China Unveils "Magic" Island-Building Ship On Eve Of Trump Arrival

In a move that appears to validate Joint Chiefs Of Staff Chairman Joseph Dunford’s concerns about China’s strategy of slowly expanding its territorial and military footprint in the Pacific, the Chinese government unveiled on Sunday a “magical” island-building ship on the eve of Donald Trump’s visit in a move likely to renew fears about its claims to territory in the South China Sea, the Financial Times reported.

Measuing 140 meters, the Tiankun is the biggest dredger in Asia, with cutters and pumps capable of smashing the equivalent of three Olympic pools of rock an hour from the sea floor and shooting it up to 15 kilometers away to create artificial land. Over the past five years, China has used similar vessels to create a string of strategic islands to support its claims to 85% of the territory in the South China Sea.

China has been widely criticized by the international community for its land-reclamation efforts in in the Spratley islands, where China has been building manmade bases over some of the since 2014. China has asserted its dominance of several groups of tiny islands in the South and East China Seas. China last year said it would not accept a ruling against it made in a key international legal case over the strategic reefs and atolls that China has asserted its authority over. In that ruling, the ICC decided that the islands belonged to the Philippines.

According to Newsweek, the US estimates China has added 3,200 acres of land on seven features (which includes rocky outcrops and reefs) over the past three years.

Between 2013 and the middle of 2016 - the peak phase of the island-building efforts - China created seven islands and reclaimed 2,000 acres, and built airfields, missile bases and radar systems.

Last year, Beijing appeared to signal it was halting large-scale dredging. However, the creation of the Tiankun would suggest otherwise. Launched at a shipyard in Jiangsu province on Friday, the Tiankun will enter service next year with Tianjin Dredging Company, an arm of state-owned China Communications Construction Company that has carried out most of the dredging in the South China Sea.

The Marine Design and Research Institute in Shanghai, which designed the vessel, described it as a “magic island-maker” on Saturday.

The US military has taken a more hard-line approach to China’s territorial claims in the Pacific since President Donald Trump took office. Since inauguration day, the US Navy has conducted at least four “freedom of operation” missions whereby US destroyers have sailed within 12 miles of the controversial islands. The most recent such mission occurred in mid-October. Each time, China has scrambled fighter jets and ships to intercept the US vessel.

As the FT pointed out, Washington’s opposition to China’s claims remains an irritant in bilateral relations, and the topic is expected to be an important point of discussion with Xi Jinping, China’s president, when Trump arrives in Beijing on Wednesday for a two-day visit.
 

How Much Space Does $1,500 Rent In The World's 'Most Magnetic' Cities?

New Yorkers who wince every time they slip a $1,500 rent check under their super’s door should consider moving to Shanghai, or maybe Berlin.

According to a new study published on RentCafe, $1,500 will buy you three times more space in Shanghai than in Los Angeles and twice as much in Frankfurt. Meanwhile, rents per square foot are five times higher in San Francisco than they are in Berlin.

Rentcafe used data from the Global Power Index and data on price-to-square footage ratios that it had collected for a previous study to compare how much space $1,500 will buy in the world’s 30 “most magnetic” cities - i.e. cities that are popular tourism hubs.

The study’s authors presented their results in an interactive graphic that allows users to compare costs between cities. Some of the most expensive markets include San Francisco, Manhattan and Zurich. Among the least expensive are Istanbul, Shanghai and Berlin.

Manhattan, for example, offers only 277 square foot (26 m2) for $1,500.  In Seoul, the same amount of money will rent you no less than a 1,389 square foot (129 m2) apartment, ample space for one person.

In San Francisco, $1,500 a month will rent you a 316 square foot apartment. Meanwhile, in Austria, $1,500 will rent you 1,009 square feet – almost three times as much. Rentcafe adds that, while SF has some of the most widely regarded cultural amenities in the world, Vienna - the City of Music – has plenty of entertainment options, from museums, vintage cinemas, live shows to recreational parks and hiking trails.

That is to say that one doesn"t necessarily need to pay sky-high rents to live in a fun urban environment.
 

US Policy Paradox: How To Lose Friends And Influence Nothing

Authored by Adam Garrie via The Asia Times,

When Paul Robeson belted out the lyric “I’m tired of living, and scared of dying,” he stumbled on to a paradox of emotional dissonance that could easily define the geo-strategic cognitive dissonance that the US exhibits when dealing with its fellow superpowers Russia and China.

Time and again the United States has shown that it does not want war with either of those countries, and these feelings are of course mutual. However, the US has a strange penchant for conducting provocative measures that inexorably harm relations with both Russia and China in mind-blowingly close proximity in time to moves suggesting rapprochement or, at minimum, de-escalation of tensions.

The most recent example is the Pentagon signing an agreement to open lines of direct communication with the commanders of the People’s Liberation Army to avoid “miscalculations” in areas ranging from the Korean Peninsula to the South and East China Seas.

In a rational environment, this would be seen as a US climb-down over actions China finds unacceptable in Korea and in its maritime waters. But in the current environment, while the US has signed an agreement that would ideally reduce tensions between the Chinese and US armed forces, the US president has also authorized his government to open an investigation into Chinese trade practices. While the proximate issue is US intellectual-property rights in China, the phrase “anti-Chinese sanctions” is on the tip of everyone’s lips.

Far from being out of character, the dichotomy of cooperating with China and engaging in a would-be pre-emptive trade war that the Chinese Ministry of Commerce has warned could be deeply dangerous is actually par for the course under the Trump administration.

On July 7, Donald Trump and Vladimir Putin met for the first time. The most meaningful outcome of the meeting was the agreement jointly to police a ceasefire and accompanying de-escalation zone in southwestern Syria, along with Jordan.

Less than a month later, Trump signed a sanctions bill against Russia that Moscow remains furious about. Détente 2.0 officially lasted from July 7 to August 3, 2017.

In respect of Iran, the Trump administration has quietly but officially stated that Tehran has not violated a single clause of the 2015 nuclear deal, but US officials continue to sanction Iran and continue to speak of Iran as though it has violated every agreement ever signed in history.

This has the aggregate effect of making the United States appear tired of warring but scared of cooperating.

In reality, neither Russia, China nor Iran wants war with the United States. One could also add North Korea, Mexico, Syria, Venezuela, Zimbabwe or just about every other country on the planet to that list.

Therefore, while moves to de-escalate military tensions are positive developments no matter where they happen, the mixed signals the US is sending will only serve as a demonstration that the US is not serious about proper de-escalation and cooperation and therefore it is only natural for the wider world to assume the worst about the United States, which far too often translates into “the tense status quo hasn’t changed”.

What’s more is that while pundits argue over whether this is part of a larger American geo-strategic plan to sow confusion or is simply an inexperienced Trump administration that cannot decide if it is coming or going, the wider world is more concerned with the effect than the cause.  

In this sense, the US is less like the longing voice of “Old Man River” than it is like the author of a future worst-seller, “How to Lose Friends and Influence Nothing”.

Pepe Escobar On North Korea: Fire, Fury, Fear, & False Flags

Authored by Pepe Escobar via The Asia Times,

Alarm bells ringing as rampant speculation breaks out over Pyongyang’s ‘possible’ miniaturized nuclear warheads.

Beware the dogs of war.

The same intel “folks” who brought to you babies pulled from incubators by “evil” Iraqis as well as non-existent WMDs are now peddling the notion that North Korea has produced a miniaturized nuclear warhead able to fit its recently tested ICBM.

That’s the core of an analysis completed in July by the Defense Intelligence Agency (DIA). Additionally, US intel believes that Pyongyang now has access to up to 60 nuclear weapons.

On the ground US intel on North Korea is virtually non-existent – so these assessments amount to guesswork at best.

But when we couple the guesswork with an annual 500-page white paper released earlier this week by the Japanese Defense Ministry, alarm bells do start ringing.

The white paper stresses Pyongyang’s “significant headway” in the nuclear race and its “possible” (italics mine) ability to develop miniaturized nuclear warheads able to fit on the tips of its missiles.

This “possible” ability is drowned in outright speculation. As the report states, “It is conceivable that North Korea’s nuclear weapons program has already considerably advanced and it is possible that North Korea has already achieved the miniaturization of nuclear bombs into warheads and has acquired nuclear warheads.”

Western corporate media would hardly refrain from metastasizing pure speculation into a “North Korea has miniaturized nuclear weapons” frenzy consuming the cable news cycle/ newspaper headlines.

Talk about hearts and minds comfortably numbed by the fear factor.

The Japanese white paper, conveniently, also escalated condemnation of China over Beijing’s actions in both the East and South China seas.

So let’s look at the agendas in play. The War Party in the US, with its myriad connections in the industrial-military-media complex, obviously wants/needs war to keep the machinery oiled. Tokyo, for its part, would much appreciate a pre-emptive US military attack – and damn the inevitable, massive South Korean casualties that would result from Pyongyang’s counterpunch.

It’s quite enlightening that Tokyo, for all practical purposes, considers China as a “threat” as serious as North Korea; Defense Minister Itsunori Onodera went straight to the point when he said, “North Korea’s missiles represent a deepening threat. That, along with China’s continued threatening behavior in the East China Sea and South China Sea, is a major concern for Japan.” Beijing’s response was swift.

Kim Jong-Un, demonized ad infinitum, is not a fool, and is not going to indulge in a ritual seppuku unilaterally attacking South Korea, Japan or US territory. Pyongyang’s nuclear arsenal represents the deterrent against regime change that Saddam Hussein and Gaddafi could not count on. There’s only one way to deal with North Korea, as I’ve argued before; diplomacy. Tell that to Washington and Tokyo.

Meanwhile, there’s United Nations Security Council Resolution 2371. It does target North Korea’s major exports – coal, iron, seafood. Coal accounts for 40% of Pyongyang’s exports, and arguably 10% of GDP.

Yet this new sanctions package does not touch imports of oil and refined-oil products from China. That’s one of the reasons why Beijing voted in favor.

Beijing’s strategy is a very Asian attempt to find a face-saving solution – and that takes time. UNSC resolution 2371 buys time – and may dissuade the Trump administration, for now, from going heavy metal, with horrible consequences.

Chinese Foreign Minister Wang Yi cautiously stated the sanctions are a sign of international opposition to North Korea’s missile and nuclear weapons programs. The last thing Beijing needs is a war right on its borders, also bound to negatively interfere with the expansion of the New Silk Roads, a.k.a. Belt and Road Initiative (BRI).

Beijing could always work on re-building trust between Pyongyang and Washington. That’s an order taller than the Himalayas. One just needs to look back at the 1994 Agreed Framework, signed during Bill Clinton’s first term.

The framework was supposed to freeze – and even dismantle – Pyongyang’s nuclear program and was bound to normalize US-North Korea relations. A US-led consortium would build two light-water nuclear reactors to compensate for Pyongyang’s loss of nuclear power; sanctions would be lifted; both parties would issue “formal assurances” against the use of nuclear weapons.

Nothing happened. The framework collapsed in 2002 – when North Korea was enshrined in the “axis of evil” by the Cheney regime. Not to mention that the Korean War is still, technically, on; the 1953 armistice was never replaced by a real peace treaty.

So what next? Three reminders.

1) Beware of an engineered false flag, to be blamed on Pyongyang; that would be the perfect pretext for war.

2) The current narrative is eerily similar to the usual suspects blaring since forever that Iran is a heartbeat away from “building a nuclear weapon”.

3) North Korea holds trillions of US dollars in unexplored mineral wealth. Watch the shadowplay by candidates bound to profit from such juicy loot.

How A Renewed Korean Conflict Is Going To Be Felt Around The Globe

Authored by James Durso via TheHill.com,

The United States and the Republic of South Korea have, until now, had identical interests in the Korean peninsula: defending against a North Korean attack on the South, and keeping the North’s regime at bay until it collapsed from internal contradictions.

The inevitable ability of North Korea to hit North America with a nuclear-armed intercontinental ballistic missile (ICBM) means the U.S. has to consider striking North Korea preventively, regardless of the casualties in South Korea because no U.S. President will trade San Francisco for Seoul.

Sen. Lindsey Graham (R-S.C.) recently said President Trump told him,

"If there’s going to be a war to stop [Kim Jong Un], it will be over there. If thousands die, they’re going to die over there. They’re not going to die here.”

And National security adviser H.R. McMaster has stated the U.S. is planning a “preventive war” against North Korea.

What will the president have to consider before he launches a preventative attack on North Korea?

Casualties in an attack of the North on the South are estimated at 100,000 in Seoul in the first 24 hours. The U.S. military estimates 200,000-300,000 South Korean and U.S. military casualties within 90 days, and even more civilian deaths, many of which may be caused not by North Korean weapons but the collapse of the electric power grid, and the water, transport and sewer systems in a city with one of the highest population densities in the world. Half of the South’s population of over 50 million lives in the Seoul Capital Area, which produces almost half of the country’s gross domestic product.

The effects would be felt worldwide and immediately as South Korea is a vital part of the global supply chain for high technology equipment, both as end products and parts used by other manufactures. Nor is it likely companies in other countries can quickly pick up the slack: it is estimated that the replacement cost of the display manufacturing capability of Samsung and rival LG will top $50 billion. In the words of one analyst, “If Korea is hit by a missile, all electronics production will stop.”

Shipping in the nearby Sea of Japan, East China Sea, and Yellow Sea will halt as there may no longer be a destination for the cargo, and spiking maritime insurance rates, if insurance can be had, will make most voyages unprofitable. Shipping to and from major Chinese ports such as Dalian, Qingdao, Shanghai, and Tianjin will halt and disrupt worldwide supply chains. Ships returning to China will have to anchor until the crisis abates, at a cost to the shipping lines (and customers). Most of Japan’s major ports are on the east coast of the main island, Honshu, and will be open for business, though with the threat of North Korean missiles early in the conflict.  

South Korea imports 98 percent of its fossil fuels and relies exclusively on tankers for liquefied natural gas (LNG) and crude oil. China will also be affected as it is the world’s largest net importer of crude oil and has LNG regasification terminals at Dalian, Qingdao, Shanghai, and Tianjin. Crude and LNG tankers enroute will have to be rerouted, but the product can probably be sold on the spot market.

The airspace surrounding the Korea Peninsula and northeast China will be closed and will affect passenger and cargo traffic, including at Beijing, the world’s second busiest airport, and Shanghai, the ninth busiest. Eastward traffic to the region will slow and will hit the hub airport, Dubai, which is also a major tourist destination for Asia. Japan will lose eastbound air traffic, but westward traffic from the U.S. less so.

South Korea imports most of its food as it has little arable land. The U.S. is its largest supplier, providing mostly corn, meat, hides, soybeans, milling wheat, and cotton, so the U.S. farm sector will sag if the crisis happens when produce is on the way to market.

Of the local allies, Japan may be more disposed to action as it isn’t – literally – on the front line and it has already deployed the PATRIOT surface-to-air interceptor and the AEGIS ship-based anti-ballistic missile system, and it may install the AEGIS Ashore system or the Terminal High Altitude Area Defense (THAAD) system. South Korea will be more reticent as it will absorb the initial blows and the only air defense missiles on its territory, the THAAD system, were deployed by the U.S. in the spring of 2017.

President Trump will have to weigh Asia’s regional stability and homeland security when making the toughest call since President Truman OK’d the use of nuclear weapons in Japan in 1945.

"Time Is Running Out" - China Is Planning For A Crisis Along North Korean Border

Despite Chinese officials reassurance that "military means shouldn’t be an option," WSJ reports that China has been bolstering defenses along its 880-mile frontier with North Korea and realigning forces in surrounding regions to prepare for a potential crisis across their border, including the possibility of a U.S. military strike.

While all eyes in America are once again distracted by "Russia"-related narratives and the dismal GOP efforts to replace, repeal, re-who-knows-what Obamacare, the threat of North Korea has not gone away... and neither has China"s preparations. As President Trump stepped up the rhetoric, pressuring China to do more to "solve" the North Korean problem, and threatening military action to halt Kim"s nuclear weapons program ambitions, it is clear that China has used this crisis to not just prepare for potential problems with North Korea but to reinforce military forces elsewhere.

The Journal writes that a review of official military and government websites and interviews with experts who have studied the preparations show that Beijing has implemented many of the changes in recent months after initiating them last year.

Recent measures include establishing a new border defense brigade, 24-hour video surveillance of the mountainous frontier backed by aerial drones, and bunkers to protect against nuclear and chemical blasts, according to the websites.

China’s military has also merged, moved and modernized other units in border regions and released details of recent drills there with special forces, airborne troops and other units that experts say could be sent into North Korea in a crisis.

They include a live-fire drill in June by helicopter gunships and one in July by an armored infantry unit recently transferred from eastern China and equipped with new weaponry.

China’s Defense Ministry didn’t respond directly when asked if the recent changes were connected to North Korea, saying only in a written statement that its forces “maintain a normal state of combat readiness and training” on the border.

While Chinese authorities have been preparing for North Korean contingencies - including economic collapse, nuclear contamination, or military conflict - according to U.S. and Chinese experts who have studied Beijing’s planning, perhaps more intriguing, as Mark Cozad, a former senior U.S. defense intelligence official for East Asia, now at the Rand Corp, explains..

China’s contingency preparations “go well beyond just seizing a buffer zone in the North and border security."

In other words, China is not letting a good crisis go to waste. Coad goes to note:

“Once you start talking about efforts from outside powers, in particular the United States and South Korea, to stabilize the North, to seize nuclear weapons or WMD, in those cases then I think you’re starting to look at a much more robust Chinese response."

“If you’re going to make me place bets on where I think the U.S. and China would first get into a conflict, it’s not Taiwan, the South China Sea or the East China Sea: I think it’s the Korean Peninsula.”

As The Journal further notes, Beijing also appears to be enhancing its capability to seize North Korean nuclear sites and occupy a swath of the country’s northern territory if U.S. or South Korean forces start to advance toward the Chinese border, according to those people. That, they say, would require a much larger Chinese operation than just sealing border, with special forces and airborne troops likely entering first to secure nuclear sites, followed by armored ground forces with air cover, pushing deep into North Korea. It could also bring Chinese and U.S. forces face to face on the peninsula for the first time since the war there ended in 1953 with an armistice - an added complication for the Trump administration as it weighs options for dealing with North Korea.

China has long worried that economic collapse in North Korea could cause a refugee crisis, bring U.S. forces to its borders, and create a united, democratic and pro-American Korea. But as WSJ"s Ben Kesling  reports, China’s fears of a U.S. military intervention have risen since January as Pyongyang has test-fired several missiles, including one capable of reaching Alaska. In a notably outspoken article written in May, retired Maj. Gen. Wang Haiyun, a former military attaché to Moscow now attached to several Chinese think tanks, made his view clear (while carefully noting he did not speak for the PLA)...

China should “draw a red line” for the U.S.: If it attacked North Korea without Chinese approval, Beijing would have to intervene militarily.

“Time is running out,... We can’t let the flames of war burn into China.”

China should demand that any U.S. military attack result in no nuclear contamination, no U.S. occupation of areas north of the current “demarcation line” between North and South, and no regime hostile to China established in the North, his article said.

“If war breaks out, China should without hesitation occupy northern parts of North Korea, take control of North Korean nuclear facilities, and demarcate safe areas to stop a wave of refugees and disbanded soldiers entering China’s northeast,” it said.

Beijing’s interests “now clearly extend beyond the refugee issue” to encompass nuclear safety and the peninsula’s long-term future, said Oriana Skylar Mastro, an assistant professor at Georgetown University who has studied China’s planning for a North Korean crisis.

“China’s leaders need to make sure that whatever happens with (North Korea), the result supports China’s regional power aspirations and does not help the United States extend or prolong its influence,” Ms. Mastro said.

In other words, China may appear to be preparing for a North Korean crisis... but is really building its capabilities should President Trump decide the time is right for more international distractions.

China Warns Japan: "Get Used To Our Warplanes", Sends Spy Ship Near Alaska

In an unexpectedly brazen rattling of sabers, just days after China deployed troops to its first foreign base in Djibouti, a move which the Global Times clarified is "about protecting its own security, not about seeking to control the world, Beijing made a less than subtle reversal, when it told Japan on Friday to "get used to it" after it flew six warplanes over the Miyako Strait between two southern Japanese islands in a military exercise.

It all started late on Thursday night, when Japan"s defense ministry issued a token statement describing the flyover by the formation of Xian H-6 bombers, also known as China"s B-52, earlier that day as "unusual", while noting that there had been no violation of Japanese airspace.

The flyover was hardly surprising: the Chinese navy and air force have been carrying out a series of exercises in the Western Pacific in recent month, both as they hone their ability to operate far from their home shores, as well as a trial balloon to gauge the reactions of their increasingly more nervous neighbors.

What made this flyover different, is that usually following a formal protest by the "offended" country, Beijing would take note and issue a token statement of its own, "neither admitting nor denying" guilt, but certainly without assurances of further transgressions. But not this time. On Friday the Chinese defense ministry said it was "legal and proper" for its military aircraft to operate in the airspace and that it would continue to organize regular training exercises according to "mission requirements."

In other words, Beijing pushed back against Japan"s complaint suggesting that China had not only done nothing wrong, but that this behaviour would escalate:

"The relevant side should not make a fuss about nothing or over-interpret, it will be fine once they get used to it," the ministry said in a statement.

Furthermore, the Miyako Strait is between Japan"s islands of Miyako and Okinawa, to the northeast of self-ruled Taiwan, which China claims as its own.

It wasn"t just Japan: also on Thursday, Taiwan"s Ministry of National Defense said the Chinese bombers flew just outside its air defense identification zone and that it had "closely followed" the movements.

It is probably safe to assume that several more such close encounters, coupled an escalation in the harsh language - don"t expect Japan to back off diplomatically, especially not under Abe who militant ambitions are hardly secret - and a repeat of the tensions that erupted in 2013/2014 over territorial claims in the East China Sea, and which ended with diplomatic relations between China and Japan collapsing as well as nationalist sentiment in both China and Japan erupting, appears likely.

In a separate close encounter, at the same time that the US was conducting a succeeful THAAD-based intercept of a ballistic missile on Tuesday, a Chinese spy ship was lurking just 100 miles from Alaska"s coast to witness the said test for itself, Fox News reported. Furthermore, it was the first time the North American Aerospace Defense Command had seen this class of Chinese spy ship before near Alaska, an official told Fox News. The ship was spotted off the coast of Kodiak, on Alaska"s southern tip.

The THAAD test came after North Korea successfully test launched an alleged ICBM missile (this has subsequently been challenged with many claiming the missile was only intermediate range) that flew longer than any test conducted by Kim"s regime to date. Officials have said that Kim may now have the capability to strike Alaska. Prior to the test, both China and Russia have repeatedly demanded that the US remove its THAAD installations from South Korea over concerns that the balance of power in the Pacific Rim could shift, and destabilize the region.

China has sent warships to Alaska before, most famously in 2015 when former Barack Obama visited Alaska, China "greeted" him by sending five ships, while more recently a Chinese warship trailed a U.S. warship when it sailed earlier this month near a contested island in the South China Sea.

China also recently launched a new class of destroyer in Shanghai, which military experts say is on par with modern U.S. Burke class guided-missile destroyers. Furthermore, China now has roughly the same number of destroyers, cruisers and submarines as the U.S. Navy, according to new study from CNAS a Washington think tank.

In a separate naval adventure, China"s first fully functional aircraft carrier recently sailed near Taiwan after making a port call in Hong Kong that marked 20 years since the British handed the city over. The carrier was declared combat ready following initial tests in November. It does not, however, have advanced steam catapults to launch jets like a modern U.S. Navy aircraft carrier.

It was not clear where the Chinese spy ship had moved to after its brief trip to the Alaska coast.

Two B-1B Bombers Hold Live-Fire Drills Over Korean Peninsula, Show Off US "Attack Capabilities"

The US sent two B-1B Lancer strategic bombers from Guam"s Andersen Air Force Base base to the Korean Peninsula, to practice “attack capabilities” with South Korean jet fighters and hold live-fire drills on Saturday, Yonhap News reported, the latest show of force by the US military after North Korea’s first-ever ICBM test launch on July 4. The pair of US bombers flew conducted a simulated destruction of an enemy ballistic missile launcher and underground facilities, the South"s air force said, sending a strong hint to its northern neighbor.

The joint exercise included US F-16 fighters jets as well as fighter planes from the South Korean and Japanese air forces, and came a day after Trump said in Warsaw on Thursday that he was considering “some pretty severe things” in response to North Korea’s latest actions

Friday’s flyover followed a joint missile-defense drill by the US and South Korean armies on Korea’s east coast Wednesday, and as the US Pacific Air Forces said in a statement late on Friday, the 10-hour flight drill was conducted “in response to a series of increasingly escalatory actions by North Korea."

The US message was clear enough: "North Korea’s actions are a threat to our allies, partners and homeland,” Gen. Terrence O’ Shaughnessy, Pacific Air Forces commander, said in a statement. “Let me be clear, if called upon we are trained, equipped and ready to unleash the full lethal capability of our allied air forces."

Some more details on the drill from the WSJ and Reuters: during the drill, two B-1B bombers flew from Andersen Air Force Base in Guam to the Korean Peninsula where the bombers conducted the live-fire exercise at a range in South Korea"s eastern Gangwon province, dropping weapons in a simulated attack on a missile launcher. They were joined by South Korean and U.S. F-16 jet fighters during the mission: South Korean and U.S. fighter jets conducted precision strike drills aimed at attacking enemy targets hidden underground.

South Korea"s Yonhap news agency said the bombers then flew west, hugging the heavily fortified Demilitarised Zone (DMZ) border between the two Koreas, before leaving South Korean airspace. The B-1Bs then flew with Japanese F-2 jet fighters over the East China Sea before returning to Guam.

This was not the first time the US sent a very clear message to te Kim regime: the Pentagon has been making shows of force in recent months in response to perceived increases in tension on the Korean Peninsula. Twice in May, the U.S. sent B-1B bombers on flyovers near the Korean Peninsula. Each came shortly after a North Korean missile test. So far these have proben to not be very effective at deterring North Korea.

Also in April, the US said it was sending the USS Carl Vinson carrier strike group to the western Pacific to underscore Washington’s commitment to the region. In that case, the announcement instead raised questions about U.S. credibility after it came to light that the aircraft carrier was thousands of miles away. On Thursday, U.S. Secretary of Defense Jim Mattis told reporters in an impromptu briefing at the Pentagon that “we are leading with diplomatic and economic efforts” although he said the launch was a “very serious escalation” and warned the North that any effort to start a war “would lead to severe consequences.”

Confirming that the US military is just waiting for a green light, in its statement following Friday’s air force exercise, the U.S. said that it “maintains flexible bomber and jet fighter capabilities” in the region and could “quickly respond to any regional threat.”

The U.S. bombers and South Korean fighters “are just two of many lethal military options at our disposal,” said Lt. Gen. Thomas Bergeson, deputy commander of the U.S. military in South Korea. “This mission clearly demonstrates the U.S.-ROK alliance remains prepared to use the full range of capabilities to defend and to preserve the security of the Korean Peninsula and region,” Lt. Gen. Bergeson added, using the acronym for South Korea’s formal name, the Republic of Korea.

* * *

Separately Reuters reports that in a move that is sure to anger China and Russia, the US also plans to carry out "a new test of its THAAD missile defense system against an intermediate-range ballistic missile in the coming days" as tensions with North Korea climb.

The test, which was reportedly planned months ago, will be the first of the Terminal High Altitude Area Defense (THAAD) to defend against a simulated attack by an intermediate-range ballistic missile (IRBM), one of the officials said. The THAAD interceptors will be fired from Alaska. The United States has THAAD interceptors in Guam that are meant to help guard against a missile attack from a country such as North Korea.

Asked by Reuters, the U.S. Missile Defense Agency (MDA) confirmed that it aimed to carry out a THAAD flight test "in early July." Chris Johnson, an MDA spokesman, said the THAAD weapon system at the Pacific Spaceport Complex Alaska in Kodiak, Alaska, would "detect, track and engage a target with a THAAD interceptor."

Earlier this month Moscow and Beijing, in a joint statement, called on Washington to immediately halt deployment of THAAD in South Korea. The statement, not incorrectly, said Washington was using North Korea as a pretext to expand its military infrastructure in Asia and risked upsetting the strategic balance of power in the region.

Meanwhile, in North Korea, KCNA news gency reported that Kim Jong Un visited a mausoleum honouring state founder Kim Il Sun on Saturday, the anniversary of his grandfather"s death. He was joined by military officials who contributed to the success of the ICBM test, the news agency said. It was unclear if he was planning any further ICBM launches in the immediate future.

The Math Behind OPEC's Revised Production Cut Still Does Not Work

"Whatever it takes."

Saudi Energy Minister Khalid al-Falih and Russia"s Energy Minister Alexander Novak

That"s what Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak said in a statement overnight in Beijing they would do to reduce the global oil inventory overhang, using the immortal phrase coined by ECB"s Mario Draghi five years ago in his successful bid to defend the euro. For OPEC, however, "whatever it takes" may not be enough.

As reported earlier oil surged today, with Brent rising above its 50 and 200 DMA, after Saudi Arabia and Russia announced an agreement that the OPEC production cuts of 1.2MMbbls agreed upon last year in Vienna, should be extended through the end of the first quarter of 2018, effectively assuring that the May 25 OPEC summit later this month will agree on the same. There is, however, a problem: based on the simple math, a simple extension will not be nearly enough to bring the oil market back into balance. 

First there is the problem of excess supply, and not just resurgent US shale production, which is set to surpass an all time high 10 million barrels per day in the near future.

Over the weekend, Libya - the OPEC member with Africa’s largest crude reserves - announced it was pumping more than 814,000 barrels a day, thanks mostly to rising output from two fields that re-started last month, Jadalla Alaokali, a board member at the National Oil Corp., told Bloomberg on Sunday. At the end of April, Libya was producing about 700,000 barrels a day.

While output from the politically divided country is at its highest since October 2014 when it pumped 850,000 barrels a day, in an ideal world its output could grow substantially from here. Prior to the Arab Spring uprising, Libya - which together with Iran and Nigeria was exempted from OPEC’s cuts due to internal strife - pumped as much as 1.6 million barrels a day. It’s targeting production of 1.32 million barrels a day by the end of this year, the NOC said last week in a statement, some 500kb/d higher.

Then there is Nigeria, where the Forcados pipeline came back online last week and the Qua Iboe pipeline is being tested currently, with both together allowing output to reach its pre-disruption level of 1.8 mb/d. The oil ministry said that Nigerian oil output averaged 1.45mb/d suggesting an increase of 300kb/s in the near future is all too possible absent another set of production disruptions.

Of course, in the interim, North American output is booming, and where according to Baker Hughes, the number of US rigs has risen for 17 consecutive weeks, the highest level since the week of April 17, 2015, and the longest stretch of increases in six years.

Furthermore, the U.S. DOE recently published a new forecast that revised the country"s oil output up yet again. And yes, it was revised higher. Crude-oil production is now expected to rise by 960,000 barrels a day between December 2016 and December 2017. That compares with a 210,00 barrel a day increase it foresaw just before OPEC"s November gathering. Add in a 470,000 barrel a day ramp up in the production of natural gas liquids, and OPEC"s entire cut is more than offset.

Then there is OPEC"s own forecast, according to which the cartel trimmed its estimate of the need for OPEC crude this year by 300,000 barrels a day. At that level of production - 31.92 million barrels a day - inventories will remain static, assuming demand and non-OPEC supply forecasts are correct. As a reminder, based on secondary sources, OPEC produced 31.74 million barrels a day in April. According to Bloomberg"s Julian Lee, simply rolling that level forward for another six months will exhaust the excess at an average rate of 722,000 barrels a day in the second half and will see about 120 million barrels removed from inventories in the nine months begun at the end of March. "That may seem like a lot, but OPEC puts the excess at the end of the first quarter at 276 million barrels -- and that"s just in the developed countries of the OECD."

Then there is the question of demand.

We look at India first, where as Reuters" Christopher Johnson points out, citing JBC numbers, oil demand growth continues to slow and is now expected to be only 185,000bpd this year, vs 290,000 in 2016.

#India #oil demand growth is slowing and may be only +185,000 bpd this year, says JBC #Energy, vs +290,000 in 2016 ( @IEA )#OPEC #OOTT #gas pic.twitter.com/7xe5gdUilx

— Christopher Johnson (@chris1reuters) May 15, 2017

Then there is China, where oil imports likewise declined from record highs according to the latest trade data. Buying by China, which overtook the U.S. during the first quarter as the world’s biggest importer, averaged 8.4 million barrels a day in April, down 8.8% from a record the previous month. At the same time, net exports of oil products fell almost 49% from March to 1.01 million tons

The import decline from a record in March was due to seasonal refining maintenance picking up and independent processors, known as teapots, reaching their buying quotas, according to Jean Zou, an analyst at Shanghai-based commodities researcher ICIS-China. “Teapot buying in April eased a bit after the high level in March," Zou said. Imports last month by the independent refiners in Shandong province, where the majority are based, dropped to about 7.8 million metric tons, from 9.9 million in March, she said.

However, even that may mask the true level of underlying demand.

According to researcher SCI99, crude inventories at major ports in Shandong province in East China rose to 9-month high last week, suggesting that much of the newly imported oil is simply being held in inert storage with little downstream demand. Echoing what Zou said, energy research consultancy Energy Aspects said that the increase of crude inventories at major ports in Shandong is linked to uncertainty over import quotas for teapot refiners. “The quotas are a key factor in this build-up,” analyst Michal Meidan said in emailed response to questions Friday, and added that refinery maintenance could also be a factor.

Making matters worse, according to a BMI Research note on Monday, a second round of quotas for Chinese independent refiners won’t provide a “significant” boost to nation’s imports. As a result, the scope for government-set quotas surprising to the upside remains low as Beijing moves to gradually curb import quotas allocated to domestic refiners to manage a persistent refined fuels glut at home.

More to the matter at hand, China’s decision to keep restrictions on teapots from exporting refined fuels independently for 2nd consecutive quarter could also lead to lower crude runs, as exporting fuels through state-owned cos. is both costly and cumbersome, and as competition intensifies in domestic market.

And with a mini-glut of upstream crude already piled up, Chinese demand over the next few months will surely dip, especially if recent teapot quotas are not restored.

* * *

As a result, simply adding up the supply increases among Libya, Nigeria, Iran and US production, offset by the demand reduction in India and China means that merely extending the cuts won"t bring oil inventories anywhere close to their five-year average level by the end of December, or even end of March. And, as Bloomberg"s Lee also notes, "let"s set aside the fact that the five-year average has been inflated by two years of surplus, which means stockpiles will have to come down significantly below that to return to normal levels."

So what does OPEC need to do in addition to extending production cuts? The answer: it needs to double them.

According to Bloomberg calculations, OPEC"s own numbers show the group needs to limit its total production to 30.88 million barrels a day from July to deplete the excess OECD inventory - a decrease of 900,000 barrels a day from current levels. But with Libya and Nigeria, which are exempt from the supply-reduction deal, both restoring production after months-long disruptions, deeper cuts will be required still.

Lee"s conclusion: "If OPEC wants to drain surplus inventories by the end of the year, its members are going to have to accept some real pain. Even then, the risk is that their actions spur more supply from U.S. shale. It"s time for some tough decisions."

Finally, none other than Goldman confirmed as much in a note earlier today, when it specified the two conditions OPEC"s production cut will need to meet for the revised extension cuts to work:

For the strategy to work we believe that (1) compliance needs to remain high and (2) long-term oil prices need to remain low to prevent shale producers from ramping up investment significantly more. In fact, an extension of the cuts should go hand in hand with guidance of future production increases by low cost producers, in our view, with an already notable emphasis by Saudi and others that oil prices will likely remain in a $45-55/bbl long-term range, in line with our forecasts

It will take the market time to digest the unrevised math, not to mention the Saudi unwillingness to "accept some real pain." Until then, we expect algos to ignite a buying frenzy every time bullish OPEC headlines cross the tape, as has been the case for the past year. In the meantime, having flipped from near-record long positions, futures specs have seen their net long positions tumble in recent weeks. We expect this to reverse as the momentum resumes chasing price higher once again, until yet another surge in bullishness leads to mass liquidations, resulting in yet another mini flash crash such as the one observed two weeks ago when Pierre Andurand - one of the world"s biggest oil bulls and largest oil hedge fund traders - ended up liquidating his long positions.

Buchanan Asks "What Is America's Goal In The World?"

Authored by Patrick Buchanan via Buchanan.org,

For the World War II generation there was clarity.

The attack on Pearl Harbor, Dec 7, 1941, united the nation as it had never been before — in the conviction that Japan must be smashed, no matter how long it took or how many lives it cost.

After the defeat of the Axis powers in 1945, however, Americans divided.

Only with the Berlin Blockade of 1948, the fall of China to Mao and Russia’s explosion of an atom bomb in 1949, and North Korea’s invasion of the South in 1950, did we unite around the proposition that, for our own security, we had to go back to Europe and Asia.

What was called the Cold War consensus — that only America could “contain” Stalin’s empire — led to NATO and new U.S. alliances from the Elbe to the East China Sea.

Vietnam, however, shattered that Cold War consensus.

The far left of the Democratic Party that had taken us into Vietnam had repudiated the war by 1968, and switched sides to sympathize with such Third World communists as Fidel Castro, Che Guevara, Ho Chi Minh and the Sandinistas.

Center-right presidents — JFK, Nixon, Reagan — accepted the need to cooperate with dictators who would side with us in fighting Communism.

And we did. Park Chung-Hee in Korea. The Shah in Iran. President Diem in Saigon. Gen. Franco in Spain. Somoza in Nicaragua. Gen. Mobuto in the Congo. Gen. Pinochet in Chile. Ferdinand Marcos in Manila. The list goes on.

Under Reagan, the Soviet Empire finally fell apart and the USSR then disintegrated in one of the epochal events of history.

The American Century had ended in America’s triumph.

Yet, after 1989, no new national consensus emerged over what ought to be our role in the World. What should we stand for? What should we fight for?

What Dean Acheson had said of our cousins in 1962: “Great Britain has lost an empire and has not yet found a role,” was true of us.

What was our role in the world, now that the Cold War was history?

George H.W. Bush took us to war to drive Saddam Hussein out of Kuwait. Soaring to 90 percent approval, he declared America’s new role was to construct a New World Order.

Those who opposed him, Bush acidly dismissed in Hawaii on Dec. 7, 1991, the 50th anniversary of Pearl Harbor:

“We stand here today on the site of a tragedy spawned by isolationism. … And it is here we must learn — and this time avoid — the dangers of today’s isolationism and its … accomplice, protectionism.”

Neither Bush nor his New World Order survived the next November.

Then came payback for our sanctions that had brought death to thousands of Iraqis, and for the U.S. bases we had foolishly planted on the sacred soil of Saudi Arabia — Sept. 11, 2001.

George W. Bush reacted by launching the two longest wars in our history, in Afghanistan and Iraq, and announced that our new role was to “end tyranny in our world.”

The Bush II crusade for global democracy also fizzled out.

Barack Obama tried to extricate us from Afghanistan and Iraq. But he, too, failed, and got us into wars in Yemen and Syria, and then started his own war in Libya, producing yet another failed state.

What does the balance sheet of post-Cold War interventions look like?

Since 1991, we have lost our global preeminence, quadrupled our national debt, and gotten ourselves mired in five Mideast wars, with the neocons clamoring for a sixth, with Iran.

With the New World Order and global democracy having been abandoned as America’s great goals, what is the new goal of U.S. foreign policy? What is the strategy to achieve it? Does anyone know?

Globalists say we should stand for a “rules-based world order.” Not exactly “Remember the Alamo!” or “Remember Pearl Harbor!”

A quarter century after the Cold War, we remain committed to 60-year-old Cold War alliances to defend scores of nations on the other side of the world. Consider some of the places where America collides today with nuclear powers: the DMZ, the Senkakus, Scarborough Shoal, Crimea, the Donbass.

What is vital to us in any of these venues to justify sending an American army to fight, or risking a nuclear war?

We have lost control of our destiny. We have lost the freedom our Founding Fathers implored us to maintain — the freedom to stay out of wars of foreign counties on faraway continents.

Like the British and French empires, the American imperium is not sustainable. We have issued so many war guarantees it is almost assured that we will be dragged into every future great crisis and conflict on the planet.

If we do not review and discard some of these war guarantees, we shall never know peace. Donald Trump once seemed to understand this. Does he still?

Chinese Black Swans? No Problem!

With bonds, stocks, and commodities collapsing amid a renewed wave of Chinese monetray conditions tightening, concerns over potential butterfly effects and potential "black swans" are beginning to appear. However, as The South China Morning Post reports, the people of Shanghai have a solution for that...

Two deliverymen have been accused of stealing a black swan from a park in Shanghai and cooking and eating part of it, according to a TV report.

Residents living near Xujiahui Park noticed that one of five black swans living in the area was missing, Radio and Television Shanghai reported.

Surveillance footage showed the pair grabbing the swan late at night.

The men, whose full names were not given, had originally planned to catch fish, but were deterred by security patrols in the park. The bird died before the men got it home and they then boiled its carcass and froze it, according to the report. The following day they cooked it with carrots, ate half, but threw the rest away because it tasted bad. The men have been arrested by the police for hunting and killing a protected species, the report said.

*  *  *

On a serious note, we have come to expect this kind of behavior from the increasingly despeate Venezuelans, but if this is becoming the norm in Shanghai, then China"s problems run far deeper than collapsing capital markets.

North Korea Arrests US Citizen, Threatens To Sink US Aircraft Carrier As Japan Deploys Warships

A third US citizen has been arrested and remains in custody in North Korea, according to South Korean news agency Yonhap. A man, a Korean-American professor in his 50s, identified by the surname Kim, had been in North Korea for a month to discuss relief activities and was detained at Pyongyang International Airport just as he was leaving North Korea, the agency reported.

The man was a former professor at Yanbian University of Science and Technology (YUST), Yonhap said, citing unnamed sources. YUST, a university in neighboring China, has a sister university in Pyongyang. An official at South Korea"s National Intelligence Service said it was not aware of the reported arrest. The reason for his arrest is still unclear, and there has been no comment from the US authorities so far. South Korea’s spy agency, the National Intelligence Service, said it “was not aware” of Kim’s arrest, according to Yonhap.

North Korea, which has been criticized for its human rights record, has in the past used detained Americans to extract high-profile visits from the United States, with which it has no formal diplomatic relations. North Korea already holds two Americans. Ahn Chan-il, director of the World North Korea Research Center in Seoul, said that the North "seems to be intending to use professor Kim as leverage in negotiations" amid the current bad relations between the two countries.

Pyongyang airport

According to Reuters, Otto Warmbier, a 22-year-old student, was detained in January last year and sentenced to 15 years of hard labor by a North Korean court for attempting to steal a propaganda banner. In March 2016, Korean-American Kim Dong Chul, 62, was sentenced to 10 years hard labor for subversion. U.S. missionary Kenneth Bae was arrested in 2012 and sentenced to 15 years hard labor for crimes against the state. He was released two years later.

Since 2009, over 10 U.S. citizens have been detained in North Korea on charges of anti-state and other unspecified crimes. The widespread view has been that Pyongyang uses the detentions as bargaining chips in its negotiations with Washington.

* * *

Meanwhile, one day after North Korea lashed out at its biggest supporter in the region China, threatening Beijing with "catastrophic consequences" for siding with the U.S. over sanctions, North Korea said on Sunday it was ready to sink a U.S. aircraft carrier steaming toward the Korean penninsula to demonstrate its military might, as two Japanese navy ships joined a U.S. carrier group for exercises in the western Pacific.

"Our revolutionary forces are combat-ready to sink a U.S. nuclear-powered aircraft carrier with a single strike," the Rodong Sinmun, the newspaper of the North"s ruling Workers" Party, said in a commentary. The paper compared the aircraft carrier to a "gross animal" and said a strike on it would be "an actual example to show our military"s force". The commentary was carried on page three of the newspaper, after a two-page feature about leader Kim Jong Un inspecting a pig farm.

North Korea says its nuclear program is for self-defense and has warned the United States of a nuclear attack in response to any aggression. It has also threatened to lay waste to South Korea and Japan.

Additionally, as discussed previously, North Korea will mark the 85th anniversary of the foundation of its Korean People"s Army on Tuesday when some speculate it may set off a nuclear test.

Donald Trump ordered the USS Carl Vinson carrier strike group to sail to waters off the Korean peninsula in response to rising tension over the North"s nuclear and missile tests, and its threats to attack the United States and its Asian allies. The United States has not specified where the carrier strike group is as it approaches the area. U.S. Vice President Mike Pence said on Saturday it would arrive "within days" but gave no other details.

* * *

Adding to the growing military tension in the region, two Japanese warships, the Samidare and Ashigara, left western Japan on Friday to join the Carl Vinson and will "practice a variety of tactics" with the U.S. strike group, the Japan Maritime Self Defense Force said in a statement according to Reuters.

The Japanese force did not specify where the exercises were taking place, but by Sunday the destroyers could have reached an area 2,500 km (1,500 miles) south of Japan, which would be east of the Philippines. From there, it could take three days to reach waters off the Korean peninsula. Japan"s ships would accompany the Carl Vinson north at least into the East China Sea, a source with knowledge of the plan said. U.S. and South Korean officials have been saying for weeks that the North could soon stage another nuclear test, something the United States, China and others have warned against.

Japan"s show of naval force reflects growing concern that North Korea could strike it with nuclear or chemical warheads. Some Japanese ruling party lawmakers are urging Prime Minister Shinzo Abe to acquire strike weapons that could hit North Korean missile forces before any imminent attack.

Japan"s navy, which is mostly a destroyer fleet, is the second largest in Asia after China"s.

South Korea has already put its forces on heightened alert. China, North Korea"s sole major ally, opposes Pyongyang"s weapons programs and has appealed for calm. The United States has called on China to do more to help defuse the tension. Last Thursday, Trump praised Chinese efforts to rein in "the menace of North Korea", after North Korean state media warned the United States of a "super-mighty pre-emptive strike".

Chinese Gold Miner Claims Discovery Of Largest Ever Gold Mine

Shandong Gold Group, China’s second biggest gold producer by output, announced on Tuesday that it has discovered deposits in eastern China containing an estimated 380 tons of gold reserves, which would represent the nation’s largest ever gold deposit.

According to a Tuesday statement that cited the company on sdchina.com, the Xiling mine in Shandong province told local authorities it had found 382.58 tons of gold reserves and that the volume could reach more than 550 tons once exploration is completed in two years. According to local media reports, the Xiling gold seam in eastern China is more than 2,000 meters long and 67 meters wide; operating at full capacity, the mine would have a life of 40 years, according to the statement.

The mine is located in the Laizhou-Zhaoyuan region of northwest Jiaodong Peninsula in eastern China"s Shandong; the region has the largest gold deposits in the country. The mine is estimated to have the equivalent of 20% of the country’s 1,843 tons of gold reserves.

China had the fifth largest gold reserves in the world after the United States, Germany, Italy, and France. In July 2015, China ended six years of mystery over how much gold it has, revealing a 57% jump in reserves since 2009 when it last updated the figures. In November that year, China said it discovered another vast deposit of gold beneath the seabed of the East China Sea. At the time, the Chinese media claimed the deposit situated at a depth of 2,000 meters held 470.47 tons of gold.

As Bloomberg adds, Shandong Gold Mining saw its shares rise as much as 2.8% in Shanghai. The listed unit said Monday that net profit doubled to 1.29 billion yuan ($187 million) last year from a year ago as gold prices rebounded.

Chinese gold companies have been stepping up their search for domestic deposits and eyeing acquisitions as the nation seeks to increase reserves by 3,000 tons to as much as 14,000 tons by 2020, the Ministry of Industry and Information Technology said last month. That amount of holdings would propel China into first place globally for official gold reserves.

White House Is Exploring Use Of Military Force Against North Korea

An internal White House strategy review on North Korean options includes the possibility of both military force and regime change to counter the country’s nuclear-weapons threat, the WSJ reports, a prospect that has some U.S. allies in the region on edge. The review comes amid recent events have strained regional stability including last month"s launch by North Korea of a ballistic missile into the Sea of Japan, and the assassination of the estranged half brother of North Korean leader Kim Jong Un in Malaysia.

The WSJ adds that U.S. officials have underscored the possible military dimensions of their emerging strategy in recent discussions with allies, suggesting that the planning is at an advanced stage.

President Trump has taken steps to reassure allies that he won’t abandon agreements that have underpinned decades of U.S. policy on Asia, his pledge that Pyongyang would be stopped from ever testing an intercontinental ballistic missile—coupled with the two-week-old strategy review—has some leaders bracing for a shift in American policy. During Japanese Prime Minister Shinzo Abe’s two-day summit in February with Mr. Trump, U.S. officials on several occasions stated that all options were under consideration to deal with North Korea, according to a person familiar with the discussions.

It was clear to the Japanese side that those options encompassed a U.S. military strike on North Korea, possibly if Pyongyang appeared ready to test an ICBM. The Japanese side found that scenario “worrisome,” he said.

The proposal emerged roughly two weeks ago, when Deputy National Security Adviser K.T. McFarland convened a meeting with national-security officials across the government and asked them for proposals on North Korea, including ideas that one official described as well outside the mainstream.

The request was for all options, ranging from U.S. recognition of North Korea as a nuclear state to military action against Pyongyang. Ms. McFarland’s directive was for the administration to undergo a comprehensive rethink of America’s North Korea policy.

The national-security officials reported back to Ms. McFarland with their ideas and suggestions on Tuesday. Those options now will undergo a process under which they will be refined and shaped before they’re given to the president for consideration.

In addition to concerns about US intervention, there is speculation that China may itself pre-empt a move by Washingont: the heightened prospect of U.S. military action in North Korea could encourage China, which fears the fallout of a military confrontation with its neighbor, to take steps Washington has long sought to choke off Pyongyang’s economic lifeline.

Another unknown is how South Korea will act. In the wake of Mr. Trump’s election, leaders in Tokyo and Seoul have sought to intensify the existing U.S. strategy of exerting economic and diplomatic pressure against North Korea. “We will make sure that the North changes its erroneous calculations by further enhancing sanctions and pressure,” South Korea’s acting President Hwang Kyo-ahn said in a speech on Wednesday.

The speech came on the same day that South Korea and the U.S. kicked off major annual military exercises, part of a long-running strategy of prioritizing defensive military preparedness to ward off North Korean aggression. As annual military exercises were set to begin, U.S. Defense Secretary Jim Mattis spoke Tuesday to South Korean Defense Minister Han Min-Koo, emphasizing that “any attack on the United States or its allies will be defeated, and any use of nuclear weapons will be met with a response that is effective and overwhelming,” said the Pentagon spokesman, Capt. Jeff Davis.

Finally, there is Japan, which is concerned it could get sucked into a regional conflict by a U.S. military strike on North Korea, said Tetsuo Kotani, a senior fellow at the Japan Institute of International Affairs, a Tokyo think tank. Another fear for Japan is a scenario in which the U.S. instead holds talks with North Korea and reaches a deal that would lead to Washington disengaging from the region, he said.

Japan, under its pacifist constitution, remains heavily dependent on U.S. military support, not only to counter North Korea, but also China, which has stepped up a territorial challenge against Japanese-administered islands in the East China Sea.

“Direct talks between Mr. Trump and Kim Jong Un would be a nightmare scenario for Japan,” Mr. Kotani said.

Trump has recently stated the U.S.’s commitment to defending both Japan and South Korea to leaders of both countries. A spokeswoman for Japan’s foreign ministry declined to comment on the details of Mr. Abe’s talks with Mr. Trump, while a spokesman for South Korea’s foreign ministry couldn’t be reached for comment.

Meanwhile, in yet another potential escalation point, the U.S. is in the process of installing advanced missile defenses, known as the Terminal High Altitude Area Defense system, or THAAD, in South Korea. As part of that, South Korea said this week that it has completed a transfer of land needed as a station for the system, Capt. Davis said. In response to this deployment, on Wednesday China and Russia announced they have agreed to intensify their opposition to the US’ controversial THAAD missile defense system.

“Both sides said they will continue to strengthen their coordinated opposition to THAAD (Terminal High Altitude Area Defense system),” the Chinese Foreign Ministry wrote on its website on Wednesday.

The statement follows a Tuesday meeting between China’s assistant foreign minister, Kong Xuanyou, and Russian Deputy Foreign Minister Igor Morgulov in Beijing. Russia’s Ministry of Foreign Affairs also released a statement, saying that “both parties emphasized that collective political and diplomatic efforts should be stepped up to ease tensions and initiate the process of military and political detente across the board in Northeast Asia, in order to create conditions conducive to resolving the nuclear issue, as well as other issue, on the Korean Peninsula.”

It comes after the South Korean government signed a land swap deal with retail giant Lotte on Tuesday, which will see the company exchange a golf course for military-owned land near Seoul. The golf course will become the future home of THAAD. THAAD is an advanced system designed to intercept short, medium, and intermediate-range ballistic missiles during their terminal flight phase. Equipped with long-range radar, it is believed to be capable of intercepting North Korea’s intermediate-range ballistic missiles.

China has repeatedly spoken out against THAAD over fears that it will undermine its own ballistic missile capabilities, and previously urged Seoul and Washington not to go ahead with the system’s planned deployment.

Terminal High Altitude Area Defense (THAAD) interceptor

Ahead of the Tuesday signing of the deal, Chinese Foreign Ministry spokesman Geng Shuang warned of “consequences” against Washington and Seoul if the agreement were to go ahead, claiming the system “severely disrupts regional strategic balance and jeopardizes the strategic security interests of regional countries including China.”

China “will definitely take necessary measures to safeguard its security interests,” he said during a news briefing, adding that “all the consequences entailed will be borne by the US and the Republic of Korea.” Beijing has already taken measures which some claim are retaliatory against the deal, including halting Lotte’s multibillion dollar real estate project in China and canceling the visits of South Korean celebrities to the country.

As for Russia, the country previously urged those involved in the THAAD system to consider the escalated tensions it will inevitably cause. Last month, Moscow appraised the situation around the Korean Peninsula as “exhibiting a high likelihood of becoming volatile,” and emphasized the “counter-productiveness of the line being taken by certain governments in exacerbating these tensions and instigating an arms race in the subregion, as well as the increase in the scale of military drills.”

However, the US and South Korea maintain that THAAD is a defensive measure against Pyongyang. South Korean officials have said they expect the missile system to be deployed and operational this year, with one stating earlier this month that deployment could be completed by August.

* * *

And just like that, suddenly the very precarious peace in East Asia suddenly depends on the actions of an irrational dictator. While for now the US appears to be on the fence about a military intervention - or regime change - that will surely change should Kim Jong Un decide, unexpectedly, to launch another ballistic missile, something he is known to do with increasing frequency. Which means that suddenly the stability of a great part of Asia is in the hands of the man in the photo below.

Neocon Or Isolationist? Who Cares! The Future Is All About Russia, Iran, And China

Via Federico Pieraccini of The Strategic Culture Foundation,

The best-case scenario has come about, which is to say the end of a world facing the specter of a mushroom cloud. With Hillary Clinton"s defeat, we avoided a nuclear denouement stemming from a direct clash with Russia in Syria and an escalation of the conflict in Ukraine. Unfortunately the good news ends here.

The chaos that originated in the United States following the election of Donald Trump does not augur well. The economic crisis has persisted for ten years, with no solutions in sight. Ignored and underestimated by the elite, it has become the engine of dissatisfaction with politicians, generating a wave of protest votes in the United States and Europe. The positive outcome, a break with the past, has degenerated into a period of apparent chaos and disorder, caused mainly by internal clashes between the leaders of the ruling classes.

No one can doubt that Trump was not the preferred candidate of the intelligence agencies (CIA and NSA especially), the media, and the Washington political consensus. This really needs no proof. But to say, on the other hand, that Trump is the man of some generals, many bankers and corporations, is to engage in an oversimplification that fuels further confusion surrounding the new administration.

The sabotage attempts against the new administration are quite apparent, directed mainly by the fringes of both the Democratic and Republican parties that are politically opposed to Trump, with help from the intelligence agencies and the media. This triumvirate of the intelligence agencies, the media, and the political establishment has already inflicted serious damage: the sabotage in Yemen; Flynn"s early exit from the role of the National Security Advisor; the antagonistic relationship between the press and the administration; and an endless series of controversies over the role of NATO and trade treaties (such as TPP). This triad, directed by leaders of the Democratic and Republican parties, seems to be working at full speed to reach an unthinkable outcome after only one month, namely the impeachment of Trump and the appointment of President Pence to provide continuity for the policies of Bush and Obama in line with the American project for global hegemony.

Donald Trump, while not a fool, is attempting to repair the sabotage with errors and decisions that often worsen the situation. The decision to fire Flynn seems wrong and excessive, distancing him from his desire for detente in international relations, one of the Trump’s most important promises.

To try and accurately hypothesize about the internal decisions and mechanisms made in the Trump administration would require excessive confidence in the authenticity of the information available. Certainly Bannon and Flynn appeared to be the core of Washington"s anti-establishment element and the major advocates of a rapprochement with Moscow. Following this line of speculation, Pence, McMaster (appointed to succeed Flynn), Mattis and Priebus seem to represent the neoconservative faction, the heart of the bipartisan establishment of Washington. The fact that they were appointed directly by Trump leaves us with two conclusions: an excessive confidence in Trump"s own ability to tame the beast, or an imposition from above which presupposes a lack of Trump’s control over his administration and over big decisions.

Figures like Rex Tillerson and Mike Pompeo arouse further confusion. While apparently confirming the policy of America First, and not necessarily giving a nod to the neoconservatives, they are certainly more digestible than anti-establishment figures like Bannon and Flynn.

The essential problem, especially for those who write analysis, is to find a rational and logical thread running through presidential decisions to be able to understand and anticipate the future direction of the new administration. To date, over just one month, we have witnessed some events that indicate a draining of the swamp, and others that indicated a full continuation of the Obama and Bush era.

Any hypothesis needs objective data and assessments confirmed by events. In my previous articles I have emphasized the clear distinction that must be made between words, actions (or lack thereof) with respect to the new administration. In Syria and Ukraine, the factions traditionally supported by the neocons (who are openly opposed to Trump) are experiencing a hard time. Poroshenko is becoming increasingly nervous and provocative (Putin, rightfully trusting no-one in Washington, has started the process of the Russian Federation recognizing the passports of the Donbass), attempting to involve Russia in the Ukrainian conflict. In Syria the situation improves every day thanks to the liberation of Aleppo and squabbling between Assad"s opponents, which has resulted in a series of clashes between different takfiri factions concentrated in Idlib.

In both of these scenarios, European and American politicians, the intelligence agencies (guided by the CIA), and the media have joined in efforts to attack the new administration for not being friendly enough towards Kiev and also possibly opposing the arming and training moderate rebels in Syria. Pence’s recent words in Monaco have served to reassure European allies on the future role of NATO and the United States in the world. Yet some changes already seem to be taking place in Syria, where it appears that the CIA has had to give in and end the terrorists" funding program. One of the deep state’s emissaries and links with Islamic terrorism, John McCain, made a trip to Syria and Turkey to mediate and renew ties with the most extremist Wahhabis present in Syria. McCain’s objective is to sabotage Trump’s attempts to end support for moderate rebels in Syria (AKA Al Qaeda). McCain’s efforts also aim for arapprochement with Erdogan, to push him back towards the deep state’s cause and again sabotage the diplomatic efforts between Turkey and Iran and with Russia in Syria. The same effort was made in Ukraine by McCain and Graham a couple of months ago, inciting the army and political elites in Ukraine to ramp up their operation in Donbass. These are two clear indications of the intention to create problems for the new administration.

The bottom line is, there is chaos surrounding the new administration.

Trump lives on a dangerous misunderstanding: Is the President in control of events, or is he at the mercy of decisions made at higher levels and against his express will? Observing Syria and Ukraine, it would appear that the intended rapprochement with Moscow is still on course. The toning down of harsh words against Iran, coinciding with the ouster of Flynn, further offers promise. Detente and the resumption of dialogue with Beijing seem to suggest that an escalation in the South China Sea and East China Sea will be avoided. The same is the case regarding the abolition of the TTP.

Yet the overall impression that we seem to get from the first thirty days is of an administration in chaos. Flynn"s ouster is a blow to the rapprochement with Moscow. Having replaced Flynn with McMaster, a disciple of Petraeus who is a strong supporter of the 4 + 1 approach (Russia, Iran, China, North Korea + ISIS) as the main focus of foreign policy, seems to minimize the hope of an administration free from warmongering. The 4 + 1 approach is at the heart of the attempt at global hegemony so dear to the promoters of American exceptionalism. The possible entry of Bolton with an undefined role, the appointment of Pence as vice president, and the roles played by Priebus and Mattis suggest a return of the neoconservatives to the driving seat. But is it really so?

The impressions we can glean come from the previous experiences of Trump appointees, media publications, drafts from the CIA, and possible leaks from those betraying the administration. The perception that we can obtain as outsiders cannot be precise, possibly being the result of constant manipulation from the news media. What credibility left have newspapers, politicians and anonymous intelligence sources that over the past two decades have cynically moulded the public’s perception of major wars and conflicts around the globe?

The question is how to be free from such conditioning in order to develop an accurate idea about Trump. Is Trump at war with the deep state? Is Trump a parallel product of the deep state? Is he an acceptable alternative for some of the deep-state factions?

Whatever the answer, we are facing an unprecedented clash between different mixes of establishment power. Certainly there are factions aligned with the thinking of the neoconservatives; factions linked to the new Secretary of State, the powerful former CEO of Exxon Mobil; factions with nationalist intentions pushing for an isolationist policy that seeks to abide by the principle of America First. If there is any certainty, it is precisely that we do not have any logical thread to divine Donald Trump"s intentions. There are too many uncertainties with respect to the intentions expressed by Trump, with the influence of the warmongers in his administration, and with the ability of his loyal collaborators (Bannon above all) to stem internal erosion.

Basically there is a major lack of information. This results in excessive consideration and importance being placed on the words expressed by Trump, which are often at odds with each other and often in conflict with other ideas within the administration. At the same time we should especially observe actions (or non-actions) of the new administration, and following this logic we can line up some important events. Trump has already had two telephone conversations with Putin, one of which was particularly positive, according to White House Press Secretary Sean Spicer. There have been exchanges between Beijing and Washington, including a letter especially popular with the Chinese leadership; and Iran seems to have momentarily disappeared from the radar following Flynn"s ouster. On the other hand, the additional sanctions on Iran are there to remind how the Republican administration will guarantee a negative stance towards Tehran. In this sense it is not surprising that the red carpet was laid out for Netanyahu on his visit to Washington.

Surely the absence of Trump at the Monaco conference is another important signal. The current president intends to continue to give priority to domestic over international politics.

For now we have to settle for a few crumbs of insight. In Syria the situation is improving thanks to the inaction of Washington; and In Ukraine Poroshenko has not found in the new administration the type of support he had been expecting to receive from Hillary Clinton had she won the election (a disappointment shared by the Banderists in Kiev and the Takfiri Wahhabis in Syria). The good news seems to end here, with a series of potentially explosive situations already in place. Western troops remain on Russia’s border (the withdrawal of such a deployment would have demonstrated to Moscow Trump’s genuine intention to dialogue, a concession, though that would have infuriated many members of the EU). The Saudis continue to receive important support for their campaign in Yemen. Constant threats against the Democratic People"s Republic of Korea continue unabated. And Trump’s executive orders on the home front have inspired a strong domestic reaction.

These are disappointing policies adopted in the first thirty days by an administration that seemed so inclined to break with the past. As the days go by, and more people get appointed to the administration and others driven out, the picture that appears to be emerging is that of a grueling battle with the deep state, leading to significant concessions by Trump. McMaster, Mattis, Priebus and Bolton seem to reflect this. Or maybe not. Bolton will find himself in a much lesser role than had been potentially considered (Secretary of State), and McMaster could spell the way to rebuild the military and strengthen deterrence without having to resort to brutal force, which would remain a final choice for the POTUS.

The risk for Trump lies in being overwhelmed by the war machine that has directed US policy for more than 70 years. He will then have given up without even having had the opportunity to try and change the course of events, if this had been his real intention in the first place. The problem with this new administration is trying to understand what is imposed and what is the result of strategic thinking. It should not be excluded that the Trump strategy to hold together the base with respect to election promises by creating a smoke screen in which he is portrayed as a fighter against the deep state who must occasionally yield in order to maintain peaceful coexistence. It is important not to discard this hypothesis for a deeper reason: Trump has to demonstrate to his voters that he is altogether outside of the establishment, and the best way to demonstrate this is to be the target of the MSM, thus attracting the sympathy of all who have long lost faith in the authenticity of the disseminators of news and information. It is a fine tactic, but not exceedingly so. Will he continue to act like a victim during the presidency, continuing to put up an effective shield against criticism about unfulfilled election promises, particularly in foreign policy? Will his voters continue to buy it? We will see.

If the administration"s actions in the future head in a direction similar to that of Obama or Bush, Trump cannot act like a victim, since it was he who picked the closest people in his administration.

This again reminds us of the lack of information available to form an objective view, compounded by the fluctuations of the new administration.

There is a positive and important aspect to this situation. Tehran, Beijing and Moscow have increasing incentives to strengthen their alliance and not to question friendships; to forge ahead with projects that advance Eurasian integration. The election of Trump was accompanied by the grand strategic objective of splitting the alliance between China and Russia. But fortunately, Trump has offered little hope of a dialogue with Moscow in this respect. The most important thing is that an escalation of confrontation that may have led to a nuclear exchange has been averted.

Paradoxically, we could be facing an extremely advantageous situation for the Eurasian continent, allowing for further integration, with Washington’s continued adversarial stance (especially Iran and China in terms of trade sanctions and war) ensuring that valuable time will not be lost in excessive talks with the new American president. If Trump will maintain two key promises, namely to avoid a conflict and think about domestic interests (internal and economic security), then this will mean that the multipolar world in which we live will certainly have a better chance of stability and economic prosperity, which is the main desire of many countries, primarily China, Russia and Iran.

Trump’s contradictions, when observing the intentions expressed during the election campaign and comparing them with appointments made to key posts, have alarmed and continue to cause concern, leaving Iran, China and Russia with little hope for future cooperation with Washington. The possibility of a joint dialogue without excessive demands seems to be fading, advancing the hope of an acceleration of Eurasian integration, giving little regard for the indecipherable intentions of the new administration.

A world order with responsibility shared between the US, Russia and China seems out of the question. Yet on the horizon there seems to be no signs of an imminent conflict for the purposes of imposing the old unipolar world order on the multipolar world. The possibility that Trump will fall back on a neocon posture is difficult but not impossible to imagine (after all, this is the United States, a nation that has for seventy years tried to impose its own way of life on the rest of world), but why exclude the possibility that even Trump could be converted to the religion of exceptionalism? After all, how much confidence can we place in politics? You already know the answer to that one.