) for a specified time range: Top categories by volume, top sites by volume, top sites by time spent, protocol usage (browsing, mail, telephony, bittorrent) and traffic/time distribution,” it adds.

Wikileaks points to a 2013 Peter-Service slideshow presentation (it says this also appears to be publicly available on the company’s website), which it claims is targeted not at telco customers but at state entities such as Russia’s FSB and Interior Ministry (despite this document apparently being in the public domain) — in which the company focuses on a new product, called DPI*GRID; which it says is a hardware device for Deep Packet Inspection that takes the form of “black boxes” apparently able to handle 10Gb/s traffic per unit.

Wikileaks adds that “the national providers are aggregating Internet traffic in their infrastructure and are redirecting/duplicating the full stream to DPI*GRID units. The units inspect and analyse traffic (the presentation does not describe that process in much detail); the resulting metadata and extracted information are collected in a database for further investigation. A similar, yet smaller solution called MDH/DRS is available for regional providers who send aggregated IP traffic via a 10Gb/s connection to MDH for processing.”

Wikileaks also makes a point of noting that the presentation was written “just a few months after Edward Snowden disclosed the NSA mass surveillance program and its cooperation with private U.S. IT-corporations such as Google and Facebook”.

“Drawing specifically on the NSA Prism program, the presentation offers law enforcement, intelligence and other interested parties, to join an alliance in order to establish equivalent data-mining operations in Russia,” it adds — sticking its boot firmly back into U.S. government mass surveillance programs.

Advertisements

Collapse of the Petrodollar looming

This will be a recurring theme in the geopolitical future, so it deserves getting a full understanding of it.  Wider use of currencies other than the Dollar avoids oil-buyers holding a stash of Dollars (usually parked temporarily in US Treasury bonds) to buy oil and a whole host of other commodities, and trading on US-controlled FX markets to get them (with the inevitable fees for the transaction), and the SWIFT system for handling the paperwork for moving the money around the international banking world.

This will considerably reduce the demand for Dollars and hence its FX conversion rate.  A weaker Dollar will in turn make US imports more expensive and exports less valuable.  Since the US already has a trade deficit with the rest of the world, this will make it harder to trade their way out of trouble.  At some point everyone will see that the US can never repay its debts and their bonds will become worthless.

Of course since the world is past the Peak Oil point (it probably happened in 2010), a future world without oil is not going to be viable long term, but the resulting collapse is not going to be evenly spread.  The US will collapse first, and then the world will switch to trading in Yuan (backed by Gold).  As the US struggles to hold its Empire together, the world economy will break into two currency blocs, and the potential for WW3 to break out will get even stronger.

https://dollarcollapse.com/currency-war/suddenly-de-dollarization-thing/

Suddenly, “De-Dollarization” Is A Thing

For what seems like decades, other countries have been tiptoeing away from their dependence on the US dollar. China, Russia, and India have cut deals in which they agree to accept each others’ currencies for bi-lateral trade while Europe, obviously, designed the euro to be a reserve asset and international medium of exchange.

These were challenges to the dollar’s dominance, but they weren’t mortal threats.

What’s happening lately, however, is a lot more serious. It even has an ominous-sounding name: de-dollarization. Here’s an excerpt from a much longer article by “strategic risk consultant” F. William Engdahl:

Gold, Oil and De-Dollarization? Russia and China’s Extensive Gold Reserves, China Yuan Oil Market

(Global Research) – China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it.  So long as Washington dirty tricks and Wall Street machinations were able to create a crisis such as they did in the Eurozone in 2010 through Greece, world trading surplus countries like China, Japan and then Russia, had no practical alternative but to buy more US Government debt—Treasury securities—with the bulk of their surplus trade dollars. Washington and Wall Street could print endless volumes of dollars backed by nothing more valuable than F-16s and Abrams tanks. China, Russia and other dollar bond holders in truth financed the US wars that were aimed at them, by buying US debt. Then they had few viable alternative options.

Viable Alternative Emerges

Now, ironically, two of the foreign economies that allowed the dollar an artificial life extension beyond 1989—Russia and China—are carefully unveiling that most feared alternative, a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.

For several years both the Russian Federation and the Peoples’ Republic of China have been buying huge volumes of gold, largely to add to their central bank currency reserves which otherwise are typically in dollars or euro currencies. Until recently it was not clear quite why.

For several years it’s been known in gold markets that the largest buyers of physical gold were the central banks of China and of Russia. What was not so clear was how deep a strategy they had beyond simply creating trust in the currencies amid increasing economic sanctions and bellicose words of trade war out of Washington.

Now it’s clear why.

China and Russia, joined most likely by their major trading partner countries in the BRICS (Brazil, Russia, India, China, South Africa), as well as by their Eurasian partner countries of the Shanghai Cooperation Organization (SCO) are about to complete the working architecture of a new monetary alternative to a dollar world.

Currently, in addition to founding members China and Russia, the SCO full members include Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and most recently India and Pakistan. This is a population of well over 3 billion people, some 42% of the entire world population, coming together in a coherent, planned, peaceful economic and political cooperation.

Gold-Backed Silk Road

It’s clear that the economic diplomacy of China, as of Russia and her Eurasian Economic Union group of countries, is very much about realization of advanced high-speed rail, ports, energy infrastructure weaving together a vast new market that, within less than a decade at present pace, will overshadow any economic potentials in the debt-bloated economically stagnant OECD countries of the EU and North America.

What until now was vitally needed, but not clear, was a strategy to get the nations of Eurasia free from the dollar and from their vulnerability to further US Treasury sanctions and financial warfare based on their dollar dependence. This is now about to happen.

At the September 5 annual BRICS Summit in Xiamen, China, Russian President Putin made a simple and very clear statement of the Russian view of the present economic world. He stated,

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

To my knowledge he has never been so explicit about currencies. Put this in context of the latest financial architecture unveiled by Beijing, and it becomes clear the world is about to enjoy new degrees of economic freedom.

China Yuan Oil Futures

According to a report in the Japan Nikkei Asian Review, China is about to launch a crude oil futures contract denominated in Chinese yuan that will be convertible into gold. This, when coupled with other moves over the past two years by China to become a viable alternative to London and New York to Shanghai, becomes really interesting.

China is the world’s largest importer of oil, the vast majority of it still paid in US dollars. If the new Yuan oil futures contract gains wide acceptance, it could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. That would challenge the two Wall Street-dominated oil benchmark contracts in North Sea Brent and West Texas Intermediate oil futures that until now has given Wall Street huge hidden advantages.

That would be one more huge manipulation lever eliminated by China and its oil partners, including very specially Russia. Introduction of an oil futures contract traded in Shanghai in Yuan, which recently gained membership in the select IMF SDR group of currencies, oil futures especially when convertible into gold, could change the geopolitical balance of power dramatically away from the Atlantic world to Eurasia.

In April 2016 China made a major move to become the new center for gold exchange and the world center of gold trade, physical gold. China today is the world’s largest gold producer, far ahead of fellow BRICS member South Africa, with Russia number two.

Now to add the new oil futures contract traded in China in Yuan with the gold backing will lead to a dramatic shift by key OPEC members, even in the Middle East, to prefer gold-backed Yuan for their oil over inflated US dollars that carry a geopolitical risk as Qatar experienced following the Trump visit to Riyadh some months ago. Notably, Russian state oil giant, Rosneft just announced that Chinese state oil company, CEFC China Energy Company Ltd. Just bought a 14% share of Rosneft from Qatar. It’s all beginning to fit together into a very coherent strategy.

Meanwhile, in Latin America:

De-Dollarization Spikes – Venezuela Stops Accepting Dollars For Oil Payments

(Zero Hedge) – Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports.

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters,

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

This first step towards one or more gold-backed Eurasian currencies certainly looks like a viable and — for a lot of big players out there — welcome addition to the global money stock.

Venezuela, meanwhile illustrates the growing perception of US weakness. It used to be that a small country refusing to take dollars could expect regime change in short order. Now, maybe not so much.

Combine the above with the emergence of bitcoin and its kin as the preferred monetary asset of techies and libertarians, and the monetary world suddenly looks downright multi-polar.

China and Russia Warn the U.S.

Russia and China make it quite clear: No regime change, regime collapse, accelerated reunification or military deployment north of the 38th parallel dividing the Korean Peninsula.

https://www.bloomberg.com/news/articles/2017-09-12/in-sanctioning-kim-china-and-russia-warn-u-s-no-regime-change

China and Russia Warn the U.S.

By Ting Shi and David Tweed

Beijing, Moscow worked to weaken sanctions on North Korea
China says it will never allow war on Korean peninsula.

September 13, 2017 “Information Clearing House” – In supporting a watered-down version of North Korea sanctions, China and Russia had a stern warning for the U.S.: Don’t try to overthrow Kim Jong Un’s regime.

The measures passed on Monday at the United Nations Security Council included reducing imports of refined petroleum products, banning textile exports and strengthening inspections of cargo ships suspected of having illegal materials. U.S. envoy Nikki Haley called them the “strongest measures ever imposed on North Korea” even though they ended up dropping demands for an oil embargo and freeze on Kim’s assets.

More worrisome for China and Russia was Haley’s remark that the U.S. would act alone if Kim’s regime didn’t stop testing missiles and bombs. The UN representatives of both countries on Monday reiterated what they called “the four nos“: No regime change, regime collapse, accelerated reunification or military deployment north of the 38th parallel dividing the Korean Peninsula.

“The Chinese side will never allow conflict or war on the peninsula,” Foreign Ministry spokesman Geng Shuang said in a statement on Tuesday.

The comments in the wake of the sanctions signaled that both China and Russia are only willing to go so far in pressuring Kim to abandon his attempts to secure the ability to strike the U.S. with a nuclear weapon. Both nations have called for dialogue, something President Donald Trump has resisted.

China and Russia realize their combined effort “works better than individual action,” said Wang Xinsheng, a history professor at Peking University. “Both oppose North Korea to become a full-fledged nuclear state, and both think parallel action from the U.S. is needed to affect any change in the situation.”

China and Russia — the biggest economic patrons of North Korea — both share the view that North Korea won’t give up its nuclear weapons without security guarantees, and they don’t see the point in fomenting a crisis on their borders that will benefit American strategic goals. At the same time, they don’t want Kim provoking the U.S. into any action that could destabilize the region.

“Sanctions of any kind are useless and ineffective,” Russian President Vladimir Putin told reporters earlier this month at a summit in Xiamen, China. “They’ll eat grass, but they won’t abandon their program unless they feel secure.”

Russia and China were singled out at a U.S. House Foreign Affairs Committee hearing Tuesday on financing for North Korea’s nuclear program. Republican Chairman Ed Royce said the U.S. should target Chinese banks, including Agricultural Bank of China Ltd. and China Merchants Bank Co., for aiding Kim’s regime. Assistant Treasury Secretary Marshall Billingslea said in prepared remarks to the committee that North Korean bank representatives “operate in Russia in flagrant disregard of the very resolutions adopted by Russia at the UN.”

U.S. officials said the new UN sanctions — combined with earlier measures — would cut North Korean exports by 90 percent, pinching the regime’s ability to get hard currency. The textile export ban alone would cost North Korea about $726 million a year, the U.S. said.

Still, analysts saw the efforts to dilute the original proposal as successful.

“The stiffer sanctions won’t change anything in the near-term,” said Stuart Culverhouse, head of macro and fixed income research at specialist frontier markets investment bank Exotix Capital. “The new embargoes are incrementally tougher, but diplomacy meant they had to be compromised to an extent that they are very unlikely to change minds in Pyongyang.”

Tactical Nukes

North Korea has said it will never give up its nuclear weapons unless the U.S. drops its “hostile” policies toward the regime. Kim has claimed the ability to fit a hydrogen bomb onto an intercontinental ballistic missile, but the U.S. military says he has yet to master re-entry and guidance systems that would allow him to target an American city.

Many analysts think Kim will wait until he’s mastered his weapons before negotiating, as it would strengthen his hand. It might take tactical nuclear weapons in South Korea — something President Moon Jae-in has opposed — to bring Kim to the negotiating table earlier, according to Lee Ho-ryung, chief of North Korean studies at the Korea Institute for Defense Analyses.

“If South Korea, Japan, or both could have the U.S. deploy tactical nuclear weapons, that’ll put pressure on Kim to come to dialogue,” Lee said. “When competition to have better weapons escalates, it’s always the poorer one who gives up.”

George Lopez, a former member of the UN Security Council panel of experts for sanctions on North Korea, said that the U.S. should seek unity of message with China and Russia in addition to a unanimous vote on sanctions. The U.S. should look to engage diplomatically to find a level of security that North Korea and its neighbors will be happy with, he said.

“We did it against powers that have thousands of nuclear weapons,” Lopez said. “We certainly should be able to do this against a power that has less than two dozen.”

Venezuela Stops Accepting Dollars For Oil Payments

Another oil supplier implies it will de-petrodollarise.  As mentioned in the article, Iran is a prime candidate to go this way too, although shouting about it like Maduro is doing is perhaps not wise.  And when Libya gets itself sorted out, it would too.  And Sudan.  Then you’ve got the oil buyers currently on the US disapproval list – North Korea, Myanmar, Zimbabwe.

http://www.zerohedge.com/news/2017-09-13/de-dollarization-spikes-venezuela-stops-accepting-dollars-oil-payments

De-Dollarization Spikes – Venezuela Stops Accepting Dollars For Oil Payments

Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?

Source: The Burning Platform

Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports.

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters,

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

 “If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

*  *  *

And today, as The Wall Street Journal reports, in an effort to circumvent U.S. sanctions, Venezuela is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy said.

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.

There is no major market reaction for now – a modest bid to Bitcoin and some weakness in EUR and Gold (seems someone wants this to look like nothing).

However, as Nomura debt analyst Siobhan Morden warns:

“You can say whatever you want for your domestic propaganda and make it look like you’re retaliating against the U.S…. This political posturing will only be to their detriment.”

So what happens if Europe also sanctions Venezuela? Will Rubles or Yuan… or Gold be the only way to buy Venezuela’s oil?

*  *  *

This decision by the nation with the world’s largest proven oil reserves comes just days after China and Russia unveiled the latest Oil/Yuan/Gold triad at the latest BRICS conference.

It’s when President Putin starts talking that the BRICS reveal their true bombshell. Geopolitically and geo-economically, Putin’s emphasis is on a “fair multipolar world”, and “against protectionism and new barriers in global trade.” The message is straight to the point.

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.

Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.

The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.

RC – via the Russian Central Bank and the People’s Bank of China – have been developing ruble-yuan swaps for quite a while now.

Once that moves beyond the BRICS to aspiring “BRICS Plus” members and then all across the Global South, Washington’s reaction is bound to be nuclear (hopefully, not literally).

Washington’s strategic doctrine rules RC should not be allowed by any means to be preponderant along the Eurasian landmass. Yet what the BRICS have in store geo-economically does not concern only Eurasia – but the whole Global South.

Sections of the War Party in Washington bent on instrumentalizing  India against China – or against RC – may be in for a rude awakening. As much as the BRICS may be currently facing varied waves of economic turmoil, the daring long-term road map, way beyond the Xiamen Declaration, is very much in place.

*  *  *

Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3…2..1…!

The End is Nigh for the Dollar

If the Chinese knew that this was part of the UNSC deal, and agreed to it anyway, then they would have been ready for this. But if the US didn’t let on, then this will be seen as a dirty trick deserving of retaliatory sanctions.

Either way, this  will be a catastrophic disruption for the world economy, and the US economy in particular – within 3 weeks the Walmart shelves will be empty of cheap Chinese manufactured goods, and US manufacturers will have to gear up for a massive load of production.  Then we will see if they are as dynamic and entrepreneurial as Trump believes.  I very much doubt that they are.

So the shelves will soon be empty of all sorts of cheap Chinese products, or full of expensive US stuff, if you’re lucky.

China is ready to withstand being “cut off” from SWIFT, having written the software for its own SWIFT system (CIPS). The SWIFT system’s interface is internationally standardised, so they only have to write the equivalent code and issue their own set of credentials for accessing the system.  Russia also has had its own system (RosSWIFT) up and running for Russian banks for months, and is ready to internationalise.

China also has the potential to crash the US Treasury bond market, being the biggest foreign investor in them.  Of course they will take a financial loss if they just dump them on the market, but these bonds are never going to be paid back with real money anyway, so what the hell. Alternatively, they could slowly sell them down, day by day depressing the price unless the Fed tries to buy them all at the support price, and adding a trillion dollars to their debt.  This will scare Japan and other big investors out of the bond market, with unknown consequences.

This is likely backfire on the US Empire, and is indicative that The End is Nigh for the Dollar.

https://www.rt.com/usa/403118-usa-china-sanctions-north-korea/

US threatens to ‘cut China off’ from dollar if it does not uphold sanctions against N. Korea

The US could impose economic sanctions on China if it does not implement the new sanctions regime against North Korea, the US Treasury Secretary has warned. Steven Mnuchin said the restrictions could involve cutting off Beijing’s access to the US financial system.

“North Korea economic warfare works,” Mnuchin said Tuesday at the Delivering Alpha Conference in New York City. “We sent a message that anybody who wanted to trade with North Korea – we would consider them not trading with us.”

The Treasury Secretary echoed the words of the US envoy to the UN, Nikki Haley, by calling the fresh round of sanctions against Pyongyang “historic.” Mnuchin added “if China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the US and international dollar system.”

Washington has, so far, been reluctant to impose economic sanctions on China over concerns of possible retaliatory measures from Beijing and the potentially catastrophic consequences for the global economy.

Washington runs a $350 billion annual trade deficit with Beijing. China also holds $1 trillion in US debt, which amounts to 28 percent of US Treasury bills, notes and bonds held by a foreign government.

US lawmakers, however, seemed to be more inclined to exert pressure on Beijing and other countries striking deals with Pyongyang as they demand a “supercharged” response to North Korea’s nuclear tests, including imposing sanctions on companies from China and any other country doing business in North Korea.

“I believe the response from the United States and our allies should be supercharged,” said Ed Royce, chairman of the House of Representatives Foreign Affairs Committee during a hearing Tuesday.

“We need to use every ounce of leverage… to put maximum pressure on this rogue regime,” he said, adding that “time is running out.” Royce also called on Washington to target major Chinese banks, including the Agricultural Bank of China and the China Merchants Bank for dealing with Pyongyang.

He also said China was apparently reluctant to follow through on the sanctions adopted by the UN Security Council (UNSC) against the North. “It’s been a long, long time of waiting for China to comply with the sanctions that we pass and, frankly, with the sanctions that the United Nations passed,” he said.

The committee chair went on to say the US could give Chinese banks and companies “a choice between doing business with North Korea or the United States.” He added that the US should also “go after banks and companies in other countries that do business with North Korea the same way.”

Committee members also expressed unease over the fact that the sanctions imposed on North Korea have so far been ineffective in preventing Pyongyang from developing its nuclear and missile programs.

“We’ve been played by the Kims for years,” Republican Representative Ted Poe said, referring to North Korean leader Kim Jong-un and his predecessors, as reported by Reuters.

President Donald Trump also downplayed the role of the newly adopted sanctions later Tuesday. ”We think it’s just another very small step, not a big deal. I don’t know if it has any impact,” he told reporters at the start of a meeting with Malaysian Prime Minister Najib Razak.

Trump also said he already discussed the issue with his State Secretary of State Rex Tillerson. He ominously added that “those sanctions are nothing compared to what ultimately will have to happen” without specifying what he meant by that.

The UNSC unanimously approved a new resolution on sanctions against Pyongyang on September 11. Following a series of behind-the-scenes negotiations Sunday, diplomats agreed not to ban oil exports into North Korea. Instead, the ninth set of restrictive sanctions against Pyongyang authorized an annual cap of 2 million barrels of refined petroleum products to North Korea.

It also banned the North’s textile exports – the second-biggest export for the country, which totals $752 million – according to data from the Korea Trade-Investment Promotion Agency. Chinese and Russian negotiators managed to persuade the US delegation not to impose a travel ban or asset freeze on North Korea’s leader Kim Jong-un.

On Tuesday, the North Korean ambassador to Moscow said sanctions will not make his country change its policies. Pyongyang’s nuclear program helps it to deter the “hostile policy of the US,” Kim Yong-jae added.

More NK sanctions on China and Russia

How to win friends and influence people – sanction them until they drop out of the WTO and form their own trade grouping.  I can foresee the world splitting into 2 trade blocs, and many of the countries like Australia being forced to choose between its main export markets and its main military alliances.

http://www.zerohedge.com/news/2017-08-22/treasury-slaps-sanctions-china-russia-entities-and-individuals-over-north-korea

Treasury Slaps Sanctions On China, Russia Entities And Individuals Over North Korea

In a move that is certain to infuriate China further and result in another deterioration in diplomatic relations between Washington and Beijing, moments ago the United States slapped both Chinese and Russian entities and individuals with new sanctions in the Trump administration’s escalating attempts to pressure North Korea to relent and stop its nuclear program and occasional missile launches.

The Treasury Department’s Office of Foreign Assets Control said it would target 10 entities and six individuals who help already sanctioned people who aid North Korea’s missile program or “deal in the North Korean energy trade.” The U.S. also aims to sanction people and groups that allow North Korean entities to access the U.S. financial system or helps its exportation of workers, according to the Treasury:

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 10 entities and six individuals in response to North Korea’s ongoing development of weapons of mass destruction (WMD), violations of United Nations (UN) Security Council Resolutions, and attempted evasion of U.S. sanctions.  Today’s sanctions target third-country companies and individuals that (1) assist already-designated persons who support North Korea’s nuclear and ballistic missile programs, (2) deal in the North Korean energy trade, (3) facilitate its exportation of workers, and (4) enable sanctioned North Korean entities to access the U.S. and international financial systems.

As a result of the latest action, “any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from dealing with them.”

Speaking on today’s sanctions, Steven Mnuchin who, or rather whose wife today is in the news for an entirely different reason, made the following statement:

“Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system,” said Treasury Secretary Steven T. Mnuchin.

“It is unacceptable for individuals and companies in China, Russia, and elsewhere to enable North Korea to generate income used to develop weapons of mass destruction and destabilize the region.  We are taking actions consistent with UN sanctions to show that there are consequences for defying sanctions and providing support to North Korea, and to deter this activity in the future.”

Among the companies sanctions in regards to North Korea’s “WMD program” are the following:

OFAC designated China-based Dandong Rich Earth Trading Co., Ltd. for its support to UN- and U.S.-designated Korea Kumsan Trading Corporation, an entity OFAC previously designated for being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, the UN- and U.S.-designated General Bureau of Atomic Energy, which is responsible for North Korea’s nuclear program.  Dandong Rich Earth Trading Co., Ltd. has purchased vanadium ore from Korea Kumsan Trading Corporation.  UNSCR 2270 prohibits North Korea’s exports of vanadium ore, and requires member states like China to prohibit the procurement of vanadium ore from North Korea.

OFAC designated Gefest-M LLC and its director, Russian national Ruben Kirakosyan, for support to the UN- and U.S.-designated Korea Tangun Trading Corporation, also known as Korea Kuryonggang Trading Corporation, which is subordinate to the UN- and U.S.-designated Second Academy of Natural Sciences, an entity involved in North Korea’s WMD and missile programs.  Gefest-M LLC, a company based in Moscow, has been involved in the procurement of metals for Korea Tangun Trading Corporation’s Moscow office.

OFAC also designated China- and Hong Kong-based Mingzheng International Trading Limited (“Mingzheng”).  Mingzheng acts as a front company for UN- and U.S.-designated Foreign Trade Bank (FTB), and it has provided financial services to FTB by, among other things, conducting U.S.-dollar denominated transactions on behalf of FTB.  FTB is North Korea’s primary foreign exchange bank; it was designated by the United Nations on August 5, 2017 as part of UNSCR 2371.  OFAC designated FTB in 2013 for facilitating transactions on behalf of North Korea’s proliferation network, including for UN- and U.S.-designated Korea Mining Development Corporation and Korea Kwangson Banking Corporation.  On June 29, 2017, OFAC designated Mingzheng’s owner, Sun Wei.

The Treasury also designated three Chinese coal companies collectively responsible for importing nearly half a billion dollars’ worth of North Korean coal between 2013 and 2016.  Dandong Zhicheng Metallic Materials Co., Ltd. (“Zhicheng”), JinHou International Holding Co., Ltd., and Dandong Tianfu Trade Co., Ltd. have sold, supplied, transferred, or purchased coal or metal, directly or indirectly, from North Korea, and the revenue may have benefitted the nuclear or ballistic missile programs of the Government of North Korea or the Workers’ Party of Korea.  JinHou International Holding Co., Ltd. and Dandong Tianfu Trade Co., Ltd. also were designated for operating in the mining industry in the North Korean economy.

Meanwhile, top U.S. officials have said they do not want to take military action against North Korea unless it is a last resort, and as a result getting China to cooperate is seen as a key part of a diplomatic solution.

Of course, what this latest round of sanctions will achieve, is to further anger Beijing and the local population, in the process making a diplomatic solution even more unlikely and “forcing” America’s ruling Generals, Kelly and McMaster to launch the first “preemptive” shot against Pyongyang.

maximizing European reassurance

More geopolitical pressure on Russia, as US starts work on a Maritime Operations Centre at Ochakov just 150 km from the Crimean Peninsular, under the guise of reassurance for European safety. This will ensure Ochakov being targeted by nuclear-armed missiles at the start of any war with Russia – some reassurance.

https://www.rt.com/news/399006-us-seabees-ukraine-maritime-center/

US Navy team starts building maritime ops center at Ukrainian base


8 Aug, 2017

The US Navy has launched construction of a maritime operations center in Ukraine which will serve as a “major planning and operation hub” during military exercises hosted by the country.

“Seabees [US Naval Construction Battalions] held a groundbreaking ceremony for a maritime operations center on Ochakov Naval Base, Ukraine, July 25,” the US Navy said in a statement released on Monday.

The Seabees have been in Ochakov since April to establish contracts, obtain construction permits, and perform other logistical tasks for the maritime operations center project, the Navy said.

The maritime operations center is one of three projects that the Seabees will execute in Ochakov.

“Beginning construction in Ukraine is a significant accomplishment,” Lt. j.g. (junior grade) Jason McGee, officer in charge of Det. Ukraine said.

“Our ability to maximize European reassurance initiatives in Ukraine holds strategic importance, and will ultimately improve host nation defense capacity and infrastructure, strengthen relations and increase bilateral training capabilities,” he added.

The Seabees are also set to build a boat maintenance facility and entry control points with perimeter fencing in Ochakov.

Last month, several US missile warships, over 800 sailors, and a Navy SEALs team took part in the 12-day Sea Breeze 2017 joint NATO naval exercise off Ukraine. The multinational war games took place in the northwestern part of the Black Sea, near the Ukrainian port city of Odessa.

The Sixth Fleet said in a press release that the US Navy sent the USS Hue City Ticonderoga-class guided-missile cruiser and the USS Carney Arleigh Burke-class guided-missile destroyer, along with a P-8A Poseidon patrol aircraft.

Moscow has long objected to NATO’s large-scale war games near the Russian border, which intensified after the March 2014 referendum in which Crimea voted for reunification with Russia.

In late June, Russian Defense Minister Sergey Shoigu said that the Alliance’s provocative actions “raise mutual suspicions and push us [Russia] to undertake retaliatory measures, mainly in the western strategic direction.”

On July 13, Russian permanent representative to NATO Alexander Grushko said that NATO activities in eastern Europe “not only ensure a reinforced military presence of the allies in the immediate vicinity of Russia’s borders but in fact represent an intensive mastering of the potential theater of military operations.”

Medvedev: “The U.S. Just Declared Full-Scale Trade War On Russia”

This hardly a surprise, yet the stupidity of Congress in believing its own anti-Russian propaganda, and of Trump allowing this power-grab to go ahead is indicative of an administration that is out of its depth, that is totally boxed in by those he calls “the swamp”.

You’ve got the Republicans and the Democrats that can’t agree on ANYTHING, with the ONE exception – that Trump is NOT allowed to be friendly towards Russia. The Empire’s real rulers have spoken.

Perhaps he had no one telling him that this was the time to make a very public statement to the nation that this major plank of his foreign policy was going to be blocked by Congress – perhaps Reince Priebus could have explained things to him if he hadn’t been fighting to keep his job at the time.

Bringing in marine General John F. Kelly as WH Chief of Staff is hardly going to educate Trump about the nuances of Washington or international politics. He is used to giving orders and having them obeyed, not having to negotiate and talk to the right people.

http://www.zerohedge.com/news/2017-08-02/russian-pm-medvedev-us-just-declared-full-blown-trade-war-russia

Russian PM: “The U.S. Just Declared Full-Scale Trade War On Russia”

Tyler Durden
Aug 2, 2017

Several hours after President Trump officially signed the new Russian sanctions into law – despite his reservations and his statement that while he favors “tough measures to punish and deter aggressive and destabilizing behavior by Iran, North Korea, and Russia, this legislation is significantly flawed” – Russia responded when moments ago Russian Prime Minister Dmitry Medvedev said on his FaceBook page that any hopes of improving Russian relations with the new US administration are dead, that the Trump administration demonstrated complete impotence by transferring executive power to Congress “in the most humiliating manner”, and most notably, that the US just declared a full-scale trade war on Russia.

From https://www.facebook.com/Dmitry.Medvedev/

The signing of new sanctions against Russia into law by the US president leads to several consequences. First, any hope of improving our relations with the new US administration is over. Second, the US just declared a full-scale trade war on Russia. Third, the Trump administration demonstrated it is utterly powerless, and in the most humiliating manner transferred executive powers to Congress. This shifts the alignment of forces in US political circles.

What does this mean for the U.S.? The American establishment completely outplayed Trump. The president is not happy with the new sanctions, but he could not avoid signing the new law. The purpose of the new sanctions was to put Trump in his place. Their ultimate goal is to remove Trump from power. An incompetent player must be eliminated. At the same time, the interests of American businesses were almost ignored. Politics rose above the pragmatic approach. Anti-Russian hysteria has turned into a key part of not only foreign (as has been the case many times), but also domestic US policy (this is recent).

The sanctions codified into law will now last for decades, unless some miracle occurs. Moreover, it will be tougher than the Jackson-Vanik law, because it is comprehensive and can not be postponed by special orders of the president without the consent of the Congress. Therefore, the future relationship between the Russian Federation and the United States will be extremely tense, regardless of the composition of the Congress or the personality of the president. Relations between the two countries will now be clarified in international bodies and courts of justice leading to further intensification of international tensions, and a refusal to resolve major international problems.

What does this mean for Russia? We will continue to work on the development of the economy and social sphere, we will deal with import substitution, solve the most important state tasks, counting primarily on ourselves. We have learned to do this in recent years. Within almost closed financial markets, foreign creditors and investors will be afraid to invest in Russia due to worries of sanctions against third parties and countries. In some ways, it will benefit us, although sanctions – in general – are meaningless. We will manage.

Separately, Russia’s foreign minister Sergey Lavrov said that Russia retains the right to impose new counter-measures, adding the US sanctions are short-sighted, and risk harming global stability. He concludes that and attempts to pressure Russia will not make it change course.

Echoing Lavrov, earlier on Wednesday the permanent representative to the UN, Vassily Nebenzia said Moscow “won’t bend” and has no plans to change its policies following Donald Trump’s signing of new anti-Russian sanctions.

“Those who invented this bill, if they were thinking that they might change our policy they were wrong, as history many times proved. They should have known better that we do not bend and do not break,” Nebenzia told journalists in New York.

“Some of the US officials were saying that this is a bill that might encourage Russia to cooperate… This is a strange form of encouragement. But it is not our habit to be resentful children,” continued the diplomat, who promised that Moscow would “not relent on finding means and ways” to cooperate in the international arena over issues such as Syria.

The Kremlin also chose not to escalate the situation further. “This changes nothing. There is nothing new here,” Vladimir Putin’s press secretary, Dmitry Peskov, told the media in Moscow. “Counter-measures have already been taken.”

And now we await a similar announcement from the European Union.