Monthly Archives: August 2018

The Syrian War: Showdown in Idlib

While a semblance of peace reigns over Idlib’s marketplace, Syrian government forces are striking the Turkmen Mountains in northwestern Syria’s Latakia province, with Assad himself threatening a major offensive to retake Idlib Province, at least rhetorically. Not long ago on July 31, the Russian president’s envoy to Syria, Alexander Lavrentiev, had made it clear on the sidelines of the Astana 10 conference that ‘Any large-scale operation in Idlib is out of the question.’ However, Sergey Lavrov, in a visit to Turkey yesterday said, despite warnings by the Turkish government that an uncontrolled offensive would be catastrophic, that ‘Syria has a right to defend itself against militant groups’.

Despite the apparent disagreement, things are not what they seem. Turkey, with Russian and Iranian consent, has set up “observation posts” around Idlib’s conurbation of some 3 million people, most of whom are displaced persons (IDPs) from other parts of Syria, now threatened once again by Assad’s army. Apart from the observation posts dividing Afrin from Idlib to the north, a front has been established facing Syrian government forces from El-Eis south of Aleppo to Kafr Sijnah and Qalaat al Madiq to the south of Idlib (north of Hama), and back up on the western side up to Jisr al-Shoughour. Furthermore, these positions have been heavily fortified with massive prefabricated concrete, and as can be seen from the video below, it doesn’t look as if  the Turks intend to move anytime soon.

رتل تركي ضخم من معبر باب الهوى باتجاه محافظة ادلب .. وتحمل الشاحنات جدار اسمنتي

Posted by ‎ابو عبدو علوش‎ on Monday, 23 July 2018

Meanwhile, Turkish security officials have been negotiating for some months now to integrate the various fighting groups spread across Idlib Province into an organized defence force under their control. But Hay’at Tahrir el-Sham (HTS or the Institution for the Liberation of the Levant), previously known as Jabhat al-Nusra (Victory Front) when it was still a declared al-Qaeda affiliate, has, typically, been refusing to cooperate.

Furthermore, elements from within HTS have been making and sending armed drones to cause damage at the Russian airbase at Khmeimim, which has made the subject of HTS’ dissolution a matter of heated debate between Russia and Turkey. While Turkey has recently been having more success at reducing the numbers of HTS’ followers, hardcore elements have broken away to form a new group called Tanzim Horass el-Din which, in virtue of its name (Organisation for the Protectors of the Religion) seems to be declaring an inflexible conservative stance. The al-Jazeera video below summarises these and other related events.

So while Russia is expressing its impatience with the situation in Idlib in its support for the threatened advance by Assad’s forces, the Turks continue to insist that the campaign be stopped. Presidential spokesperson İbrahim Kalın told reporters at a press conference today: ‘We are calling for the immediate termination of the operation into Idlib. Referring to Turkey’s role in the Astana  process, he said: ‘ As a guarantor country, we are working to avoid the mistakes carried out by the [Assad] régime in other parts of Syria, like Deraa and Homs, in Idlib.’ This is a diplomatic way for the Turks to say that they are not moving, and that the Russians have to give them more time to get the situation in Idlib under control. It is understood, however, that Russia’s change of tone conveyed in Lavrov’s statement yesterday is a necessary threat in the interests of speeding things up with recalcitrant fighters on the ground.

Meanwhile, it is the next round of the Astana process in Tehran that will be decisive in all these respects (including Assad’s advance) since, undoubtedly, the Iranians will be bringing into the mix the question of trade with Turkey, in trying to overcome the difficult new sanctions environment .

The travails of the Lira and the financial assault on Turkey

The social media bots were in full swing as the Turkish Lira roared past the L5.5=$1 mark on August 8 towards L7 in a frenzy reminiscent of the boiler room attacks on the elected Egyptian President, Mohamed Morsi in the lead up to the Western-sanctioned July 2013 Egyptian coup. The smear campaign was a final assault orchestrated by the US security state against Turkey, intended to drive it into the arms of the IMF, after an attempted coup organised through Turkish deep state operator and religious cleric, Fethulla Gülen, in July 2016, had failed. This was a final attempt to bring this rebellious imperial satrapy to heel, and its bolshie Islamic leader Erdoğan, under control. If Khomeini’s upset of US dominance over Iran caused a shock to the world order in 1979, Erdoğan’s policies are even more difficult for the world’s élites to swallow.

Consider that the “U.S. Empire” began (formally) on Monday, February 24 1947. On that fateful day, British Ambassador Lord Inverchapel informed newly-appointed U.S. Secretary of State George Marshall personally that Britain could no longer provide aid to Greece and Turkey: “His Majesty’s government could no longer keep up its imperial role in checking Russian ambitions at the straits barrier”. He said it was urgent that the U.S. take over that role, which was going to be costly. As Truman scheduled a meeting with congressional leaders to discuss the estimated $400m cost of this venture on February 27, it would be Dean Acheson, Marshall’s deputy, who actually took over the lead negotiating role.

To convince squeamish budget-cutting congressional leaders just coming out of WWII, of the necessity of spending so much money, Acheson argued that Soviet pressure on the Dardanelles (Bosphorus) might cause Greece to fall like a ‘rotten apple’, the corruption would then infect ‘Iran and all to the East’, then ‘Africa through Asia Minor and Egypt, and to Europe through Italy and France’. Acheson’s claims were so off the scale that he upset many Washington insiders and Walter Lippman, for instance, was so incensed  that he almost came to blows with Acheson at a dinner party.

The way George Marshall recalled these events of 21-27 February 1947 that led to the Truman doctrine is illuminating. When Inverchapel raised the matter of Greece and Turkey with Marshall, the U.S. Secretary of State said that he didn’t understand the urgency, and ‘given that the Russians had made no move with regard to Turkey for some time, he asked if the Ambassador had any ideas regarding the reasons for the Russian silence’. The British Ambassador replied that ‘in his opinion no foreigner knows why Russia takes or fails to take certain actions. Therefore, as an honest man, he must admit that he is not in a position to explain what is responsible for the present Soviet attitude towards Turkey’. If the business of Empire – according to these strange diplomatic exchanges – is thus simply a mindset, it is in this form that the US inherited it from the UK.

In any event, Turkey became central to US world dominance, and as the Turkish military joined NATO in 1952, forming the front line of the Cold War and the covert ‘fight against international communism’, there followed the creation of the Turkish “Gladio” special warfare department (ÖHD – called the STK before 1965). This would constitute the Turkish “Deep State”, funded directly by the US outside Turkish government accounts, until it was flushed out by Turkish Prime Minister Bülent Ecevit in the 1970s, only for it to be replaced in the 1980s by the Gülen organisation. This would, in turn, collapse with the failure of the July 2016 attempted coup, and subsequently unravel in dramatic fashion as a result of Erdoğan’s “state of emergency” – thoroughly unpopular with the Western media – as more than 50,000 military men, bureaucrats and academics were removed from office and were either convicted in court or simply lost their jobs. The current attack on the Lira must be seen in that light – as the final (possibly, you never know) attempt to bring what had been a pillar of “US Empire” to heel.

Emerging from basket-case status in the 20th century, Turkey is now a G20 country with a government debt to GDP ratio of 28.3%. Among G20 countries only Russia has a lower ratio (12.6%) whilst Germany (64.1%), the UK (85.4%) and the US (105.4%) all have much higher ratios of public debt to GDP. If we are concerned about the state of foreign exchanges and inflation then the best measure of GDP is purchasing power parity (measuring the country’s production in terms of local costs), and on that basis, Turkey is the 13th largest economy in the world GDP with $2.1trillion economy, compared with Russia ($4tr.),  UK ($2.9 tr.), Germany ($4tr.) and the US ($19tr.).

Turkey’s problem (if that is a problem) is that it is the fastest growing G20 country, level with India (7% p.a. GDP growth), ahead of China (6.5%), Germany (2.9%), the US (2.6%) and the UK (1.4%). These levels of growth drag in a lot of imports in terms of energy products and intermediate goods necessary for industrial production, which leads to a high balance of trade deficit, currently running at levels of around $55billion p.a. (double the rate for the UK, for instance). Nevertheless, Turkey total public/private external debt is only $453bn.; lower than all G20 countries, except Saudi Arabia. The large European countries (Germany, France, the UK), the US and Japan have massive external debts, because they have deep capital markets and are home to international banking, and so the external debt figures (between $2 and $20tr.) are strictly not comparable with Turkey’s. But BRICS countries like India and Brazil have external debts of well over $550bn, and small European countries (outside the G20), like Denmark, Finland, Austria, and Belgium have a much larger external debt than Turkey.

So why did the Dow Jones lose 196 points last Friday on the news that Turkey’s currency was plummeting, with, especially, bank stocks falling (Citigroup -2.39%; Morgan Stanley -2.12%; Goldman Sachs -1.78%; Bank of America -1.30%; and JPMorgan Chase -0.98%). In Germany, Deutsche Bank down -4.68% on Friday, is an exceptional case with its stock down -41% since February. But the selloff didn’t stop there. Two big U.S. life insurance companies were also down MetLife -3.19%, and Prudential Financial -2.97%. This is the product of exposure by European Banks to Turkey, with a total of both loans and shareholdings in local Turkish banks standing at some $194bn (according to the Bank of International Settlements). So what has that to do with the Wall Street banks and insurers? The problem is in fact that European banks are  counterparties to trillions of dollars in derivatives held by Wall Street, estimated at over $4tr. by the Office for Financial Research (OFR). So if anything happens to the European banks, Wall Street would collapse.

The basic problem is that, if over the past year the Turkish lira has lost 40% of its value vs. the U.S. dollar, this makes local dollar-denominated debts of Turkish companies harder to repay, and puts European banks, and therefore Wall Street, at risk. Trump was blithely unaware of all this as he focused on delivering his gut punch to a truculent Erdoğan. This latter was refusing to release Pastor Andrew Brunson from his Turkish jail cell (charged as he was of involvement in the 2016 attempted coup), which White House evangelist-in-chief, Mike Pence, had summarily demanded. While the Lira was already displaying weakness, Trump tweeted his explosive attack, and the currency decline turned into a rout:

“I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!”

Fed tightening over the past year, and the end of Quantitative Easing (QE) has meant that, not just Turkey, but all currencies of the emergent economies/BRICS countries have lost somewhere around 20% of their value against the US dollar. The drop in the Lira was proportionate to those trends, until last month that is, when social media pressure began to build up against Turkish government policies, noticeably after the official rejection by Turkey of US sanctions against Iran. When demands for the release of Pastor Andrew Brunson were also rebuffed, a new high-pitched Erdoğanophobic feeding frenzy driven by political bots took the Lira to its current new lows. The Turkish currency would thus register a decline over the last year similar to that of the currency of the worst-performing emerging economy – Argentina (or a move of c. -40%).

But the difference between the Turkish and Argentinian economies, in terms of strategic potential, GDP growth, productivity and foreign exchange reserves is stark, demonstrating the clear political origins of the market assault on the Lira, in the last phase. The intention may have even been to drive Turkey into the arms of the IMF, as in the case of Argentina, giving the US new leverage on the country. However, with $170bn in foreign exchange reserves the Turkish Central Bank has enough money to cover interest payments, capital repayments on its external debt, as well as trade deficits, for the next year and a half at least. The very last thing Erdoğan would do is to go to the IMF. Instead, he has the time and space to follow the same policy that Russia pursued during a similar attack on the Rouble in 2014: dedollarisation.

Rather than put up local interest rates, which are already at 17.75%, the Turkish government seems to want to pursue a policy of increased trade in local currency with China, Russia and Iran, and to seek new loans in Yuan from the Chinese, to replace US dollar debt. However, this policy of diversification need not be blinkered or focused only Eastward. Coming out from under the US shadow can significantly also involve a reboot of old historical ties with Germany, Turkey’s largest trading partner. Germany is looking to re-orient itself in a new phase in relations with a US which, following the failure to agree on TTIP under Obama, and its summary cancellation anyway by Trump, has been willing to consider a break-up of the European Union. Germany also supports Turkey’s insistence on continuing trade with Iran. On the back of such improving relations with Germany, better relations with France and the UK would follow. Such an eclectic solution would in fact be natural for a country that sees itself as a bridge between continents and between cultures.

 

Sadr wins the recount: nothing changes except an improvement in Iraq’s political mood

Muqtada al-Sadr’s alliance wins the vote recount, retaining all 54 of the 329 seats it won in the May 12 vote, with the only change being an extra seat for the Conquest Alliance of pro-Iranian former paramilitary fighters led by Hadi al-Amiri, which remains in second place. This outcome is confidence building, and is good news for Iraq’s new nationalistic-cum-pluralistic political temper, the country having been sidelined for too long in a sectarian cul-de-sac.

In the intervening period, however, Haidar al-Abadi, has not only lost the election, but also his credibility as prime minister, as a result of his now clear inability to tackle corruption.

Silent Wars: Jazeera’s documentary on the war in Sinai (2)

Al-Jazeera broadcasts Part 2 of Sinai: The Silent Wars. Continuing reports of incidents between armed insurgents and the Egyptian military now further includes an investigation into the targeting of civilians in the Sinai by the Israeli Airforce in cooperation with Egypt’s armed forces.

Time delayed satellite images show the disappearance of entire residential neighborhoods, as well as large sweeps of agricultural land in the densely populated region Rafah, on Gaza’s border. The images also show barbed wire fences 6.5 kilometers from the border with the Gaza Strip, supposedly an greed-upon buffer zone.

Despite the liberal whitewashing of Assad: the evidence is overwhelming that the unreconstructed Arab tyrant is true to type

As the Russians spin Assad’s way out of blame for the chemical atrocities he is responsible for, his régime continues to dodge the real questions the chemical weapons watchdog (OPCW) want answered. Assad’s denials over chemical attacks, are no different to his denials over the systematic torture and destruction of the Syrian people in his prisons.

Liberal arguments just as those after Ghouta and Khan Sheikhun (to the effect that Assad ‘had no reason to commit such an atrocity’ because he was winning the war), fail to understand the mentality of Arab tyrants, who scheme to use plausible deniability of daylight murder as a policy intended for the promulgation of the fear their rule depends on. The RT media machine, usually a valuable counterweight to such as the BBC and CNN, is nevertheless a boon to the Syrian despot in that particular respect.