Sound The Trumpet : U.S. Financial Showdown With Russia is Far More Dangerous Than It Looks

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“U.S. Financial Showdown With Russia is Far More Dangerous Than It Looks”
by Prophecy News Watch
April 21st, 2014

The United States has constructed a financial neutron bomb. For the past 12 years an elite cell at the US Treasury has been sharpening the tools of economic warfare, designing ways to bring almost any country to its knees without firing a shot.

The strategy relies on hegemonic control over the global banking system, buttressed by a network of allies and the reluctant acquiescence of neutral states. Let us call this the Manhattan Project of the early 21st century.

"It is a new kind of war, like a creeping financial insurgency, intended to constrict our enemies' financial lifeblood, unprecedented in its reach and effectiveness," says Juan Zarate, the Treasury and White House official who helped spearhead policy after 9/11.

“The new geo-economic game may be more efficient and subtle than past geopolitical competitions, but it is no less ruthless and destructive,” he writes in his book Treasury's War: the Unleashing of a New Era of Financial Warfare.

Bear this in mind as Washington tightens the noose on Vladimir Putin's Russia, slowly shutting off market access for Russian banks, companies and state bodies with $714bn of dollar debt.

The stealth weapon is a "scarlet letter", devised under Section 311 of the US Patriot Act. Once a bank is tainted in this way - accused of money-laundering or underwriting terrorist activities, a suitably loose offence - it becomes radioactive, caught in the "boa constrictor's lethal embrace", as Mr Zarate puts it.

This can be a death sentence even if the lender has no operations in the US. European banks do not dare to defy US regulators. They sever all dealings with the victim.

So do the Chinese, as became clear in 2005 when the US hit Banco Delta Asia (BDA) in Macao for serving as a conduit for North Korean commercial piracy. China pulled the plug.

BDA collapsed within two weeks. China also tipped off Washington when Mr Putin proposed a joint Sino-Russian attack on Fannie Mae and Freddie Mac bonds in 2008, aiming to precipitate a dollar crash.

Mr Zarate told me that the US can "go it alone" with sanctions if necessary. It therefore hardly matters whether or not the EU drags its feet over Ukraine, opting for the lowest common denominator to keep Bulgaria, Cyprus, Hungary and Luxembourg on board. Washington has the power to dictate the pace for them.

The new arsenal was first deployed against Ukraine - of all places - in December 2002. Its banks were accused of laundering funds from Russia's organised crime rings. Kiev capitulated in short order.

Nairu, Burma, North Cyprus, Belarus and Latvia were felled one by one, all forced to comply with US demands. North Korea was then paralysed. The biggest prize yet has been Iran, finally brought to the table. "A hidden war is under way, on a very far-reaching global scale. This is a kind of war through which the enemy assumes it can defeat the Iranian nation," said then-president Mahmoud Ahmadinejad to Iran's Majlis. He meant it defiantly. Instead it was prescient.

The US Treasury faces a more formidable prey with Russia, the world's biggest producer of energy with a $2 trillion economy, superb scientists and a first-strike nuclear arsenal. It is also tightly linked to the German and east European economies. The US risks endangering its own alliance system if it runs roughshod over friends. It is in much the same situation as Britain in the mid-19th century when it enforced naval supremacy, boarding alleged slave ships anywhere in the world, under any flag, ruffling everybody's feathers.

President Putin knows exactly what the US can do with its financial weapons. Russia was brought into the loop when the two countries were for a while "allies" in the fight against Jihadi terrorism. Mr Putin appointed loyalist Viktor Zubkov - later prime minister - to handle dealings with the US Treasury.

Mr Zarate said the Obama White House has waited too long to strike in earnest, clinging to the hope that Putin would stop short of tearing up the global rule book. "They should take the gloves off. The longer the wait, the more maximalist they may have to be," he said.

This would be a calibrated escalation, issuing the scarlet letter to Russian banks that help Syria's regime.

He thinks it may already too late to stop Eastern Ukraine spinning out of control, but not too late to inflict a high cost. "If the US Treasury says three Russian banks are "primary money-laundering concerns", do you think that UBS, or Standard Chartered will have anything to do with them?"

This will graduate to sanctions on Russian defence firms, mineral exports and energy - trying not to hurt BP assets in Russia too much, he adds tactfully - culminating in a squeeze on Gazprom should all else fail. Whether you are for or against such action, be under no illusion as to what it means. We would be living in a different world, and Wall Street's S&P 500 would not be trading anywhere near 1,850.

It is true that Russia is not the power it once was, as you can see from these Sberbank charts showing relative economic size against China and Europe.

This is not a repeat of the Cold War. There is no plausible equivalence between Russia and the West, and no ideological mystique.

It has $470bn of foreign reserves but these have already fallen by $35bn since the crisis began as the central bank fights capital flight and defends the rouble. Moscow cannot easily deploy the reserves in a slump without causing the money supply to shrink, deepening a recession that is almost certainly under way. Finance minister Anton Siluanov says growth may be zero this year. The World Bank fears -1.8pc, while Danske Banks says it could be -4pc.

Putin cannot count on global allies to carry him through. Only Venezuela, Bolivia, Cuba, Nicaragua, Belarus, North Korean, Syria, Sudan, Zimbabwe and Armenia lined up behind Mr Putin at the United Nations over Crimea, a roll-call of the irrelevant.

Yet as the old proverb goes: "Russia is never as strong as she looks; Russia is never as weak as she looks."

Princeton professor Harold James sees echoes of events before the First World War when Britain and France imagined they could use financial warfare to check German power.
He says the world's interlocking nexus means this cannot be contained. Sanctions risk setting off a chain-reaction to match the 2008 shock. "Lehman was a small institution compared with the Austrian, French and German banks that have become highly exposed to Russia’s financial system. A Russian asset freeze could be catastrophic for European – indeed, global – financial markets," he wrote on Project Syndicate.

Chancellor George Osborne must have been let into the secret of US plans by now. Perhaps that is why he issued last week's alert in Washington, warning City bankers to prepare for a sanctions fall-out. The City is precious, he said, "but that doesn't mean its interests will come above the national security interests of our country".

The greatest risk is surely an "asymmetric" riposte by the Kremlin. Russia's cyber-warfare experts are among the best, and they had their own trial run on Estonia in 2007. A cyber shutdown of an Illinois water system was tracked to Russian sources in 2011. We don't know whether US Homeland Security can counter a full-blown "denial-of-service" attack on electricity grids, water systems, air traffic control, or indeed the New York Stock Exchange, and nor does Washington.

"If we were in a cyberwar today, the US would lose. We're simply the most dependent and most vulnerable," said US spy chief Mike McConnell in 2010.

The US defence secretary Leon Panetta warned of a cyber-Pearl Harbour in 2012. "They could shut down the power grid across large parts of the country. They could derail passenger trains or, even more dangerous, derail passenger trains loaded with lethal chemicals. They could contaminate the water supply in major cities, or shut down the power grid across large parts of the country,” he said. Slapstick exaggeration to extract more funds from Congress? We may find out.

Sanctions are as old as time. So are the salutary lessons. Pericles tried to cow the city state of Megara in 432 BC by cutting off trade access to markets of the Athenian Empire. He set off the Pelopennesian Wars, bringing Sparta's hoplite infantry crashing down on Athens. Greece's economic system was left in ruins, at the mercy of Persia. That was a taste of asymmetry.

An attempt to slaughter an animal for a Passover sacrifice atop the Temple Mount in Jerusalem has led to the arrest of eight Jews and brought the desire of many Jews for a rebuilt temple back into the spotlight.

According to local media, eight Jews were taken into custody Monday as they ascended the mount, considered the holiest site in Judaism where two of God’s temples once stood. They were carrying a goat and were reportedly seeking to slay the animal in accordance with biblical instructions.

Historically, Passover first debuted in Old Testament times when God commanded Moses and the Israelites to offer the sacrifice as they embarked on the Exodus out of Egyptian slavery. God said he would “pass over” the Israelites who obeyed his instructions, while He would slay the firstborn children and animals in Egypt.

The animal sacrifice was continued in the New Testament, as Jesus Himself ate a Passover meal along with his apostles at the famous “Last Supper,” among other instances.

“The sacrifice is supposed to take place on the Temple Mount, which is the site of the two former Holy Temples of Jerusalem but which today is occupied by the Islamic Al Aqsa Mosque complex,” Israel National News reported. “By order of the Islamic Waqf authorities who administer the site, Jews are forbidden from praying or carrying out any other religious rituals on their holiest site, in what activists have repeatedly condemned as a capitulation by police to Muslim extremists.”

The paper noted the Temple Organizations Headquarters, which represents several Jewish-rights groups, condemned the arrests as “a severe blow to freedom of religion, the Basic Law of Freedom of Worship, the holy places and the rule of law in Jerusalem.”

“The time has come to allow Jews to act as a free people in the State of Israel, without worrying about or surrendering to Islamist threats,” the group continued, referring to threats of violence by Islamist groups if Jews are granted equal prayer rights on the Temple Mount.

Many Jewish groups see equal prayer rights on the temple mount as the first step towards progress in rebuilding the temple.

According to Yizhar Beer’s recent research, “about 12 official groups are working in Israel today to establish the temple. Some of them receive funding amounting to hundreds of thousands of shekels from the State of Israel. One of the main groups is the Temple Institute.

The Temple Institute, according to usnews.com, holds “various training sessions meant to educate and raise consciousness. But they also work on the pragmatic level. The institute has the holy menorah, a modular altar that could be quickly taken apart and reassembled at the temple, the bronze basin, the showbread table and no less than 40 sets of priestly garments, which will be the prototype for the thousands of sets to be sewn in the future.”

Arnon Segal, a journalist dedicated to following developments in the plan to rebuild the third temple, says preparations are “based on very in-depth research…it’s an entire research project of the past 20 years.”

There are also blueprints which include both modern changes and old essentials. Rabbi Yehoshua Friedman, director of the school for priests, Nezer Hakodesh, says, “The third temple will mostly look like the second temple, and there is an organized plan for the Chamber of Hewn Stone, the seat of the Sanhedrin… but there will be no entryway in the sanctuary.”

Modern changes include “a computer with a database and law decisions available for every judge, an electric mixer and an electric oven may be added for mixing fruit and grain offerings and roasting the Passover sacrifice.”

One change could create some difficulties: “The temple subsisted on the half-shekel tax. This money became sanctified when it was transferred to the temple. Today, when payments are made by direct deposit, they will only be numbers in bank accounts and there is no actual sacred currency.”

Avivi adds, “One thing is certain: The third temple will have cameras that will transmit what’s happening there to the whole world.”

Everything is ready except for having the Ark of the Covenant in hand and ready, but Segal says the Second Temple didn’t have a the Ark either.”

Friedman claims its location is in the tunnels under the Temple Mount and when the time comes to place it, it will be retrieved.

As for geography, despite the obvious impedance of the Al-Aqsa Mosque’s (Dome of the Rock) current position on the Temple Mount, Segal notes, “The location of the altar where sacrifices are allowed on the Temple Mount is not within bounds of Al-Aqsa.”

This 20- year endeavor has not just produced articles of temple operation, but now there is a school for priests, Nezer Hakodesh, which started operating this year.
Avivi says, “The intention is to train hundreds of priests that would be needed to work at the third temple.”

For a fully operational temple, where the people would “bring their own sacrifices, it’s a place where hundreds of priests work daily.”

According to Friedman, “The rabbis say that the minimum necessary is 13 priests in the temple to carry out the mandatory sacrifices.” He adds, “In the days of old, a father and grandfather would teach the grandson and son how to be a priest, the commandments and laws. Today, they have to take a course. The prayer to establish the temple has no meaning if we don’t actually prepare for it. Think what would happen if tomorrow you got a functioning temple and don’t have the priests.”

“The Jewish presence on the Temple Mount is gaining ground in Jewish-Israeli discourse, members of the Knesset and rabbis are ascending to the Temple Mount more frequently and today a third of Israeli public believes that when the day comes, the temple should be erected. This number is only growing,” adds Avivi.

Considering that the only thing holding back the establishment of a third temple is the inability to access the holy spot in which it may be built (due to the Jewish, Christian and Muslim sensitivities) it is interesting that there is now talk about compromise regarding the Temple Mount.

Muslim pundit, Sinem Tezyapar, posted on jewishpress.com on 3/12/13, the following: “Freedom of worship is an essential issue. The Temple Mount, where the First and Second Temples stood, is the holiest place to the people of Israel. However, it is no less holy to both Muslims and Christians. Since this is a location that God has announced to be a “house of prayer for all nations,” it should be a place of festivity for all believers. As all who call on the God of Abraham are our brothers, Jews and Christians should be able to offer prayers there in dignity and peace along with Muslims…”

Robertm75 expounded on this idea on 4/12/14 at redstate.com, “Solutions to this impasse involve establishing different prayer times for Jews and Muslims on the same actual grounds of the Al-Aqsa Mosque. Writing in the Foreign Policy Journal, Ramzy Baroud, no friend to Israel based on the descriptions he uses for the claims made by Israel, says that Likud Party member Miri Regev wants to introduce what is called the Ibrahimi Model to the Temple Mount. “We will reach a situation where the Temple Mount will be like the Cave of the Patriarchs, days for Jews and days for Muslims,” she said. The great fear among many Orientalists is that Israel is already in the process of building a Third Temple. Many in Iran are paranoid that the Kingdom of Saudi Arabia is actually helping Israel build a Temple.”

He adds, “This, above all other issues surrounding the discussions between Israel and Palestinians, is the biggest sticking point. This issue, the establishment of a Third Temple, strikes at the heart of culture and society for both civilizations, Jewish and Muslim. Until this can be resolved, no amount of talking is going to go anywhere. There is no indication that US negotiators take this as seriously as the interlocutor for the two negotiating parties, after all the people at the State Department in charge of these talks do not seem to take religious aspects of culture seriously within the US so why should they think “…that others in foreign states do either. Despite this conceited view from the US officials, the Israelis and the Palestinians certainly do and it is going to take a mediator who recognizes this to broker a deal.”
Read more at http://www.prophecynewswatch.com/2014/April21/213.html#ySMSfwv33qUUKDZB.99

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