Why Is Trump Adviser Wearing Medal of Nazi Collaborators?

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Editor’ Update: Gorka evidently felt compelled today to respond (via Breitbart) indirectly to our post here about his public display of a Vitezi Rend medal at an inaugural ball and on other occasions. We want to make clear that we respect his devotion to his parents and the commemoration of their experience and suffering. But we in turn are compelled to ask why his father joined a group with a known history of anti-Semitism and collaboration with the Nazis. And why does Gorka himself choose to honor his parents’ memory with a medal issued by Vitezi Rend, which apparently still propagates anti-Semitism and a degree of Holocaust denial, as described in this article published in December 2014 in the Budapest Beacon? It is in this context that Gorka’s defense of the White House’s Holocaust Remembrance Day statement – and its omission of any explicit reference to the fate of European Jews or anti-Semitism – is particularly noteworthy, not to say disturbing.

Just as we asked Gorka to comment on why he wore the Vitezi Rend medal before we published the original post, we would ask him now to explain why his father chose to accept membership in such a group and why, given its distressing historical and contemporary associations, he chooses to honor his parents’ memory in this particular and peculiar way. Eli’s original post commences below.

The White House’s omission of Jewish victims of the Holocaust in its statement for Holocaust Remembrance Day raised objections from Jewish groups across the political spectrum but the Trump administration’s combative defense was perhaps the most surprising move by a presidency facing record low approval numbers. Last Monday, Deputy Assistant to the President Sebastian Gorka refused to admit that that it may have been poor judgment not to specifically acknowledge the suffering of Jews in the Holocaust.

Gorka was an odd choice of proxies for the White House to put forward in defense of its Holocaust Remembrance day statement.

He has appeared in multiple photographs wearing the medal of a Hungarian group listed by the State Department as having collaborated with the Nazis during World War II.

When asked on Monday whether the White House’s Holocaust Remembrance Day statement was “questionable in being the first such statement in many years that didn’t recognize that Jewish extermination was the chief goal of the Holocaust,” Gorka told conservative talk show host Michael Medved:

No, I’m not going to admit it. Because it’s asinine. It’s absurd. You’re making a statement about the Holocaust. Of course it’s about the Holocaust because that’s what the statement’s about. It’s only reasonable to twist it if your objective is to attack the president.

That statement is particularly noteworthy when viewed in the context of Gorka’s apparent affinity for a Hungarian group with a checkered past.

Gorka, who worked in the UK and Hungary before immigrating to the U.S., was photographed at an inaugural ball wearing a medal from the Hungarian Order of Heroes, Vitezi Rend, a group listed by the State Department as taking direction from Germany’s Nazi government during World War II.

Gorka did not respond to a request for comment but appeared to be wearing the medal on his chest during the Trump inauguration ball and in an undated photo posted on his Facebook page.

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Hungarian Collaborators

Eva Balogh, founder of the news analysis blog Hungarian Spectrum and former professor of Eastern European History at Yale University, confirmed to LobeLog the identity of the medal worn by Gorka. She said:

Yes, the medal is of the “vitézi rend” established by Miklós Horthy in 1920. He, as a mere governor, didn’t have the privilege to ennoble his subjects as the king could do before 1918, and therefore the “knightly order” he established was a kind of compensation for him. Officers and even enlisted men of exceptional valor could become knights. Between 1920 and 1944 there were 23,000 such knights. The title was inheritable by the oldest son. I found information that makes it clear that Gorka’s father, Pál Gorka, used the title. However, since he was born in 1930 he couldn’t himself be the one “knighted.” So, most likely, it was Gorka’s grandfather who was the original recipient.

Gorka’s PhD dissertation lists his name as “Sebestyén L. v. Gorka,” which suggests that he is carrying on his father’s title, albeit in an abbreviated format, according to Balogh.

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The Order of Vitezi

Miklós Horthy, regent of the Kingdom of Hungary from 1920 to 1944, established Vitezi Rend for both civilian and military supporters of Horthy’s government. The group was initially open to non-Jews who served in distinction during World War I.

Although Horthy’s personal views about Jews are still debated, he was explicit in endorsing anti-Semitism even while showing some unease with the pace of the Holocaust. In an October 1940 letter to Prime Minister Pál Teleki, Horthy said:

As regards the Jewish problem, I have been an anti-Semite throughout my life. I have never had contact with Jews. I have considered it intolerable that here in Hungary everything, every factory, bank, large fortune, business, theatre, press, commerce, etc. should be in Jewish hands, and that the Jew should be the image reflected of Hungary, especially abroad. Since, however, one of the most important tasks of the government is to raise the standard of living, i.e., we have to acquire wealth, it is impossible, in a year or two, to replace the Jews, who have everything in their hands, and to replace them with incompetent, unworthy, mostly big-mouthed elements, for we should become bankrupt. This requires a generation at least.

In April 1941, Hungary became a de facto member of the Axis and permitted German troops to cross Hungary for the invasion of Yugoslavia. The first massacres of Jews took place in August when SS troops murdered between 18,000 and 20,000 Jews without Hungarian citizenship after they’d been deported from Hungary to Ukraine.

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Horthy and Hitler

By 1944, Horthy may have sought to distance Hungary from Nazi Germany but agreed to deport around 100,000 Jews. The German army removed Horthy from office after it occupied Hungary. Horthy’s actual awareness of the fate of Hungarian Jews remains unclear. But reports by journalists and the State Department in 1942 are explicit about the role played and benefits enjoyed by Vitezi Rend’s members.

A Jewish Telegraph Agency report from October 1942, describes how:

Confiscated Jewish real estate in Hungary will be distributed by the government among members of the “Hungarian Order of Heroes” it was announced today over the Budapest radio. The order consists of soldiers who distinguished themselves in the last World War or in the present war.

“In 1942 there was a so-called ‘land reform,’” said Balogh. “It actually meant the expropriation of agricultural lands owned by Jewish citizens. According to government propaganda this move was necessary to ease social tensions in the countryside but as a recent study (2015) shows, most of the land went to “loyal, middle-class supporters of the regime, among them members of the ‘vitézi rend.’”

A Checkered Legacy

The State Department lists the Order of Heroes as an organization that was “under the direction of the Nazi government of Germany.” Membership in such groups during World War II could make individuals ineligible for U.S. visas. The State Department’s website warns that membership in groups under this designation:

[R]enders ineligible for a visa any alien who participated in the persecution of any person because of race, religion, national origin, or political opinion during the period from March 23, 1933, to May 8, 1945, under the direction of or in association with the Nazi Government of Germany or an allied or occupied government.

Vitezi Rend was banned during the Soviet occupation of Hungary but reestablished in exile. The order was awarded to members of the Hungarian diaspora and individuals in Hungary since 1983. Although appearing to largely promote Hungarian culture and the diaspora, it sought foreign donors to help fund the construction of a statue of Horthy in 2011. A fundraising document read, “We have decided after almost seven decades to erect a statue in honor of our beloved Regent and to remember him, therefore we ask for your support!”

“In post-World War II Hungary, no noble titles of any sort can be officially used,” said Balogh. “The ‘knightly order’ no longer officially exists. However, right-wing émigrés kept the order going abroad.”

She later added, “Many supporters of the Horthy regime were enamored by the Nazis and Hitler and the ‘knights’ were especially so. Put it that way, after 1948 one wouldn’t have bragged about his father being a ‘vitéz.’ Lately, however, especially since 2010, it has become fashionable again to boast about such ‘illustrious’ ancestors.”

Horthy, under Hungary’s center-right Prime Minister Viktor Orbán, has undergone a controversial rehabilitation, with squares renamed in his honor and statues erected.

Gorka’s decision to publicly identify with Vitezi Rend raises questions about Trump’s adviser and the administration’s flirtations with anti-Semitism and the alt-right. It’s even more awkward that he’s the person defending the administration’s explicit omission of Jewish victim of the Holocaust from the Holocaust Remembrance Day statement.

by Eli Clifton

Will Bannon’s Puppet Give Him the War He Wants?

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What do you do if you believe that your beloved white race is in an existential battle but it is not fighting back? In Steve Bannon’s case, the answer seems to be: You find yourself a puppet, get him elected President of the United States and make sure everybody realizes that this war is happening.

Bannon, the de-facto president Donald Trump’s chief strategist and National Security Council member, believes that the “Judeo-Christian West” has been in an epic conflict for years without recognizing the scope of this fight.

The former Breitbart chief laid out that part of his worldview when he did a Q&A via Skype as part of a conference held inside the Vatican in 2014.

“We have to face a very unpleasant fact. And that unpleasant fact is that there is a major war brewing, a war that’s already global,” Bannon told his audience in response to a question of whether secularism or the Muslim world were a bigger threat to the Judeo-Christian civilization.

He added a sense of urgency, noting that this threat has to be confronted immediately.

“Every day that we refuse to look at this as what it is, and the scale of it, and really the viciousness of it, will be a day where you will rue that we didn’t act,” Bannon said.

Since he made that statement, 954 days have passed — and Bannon is finally in a position to do something about it.

In Trump, he has found the perfect vessel. An insecure man looking for validation who can be coaxed to spring into action without much thought.

The self-proclaimed billionaire was not the first know-nothing whose coattails Bannon had hoped to ride into the White House. Before taking over Breitbart, he had courted 2008 vice presidential candidate Sarah Palin — another populist who wanted to drain the swamp and put America first — and tried to coax her into taking on President Barack Obama in 2012.

When Palin declined to run, Bannon had to sit on the sidelines for four more years before springing into action again. He made good use of that time by whipping the GOP’s Tea Party base into a frenzy with his far-right publication.

One question remains: Now that he has his hands on the levers of power, what is Bannon going to do? The Executive Order to seal off the US for people from seven Muslim countries was just the first step. ISIS, which is itching for a fight as much as Bannon, hailed that move, hoping it would lead to Muslims in the US turning against the country.

Next up might just be a confrontation with Iran. Trump has already tweeted that he put the country “on notice” for conducting a ballistic missile test. After that, who knows? One thing seems for sure: With both ISIS and Bannon determined to show that there is a global war happening between Muslims and the “Judeo-Christian West,” chances are that the world will take notice real soon.

 

DonkeyHotey and Klaus Marre February 5, 2017 |

Donald J. Trump and the Deep State, Part 2

  Peter Dale Scott, is a former Canadian diplomat, Professor of English at the University of California, Berkeley, co-founder of the Peace and Conflict Studies program at Berkeley, poet, and 2002 recipient of the Lannan Poetry Award.

  His political books include Deep Politics and the Death of JFK (1993), The Road to 9/11: Wealth, Empire, and the Future of America (2007), The War Conspiracy: JFK, 9/11 and the Deep Politics of War (2008), American War Machine: Deep Politics, the CIA Global Drug Connection, and the Road to Afghanistan  (2010), The American Deep State: Wall Street, Big Oil, and the Attack on U.S. Democracy (2014) and  Dallas ’63: The First Deep State Revolt Against the White House (2015).  A complete bibliography can be found on his website at http://www.peterdalescott.net.

  The following is Part 2 of a two-part series, excerpted from The American Deep State: Big Money, Big Oil, and the Struggle for U.S. Democracy, Updated Edition (copyright 2017) (paperback); by Peter Dale Scott with permission of the publisher, Rowman & Littlefield. All rights reserved.

Please go here to see Part 1.

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Trump and the International Deep State

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The first charge against Trump was the CIA-backed claim that Russian intelligence agencies hacked organizations affiliated both with Hillary Clinton and with the Democratic Party, and that the hacks were apparently “designed to benefit Donald Trump’s presidential aspirations in one fashion or another.”[52] (Politico also reported that “Ukrainian government officials tried to help Hillary Clinton and undermine Trump by publicly questioning his fitness for office.”)[53]

A second charge against Trump, closely related, was that

as major banks in America stopped lending him money following his many bankruptcies, the Trump organization was forced to seek financing from non-traditional institutions. Several had direct ties to Russian financial interests in ways that have raised eyebrows. What’s more, several of Trump’s senior advisors have business ties to Russia or its satellite politicians.[54]

In May 2016 the Washington Post and Buzzfeed charged specifically that

Trump’s top adviser, Paul Manafort, has spent much of his recent career working for pro-Russian forces in Ukraine, and doing complex deals for an oligarch with close ties to Putin.…  Manafort … has, according to court documents, managed tens of millions of dollars for Oleg Deripaska, an oligarch denied entry to the U.S. reportedly for ties to organized crime, but so close to Vladimir Putin that top Russian officials fought (unsuccessfully) to get him a visa.[55]

On the eve of the new Trump presidency The New York Times reported that

American law enforcement and intelligence agencies are examining intercepted communications and financial transactions as part of a broad investigation into possible links between Russian officials and associates of President-elect Donald J. Trump, including his former campaign chairman Paul Manafort… and Roger Stone.[56]

Paul Manafort

Trump Campaign Chairman Paul Manafort at the 2016 Republican National Convention. Photo credit: Disney | ABC Television Group / Flickr (CC BY-ND 2.0)

In January 2017 Buzzfeed leaked the source of these charges: a private intelligence report transmitted by the CIA to Trump.[57] This report, by former British intelligence Christopher Steele, did not as released mention Deripaska at all, but contained instead an unexplained discussion of Deripaska’s bankers, the Alfa Group, along with its founders Mikhail Fridman and Pyotr Aven.

Just before the election The New York Times reported that

For much of the summer, the F.B.I. … scrutinized advisers close to Donald J. Trump, looked for financial connections with Russian financial figures, … and even chased a lead — which they ultimately came to doubt — about a possible secret channel of email communication from the Trump Organization to a Russian bank….

F.B.I. officials spent weeks examining computer data showing an odd stream of activity to a Trump Organization server and Alfa Bank. … But the F.B.I. ultimately concluded that there could be an innocuous explanation, like a marketing email or spam, for the computer contacts.[58]

The next day the Jewish paper Forward raised a question, not yet answered, about Alfa Bank’s principal owner, the philanthropist oligarch Mikhail Fridman, listed as #73 on the Forbes list of the world’s billionaires in 2016 (once #20), and the second wealthiest Russian:

Is a Russian Jewish oligarch with Israeli citizenship and close ties to both Vladimir Putin and Benjamin Netanyahu running a secret cyber-communications channel between Donald Trump’s presidential campaign and Russian authorities? [59]

The various speculations about the Trump link to Alfa and Fridman, whether innocuous or shady, justify a closer look at the charges about Alfa’s influence two decades ago, when Alfa’s dubious clout in Washington included protection from both senior Democrats like Richard Burt of Kissinger McLarty Associates and also senior Republicans like Dick Cheney.[60] As The Guardian reported in 2002, Alfa’s 1990s clout in Washington was demonstrated when its oil company, Tyumen,

was loaned $489m in credits by the US Export-Import Bank after lobbying by Halliburton…. The [Clinton] White House and State Department tried to veto the Russian deal. But after intense lobbying by Halliburton the objections were overruled on Capitol Hill [which then was Republican controlled]…. The State Department’s concerns were based on the fact that Tyumen was controlled by a holding conglomerate, the Alfa Group, that had been investigated in Russia for mafia connections.[61]

Veteran newsman Knut Royce (a major contributor to three Pulitzer Prize-winning stories) reported the details:

Under the guidance of Richard Cheney, a get-the-government-out-of-my-face conservative, Halliburton Company over the past five years has emerged as a corporate welfare hog, benefiting from at least $3.8 billion in federal contracts and taxpayer-insured loans.

One of these loans was approved in April by the U.S. Export-Import Bank. It guaranteed $489 million in credits to a Russian oil company [Tyumen, owned by Alfa] whose roots are imbedded in a legacy of KGB and Communist Party corruption, as well as drug trafficking and organized crime funds, according to Russian and U.S. sources and documents.

[Two reports, one by “a former U.S. intelligence officer,” and one by the Russian FSB] claim that Alfa Bank, one of Russia’s largest and most profitable, as well as Alfa Eko, a trading company, had been deeply involved in the early 1990s in laundering of Russian and Colombian drug money and in trafficking drugs from the Far East to Europe….

The FSB report, too, claimed that the Alfa Group’s top executives, oligarchs Mikhail Fridman and Pyotr Aven, “allegedly participated in the transit of drugs from Southeast Asia through Russia and into Europe.”[62]

This impression is reinforced by the statements and actions of Michael Flynn, Trump’s new national security advisor. Flynn has made several appearances on Russia’s RT network, where he has often argued “that the US and Russia should be working more closely together on issues like fighting ISIL and ending Syria’s civil war.” In June 2016 Flynn attended an RT gala dinner in Moscow, seated just two seats away from Putin. [63] And in December Flynn reportedly met with far-right Austrian political party leader Heinz-Christian Strache, whose Freedom Party had recently signed a cooperation deal with Putin’s United Russia Party. [64]

Igor Sechin, Vladimir Putin, Rex Tillerson

President Vladimir Putin, Igor Sechin, Chairman of the Board of Rosneft (left) and Rex Tillerson, Chairman of ExxonMobil signed an agreement on joint development of petroleum reserves in Western Siberia, June 2012. Photo credit: President of Russia / Wikimedia (CC BY 3.0)

An even closer friend of Putin in Trump’s team, ironically, is former Exxon CEO Rex Tillerson, his Secretary of State.[65] In fact Tillerson, through Exxon’s development of Russian oilfields, “has deep ties to Russia, dating back to the Boris Yeltsin administration.”[66] As Julian Borger told the Guardian,

Putin… bestowed the Order of Friendship on Tillerson in 2013. The Wall Street Journal reported: “Friends and associates said few US citizens are closer to Mr. Putin than Mr. Tillerson.”[67] The 64-year-old Texas oilman spent much of his career working on Russian deals, including a 2011 agreement giving Exxon Mobil access to the huge resources under the Russian Arctic in return for giving the giant state-owned Russian oil company, OAO Rosneft, the opportunity to invest in Exxon Mobil’s operations overseas. ….The 2011 Exxon-Rosneft agreement was frozen when sanctions were imposed on Russia in 2014, following the annexation of Crimea and covert military intervention in eastern Ukraine. Exxon Mobil estimated the sanctions cost it $1bn and Tillerson has argued strenuously for the measures to be lifted.[68]

The $500 billion Exxon-Rosneft exploration deal, allegedly “the biggest oil deal ever,” was so huge that the Wall Street Journal reported in 2014 that its temporary cancellation “put Exxon at risk.”[69]

Trump’s criticisms of Obama’s sanctions on Russia were one powerful reason for Exxon to prefer Trump in the 2016 election.[70] But Trump was also attractive for his promises of deregulation:

President Trump will “absolutely” be a boon to Exxon and the rest of the oil industry, Fadel Gheit, an analyst at Oppenheimer & Co., said in a telephone interview. “The industry hasn’t asked for a hand up from Washington, but instead has said, ‘Get off our backs.’ Less regulation means less burden” on oil explorers.[71]

And Trump clearly will continue Exxon’s longtime history of opposition to measures to control global warming.[72] (When still CEO, Tillerson ended Exxon’s two decades of strenuous climate change denial, and came out for a carbon tax. But skeptics, including The New York Times, suspected this was merely a skillful means of defeating the more viable “cap-and-trade” carbon proposals that were then being debated in Congress, and ultimately defeated.)[73]

My book The American Deep State documents the leading role played by Exxon behind the elections of the oil-friendly presidents Eisenhower in 1952, and Reagan in 1980 (below, pp. 18-20, 27-28). It is not surprising that Exxon in 2016 should have helped propel yet another former television performer into the White House.

The “Party of Davos” and the “New New International Order”

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In short, the Trump team connections to the Russian state and deep state — both overt (through Exxon) and covert (through Manafort and Alfa) would appear to link Trump to a shady larger network or networks connected also to the same Washington swamp he promised to drain. Such networks led me in the Preface to the French edition of this book to talk of

a supranational milieu of the super-rich, just eighty of whom are now said to own nearly as much as the 3.5 billion people who occupy the bottom half of the world’s income scale.[74] Thanks to the enormous increase in global wealth in recent years, the “global power elite” who meet annually at Davos now have far more influence on how the world will be governed than those who meet annually at the United Nations General Assembly.

Those at Davos do not need to give instructions to the American deep state, which is already structured around responsiveness to the requirements of extreme wealth in Wall Street and elsewhere. And some of them are members of what have been called “shadow elites, those whose influence stems from illicit or unconventional means.”[75]

Tom Friedman, John Kerry

“Diplomacy in an Era of Disruption” – Conversation with Secretary John Kerry and Tom Friedman on the opening day of the World Economic Forum in Davos, 2017. Photo credit: US Embassy Bern, Switzerland / Flickr (CC BY-SA 2.0)

Naomi Klein, ascribing Trump’s victory to the neoliberalism of the Democrats and of Davos, has written of

the rise of the Davos class, a hyper-connected network of banking and tech billionaires, elected leaders who are awfully cosy with those interests (neoliberal policies), and Hollywood celebrities who make the whole thing seem unbearably glamorous.[76]

And before becoming the Chief Strategist and Senior Counselor in the Trump White House, Steve Bannon, while executive chair of Breitbart News, had said in a speech at the Vatican that working men and women in the world were “tired of being dictated to by what we call the party of Davos.”[77]

Trump has just chosen an ambassador to the European Union, Ted Malloch, a professor “well-known for his pro-Brexit and anti-EU views,” positions consistent “with Trump’s longstanding anti-EU and anti-NATO biases.” Reporting this, Salon notes also that “some American foreign policy watchers are concerned that he is also motivated by his close ties to Russian dictator Vladimir Putin.”[78]

The Trump attack on the “party of Davos,” the status quo of the world superclass, is likely to continue.[79] On January 26, Trump announced “he would strike numerous bilateral trade deals, as opposed to multilateral accords like the Trans-Pacific Partnership.”[80]

This approach, which by itself could please China as well as Russia, seems to reflect a coherent effort to replace the old consensus of the “party of Davos”, with what the right-wing Drudge Report approvingly called the “new, new world order”.[81]

The  “New, New World Order” may be said to represent the mavericks of the international deep state, eager to dispense with the regulations of the old insiders. But they are still part of the nexus of uncontrolled big money, even if drawn more from the under-reported shady underside of that superclass.

As I write after just one week of Trump in office, it already seems clear that we can expect a “Trump revolution,” one that will almost certainly attempt to reflect and repeat the major features (deregulation, anti-abortion measures, a defense spending buildup, tax cuts for the rich, and deficit financing) of the Reagan revolution before it. And it should not be too surprising if the Trump revolution, just like the Reagan revolution before it, turns out to have been not just financed, but partly plotted, at the levels of the American and the international deep state.[82]

Personal Postscript

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As I write this new Introduction in January 2017, the involuntary response to Trump’s election from many of my friends in both political parties has been anger, hatred, or despair. Many, like Michael Kinsley in the Washington Post, have charged that “Donald Trump is a fascist.”[83] From such alienation, millions of people protested worldwide, the day after Trump’s inauguration, in what was perhaps the world’s first global political action. This was a welcome step towards shaping a global active public opinion.

Donald Trump, Joe Dunford, Mike Pence

President Donald Trump, General Joe Dunford and Vice President Mike Pence observe the 58th Presidential Inauguration Parade at the White House reviewing stand in Washington D.C., Jan. 20, 2017. Photo credit: Chairman of the Joint Chiefs of Staff / Flickr (CC BY 2.0)

It is true that Trump, like Hitler, campaigned against big bankers while quietly taking money from them. But the infant Weimar Republic Hitler overthrew, jerry-built amid the ruins of post-war Germany, cannot be compared to the constitution and civil polity of America, among the oldest and hardiest in the world.

I say below (p.99) that America is also exceptional

for its percentage of citizens who are incarcerated, for its disparity in wealth and income between rich and poor (a ratio exceeded among large nations only by China), and for its indiscriminate use of lethal power abroad.

From the beginning, America has been embroiled in major divisions, arising chiefly from its amazing diversity. But it is also the leader among world powers in its ability to process and transcend, however imperfectly, these divisions.

As so many times before in US history, we are entering another period of divisions and protests. But a successful protest of the nonviolent kind I hope for in this book (see below, pp. 164, 181-90) must be one inspired by deeply critical love of this flawed country, not by hatred.

References


[52] “Donald Trump’s Many, Many, Many, Many Ties to Russia.” Time, August 16, 2016, http://time.com/4433880/donald-trump-ties-to-russia/

[53] Kenneth P. Vogel and David Stern, “Ukrainian efforts to sabotage Trump backfire…. Kiev officials are scrambling to make amends with the president-elect after quietly working to boost Clinton,” Politico, January 11, 2017, http://www.politico.com/story/2017/01/ukraine-sabotage-trump-backfire-233446: “A Ukrainian-American operative who was consulting for the Democratic National Committee met with top officials in the Ukrainian Embassy in Washington in an effort to expose ties between Trump, top campaign aide Paul Manafort and Russia, according to people with direct knowledge of the situation. The Ukrainian efforts had an impact in the race, helping to force Manafort’s resignation and advancing the narrative that Trump’s campaign was deeply connected to Ukraine’s foe to the east, Russia.”

[54] Ibid.

[55] “Trump Adviser’s Ties Raise Security Questions,” BuzzfeedNews, May 6, 2016, https://www.buzzfeed.com/bensmith/manafort-russia?utm_term=.htL7NyLEDb#.elgKkM63xN, linking to “Inside Trump adviser Manafort’s world of politics and global financial dealmaking” (Washington Post, April 26, 2016, https://www.washingtonpost.com/politics/in-business-as-in-politics-trump-adviser-no-stranger-to-controversial-figures/2016/04/26/970db232-08c7-11e6-b283-e79d81c63c1b_story.html?utm_term=.db8349a4a754). These charges should not be confused with the more sensational Buzzfeed leak in January 2017 of a private intelligence report shown by the CIA to Trump (https://www.buzzfeed.com/kenbensinger/these-reports-allege-trump-has-deep-ties-to-russia?utm_term=.ppJ6nP7KJA#.hrE3zm5pPx). This report, by former British intelligence Christopher Steele, did not as released mention Deripaska, but contained instead an unexplained discussion of the Alfa Group, whose connections to Halliburton when run by Dick Cheney are discussed by me in American War Machine, 187.

[56] “Intercepted Russian Communications Part of Inquiry Into Trump Associates,” New York Times, January 19, 2017, https://www.nytimes.com/2017/01/19/us/politics/trump-russia-associates-investigation.html. For a critique of Manafort’s and Stone’s responses to the charges, see Joseph Cannon at http://cannonfire.blogspot.com/2017/01/busted-on-inauguration-day.html. In addition to the charge that Russian officials helped Trump, Politico has also claimed that “Ukrainian government officials tried to help Hillary Clinton” (Ukrainian Efforts to Sabotage Trump Backfire,” Politico, January 11,2017, http://www.politico.com/story/2017/01/ukraine-sabotage-trump-backfire-233446.

[57] https://www.buzzfeed.com/kenbensinger/these-reports-allege-trump-has-deep-ties-to-russia?utm_term=.ppJ6nP7KJA#.hrE3zm5pPx.

[58] Eric Lichtblau and Steven Lee Myers, “Investigating Donald Trump, F.B.I. Sees No Clear Link to Russia,” New York Times, October 31, 2016, https://www.nytimes.com/2016/11/01/us/politics/fbi-russia-election-donald-trump.html.c f. Geoffrey Smith, “Meet the Russian Bank with Ties to Donald Trump,” Fortune, November 2, 2016, http://fortune.com/2016/11/02/donald-trump-alfa-bank/.

[59] Larry Cohler-Esses, “Is Jewish Oligarch the Cyber Link Between Donald Trump and Russia?” Forward, November 1, 2016, http://forward.com/news/world/353170/is-a-russian-israeli-oligarch-running-a-covert-cyber-channel-between-trump/.

[60] Scott, American War Machine, 187: “Diligence’s chief transnational  connection  in  Russia  is  Alfa  Bank.  The chairman of Diligence from 2001 to 2007 was former U.S. ambassador and arms negotiator Richard Burt, of Barbour, Griffith and Rogers and McLarty Kissinger Associates. Burt, a neoconservative who once called the SALT agreement “a favor to the Russians,” is also on the Alfa Bank’s Senior Advisory Board in Moscow.

[61] “Cheney Firm Won $3.8bn Contracts from Government,” Observer, July 21, 2002, http://www.guardian.co.uk/world/2002/jul/21/globalisation.georgebush; quoted in Scott, American War Machine, 187. In 2003 the Alfa Group of investors formed a 50-50 joint venture with BP, called TNK-BP. A dispute in 2011 between Mikhail Fridman and BP led Rosneft, blocked in its plans to develop its Arctic oilfields with BP, to agree to a deal on the same Arctic acreage with ExxonMobil instead (Guy Chazan and John Thornhill, “Mikhail Fridman: The Alpha oligarch,” Financial Times, March 5, 2015, https://www.ft.com/content/b47de3d4-c325-11e4-ac3d-00144feab7de). See below.

[62] Knut Royce and Nathaniel Heller, “Cheney led Halliburton to feast at federal trough,” Center for Public Integrity [CPI]. August 2, 2000 Updated: 12:19 pm, May 19, 2014; https://www.publicintegrity.org/2000/08/02/3279/cheney-led-halliburton-feast-federal-trough. Alfa sued CPI for libel over the release of the Royce report, but in 2005 the suit was dismissed. Federal Judge John D. Bates wrote “No claim is made that the defendants fabricated the assertions in the CPI article. Nor are the allegations of organized mob ties and drug trafficking so inherently improbably [sic] that actual malice can be presumed” (“Libel case over mafia-Halliburton link dismissed,” Reporters’ Committee for Freedom of the Press, October 4, 2005, http://www.rcfp.org/browse-media-law-resources/news/libel-case-over-mafia-halliburton-link-dismissed).

[63] Michael Cowley, “The Kremlin’s Candidate,” Politico. May/June 2016, http://www.politico.com/magazine/story/2016/04/donald-trump-2016-russia-today-rt-kremlin-media-vladimir-putin-213833.

[64] Natasha Bertrand, “A far-right Austrian leader who just signed a pact with Putin says he met with Trump’s national security adviser in New York,” Business Insider, December 20, 2016, http://www.businessinsider.com/michael-flynn-putin-trump-austria-far-right-2016-12.

[65] I say “ironically,” because Exxon, until the 1960s, joined the other big oil majors in plotting to exclude the Soviet Union from international oil markets. This change is characteristic of how increasing globalization has changed the international deep state.

[66] http://www.forbes.com/sites/jenniferwang/2016/12/13/trump-taps-exxonmobil-ceo-putin-ally- rex-tillerson-to-be-secretary-of-state/#46e49c726a55

[67] Cf. Bradley Olson, “Rex Tillerson, a Candidate for Secretary of State, Has Ties to Vladimir Putin,” Wall Street Journal, December 6, 2016, https://www.wsj.com/articles/donald-trump-candidate-for-state-has-close-ties-to-vladimir-putin-1481033938.

[68] Julian Borger, “Rex Tillerson: an appointment that confirms Putin’s US election win,” Guardian, December 13, 2016, https://www.theguardian.com/us-news/2016/dec/11/rex-tillerson-secretary-of-state-trump-russia-putin .

[69] Daniel Gilbert, “Sanctions Over Ukraine Put Exxon at Risk: Deal With Russia’s Rosneft to Drill in Arctic Is Crucial to Oil Company,” Wall Street Journal, September 11, 2014, https://www.wsj.com/articles/sanctions-over-ukraine-put-exxon-at-risk-1410477455. The deal was originally made by Rosneft with BP, but the BP deal was blocked by a successful legal challenge from a company controlled by Mikhail Fridman. See above.

[70] An Exxon link to the Trump campaign surfaced in June 1916, when Paul Manafort, then the campaign chairman, hired leading Exxon lobbyist Jim Murphy to be the campaign’s national political director (Melissa Cronin, “This lobbyist denied climate change for ExxonMobil. Now he’ll do it for Trump,” Grist.org, June 7, 2016, http://grist.org/climate-energy/this-lobbyist-denied-climate-change-for-exxonmobil-now-hell-do-it-for-trump/).

[71] Joe Carroll, “Exxon CEO-in-Waiting to Inherit Rex Tillerson’s Mixed Legacy.” Bloomberg, December 12, 2016, 4:55 PM PST December 13, 2016, https://www.bloomberg.com/news/articles/2016-12-13/exxon-s-ceo-in-waiting-to-inherit-rex-tillerson-s-mixed-legacy.

[72] Farron Cousins, “Republican Attorneys General Met Secretly with Exxon Lobbyists to Stop Climate Change Investigations,” Desmog, September 30, 2016, https://www.desmogblog.com/2016/09/30/republican-attorneys-general-met-secretly-exxon-stop-climate-change-investigations.

[73] John Schwartz, “Tillerson Led Exxon’s Shift on Climate Change; Some Say ‘It Was All P.R.’”, New York Times, December 28, 2016, https://www.nytimes.com/2016/12/28/business/energy-environment/rex-tillerson-secretary-of-state-exxon.html.

[74] Patricia Cohen, “Oxfam Study Finds Richest 1% Is Likely to Control Half of Global Wealth by 2016,” New York Times, January 19, 2015. By an earlier estimate, “In 2010, the wealth of the world’s eleven million super-rich individuals stood at $43 trillion, or 70 percent of global gross domestic product” (Financial Times, May 6, 2012, 4).

[75] David Rothkopf, Superclass: The Global Power Elite and the World They Are Making (New York: Farrar, Straus and Giroux, 2009), 289; cf. xx.

[76] Naomi Klein, “It was the Democrats’ embrace of neoliberalism that won it for Trump,” Guardian, November 9, 2016, https://www.theguardian.com/commentisfree/2016/nov/09/rise-of-the-davos-class-sealed-americas-fate. Cf. Andrew Ross Sorkin, “Dealbook: What to Make of the ‘Davos Class’ in the Trump Era,” New York Times, January 16, 2017, https://www.nytimes.com/2017/01/16/business/dealbook/world-economic-forum-davos-trump.html: “The World Economic Forum — an annual gathering of global policy and business leaders…  known as the ‘Davos class.’ It is this group of so-called plutocrats that largely failed to anticipate — and may have even unconsciously generated — the seeping anti-establishment movement across the globe.

[77] Matt Clinch, “The ‘party of Davos’ wakes up to the new, new world order,” CNBC, Januaty 9,  2017 http://www.cnbc.com/2017/01/09/davos-wakes-up-to-the-trump-new-world-order.html.

[78] Matthew Rozsa, “President Trump’s United Nations, European Union ambassadors send early message, shock waves,” Salon, January 27, 2017, http://www.salon.com/2017/01/27/president-trumps-united-nations-european-union-ambassadors-send-early-message-shock-waves/.

[79] The “party of Davos” is a target of a new book by Hugh Hewitt (The Fourth Way: The Conservative Playbook for a Lasting GOP Majority (New York: Simon & Schuster, January 2017).

[80] “Trump says plans lots of bilateral trade deals with quick termination clauses,” Reuters, January 26, 2017, http://www.reuters.com/article/us-usa-trump-trade-idUSKBN15A2MP?feedType=RSS&feedName=politicsNews.

[81] Clinch, “The ‘party of Davos’ wakes up to the new, new world order,” CNBC, January 9, 2017.

[82] See Scott, The American Deep State, 101–08.

[83] Michael Kinsley, “Donald Trump is actually a fascist,” Washington Post, December 9, 2o16, https://www.washingtonpost.com/opinions/donald-trump-is-actually-a-fascist/2016/12/09/e193a2b6-bd77-11e6-94ac-3d324840106c_story.html?utm_term=.09661e9af547.

DONALD J. TRUMP AND THE DEEP STATE, Pt. 1

America is being played yet again, but this time by a different player who claims, he wants to  “make America great again”, that he will “drain the swamp” in Washington (referring to eliminating political gridlock and the good ole boy politics). His approach is uncharacteristically different from what we have experienced from prior presidents, his cabinet picks however have been the antitheist of “draining the swamp” as he chosen elites from his billionaire class cronies and military generals as cabinet picks; unseen by the masses are the same tentacles of the ruling class elite that has always held sway in Washington. slf.

When the uninitiated think of the “Deep State,” they tend to imagine a group of men getting together in a room, smoking cigars and plotting world domination. But the Deep State is not one coordinated network of people controlling the government from the shadows.

Instead, it refers to individuals and groups that have the resources to shape the direction of the world to their benefit and don’t hesitate to make use of them. At times, the interests of different factions of the Deep State collide. That often happens when the direction of the world is rapidly changing, as is the case now after the election of Donald Trump.

Nobody knows this better than Peter Dale Scott, the foremost expert on the US Deep State. Below, you will find a new introduction to the paperback version of The American Deep State: Big Money, Big Oil, and the Struggle for U.S. Democracy, Updated Edition (copyright 2017), (with permission of the publisher, Rowman & Littlefield. All rights reserved). 

Peter Dale Scott is a former Canadian diplomat, Professor of English at the University of California, Berkeley, co-founder of the Peace and Conflict Studies program at Berkeley, poet, and 2002 recipient of the Lannan Poetry Award.

His political books include Deep Politics and the Death of JFK (1993), The Road to 9/11: Wealth, Empire, and the Future of America (2007), The War Conspiracy: JFK, 9/11 and the Deep Politics of War (2008), American War Machine: Deep Politics, the CIA Global Drug Connection, and the Road to Afghanistan  (2010), The American Deep State: Wall Street, Big Oil, and the Attack on U.S. Democracy (2014) and  Dallas ’63: The First Deep State Revolt Against the White House (2015). A complete bibliography can be found on his website at http://www.peterdalescott.net.

***

On February 3, 2017, the Wall Street Journal reported President Trump’s planed to pave the way for a broad rollback of the recent financial reforms of Wall Street.[1] Although no surprise, the news was in ironic contrast to the rhetoric of his campaign, when he spent months denouncing both Ted Cruz and Hillary Clinton for their links to Goldman Sachs, even when his campaign’s Financial Chairman was a former Goldman Sachs banker, Steve Mnuchin (now Trump’s Treasury Secretary).

Trump was hardly the first candidate to run against the banking establishment while surreptitiously taking money from big bankers. So did Hitler in 1933; so did Obama in 2008. (In Obama’s final campaign speech of 2008, he attacked “the greed and irresponsibility of Wall Street.”[2] But it was revealed later that Wall Street bankers and financial insiders, chiefly from Goldman Sachs, had raised $42.2 million for Obama’s 2008 campaign, more than for any previous candidate in history.)[3]

However, Trump’s connections to big money, both new (often self-made) and old (mostly institutional) were not only more blatant than usual; some were also possibly more sinister. Trump’s campaign was probably the first ever to be (as we shall see) scrutinized by the FBI for “financial connections with Russian financial figures,” and even with a Russian bank whose Washington influence was attacked years ago, after it was allegedly investigated in Russia for possible mafia connections.[4]

Trump’s appointment of the third former Goldman executive to lead Treasury in the last four administrations, after Robert Rubin (under Clinton) and Hank Paulson (under Bush), has reinforced recent speculation about Trump’s relationship to what is increasingly referred to as the deep state. That is the topic of this essay.

But we must first see what is really meant by ‘the deep state”.

What Is Meant by the Deep State?

.

Since 2007, when I first referred to a “deep state” in America, the term has become a meme, and even the topic of a cautious essay in The New York Times.[5] Recently it has been enhanced by a new meme, “the ’deep state’ versus Trump,” a theme that promoted Donald Trump as a genuine outsider, and entered the electoral campaign as early as August 2016.[6]

Trump reinforced this notion when he expressed opposition to America’s international defense alliances and trade deals that both traditional parties had long supported, as well as by his promise to “drain the Washington swamp.” It was encouraged again post-election by Trump’s longtime political advisor Roger Stone, formerly of the Washington lobbying firm Black, Manafort, Stone, and Kelly, once a major feature of that swamp.[7]

But those who saw the election as a contest between outsider Trump and a “deep state” tended to give two different meanings to this new term. On the one hand were those who saw the deep state as “a conglomerate of insiders” incorporating all those, outside and inside the traditional state, who “run the country no matter who is in the White House…and without the consent of voters.”[8] On the other were those who, like Chris Hedges, limited the “deep state” to those perverting constitutional American politics from the margin of the Washington Beltway — “the security and surveillance apparatus, the war machine.”[9]

But both of these simplistic definitions, suitable for campaign rhetoric, omit the commanding role played by big money — what used to be referred to as Wall Street, but now includes an increasingly powerful number of maverick non-financial billionaires like the Koch brothers. All serious studies of the deep state, including Mike Lofgren’s The Deep State and Philip Giraldi’s Deep State America as well as this book, acknowledge the importance of big money.[10]

It is important to recognize moreover, that the current division between “red” and “blue” America is overshadowed by a corresponding division at the level of big money, one that contributed greatly to the ugliness of the 2016 campaign. In The American Deep State (p. 30), I mention, albeit very briefly, the opposition of right-wing oilmen and the John Birch Society “to the relative internationalism of Wall Street.”[11] That opposition has become more powerful, and better financed, than ever before.

It has also evolved. As I noted in The American Deep State, (p. 14), the deep state “is not a structure but a system, as difficult to define, but also as real and powerful, as a weather system.” A vigorous deep state, like America, encompasses dynamic processes continuously generating new forces within it like the Internet — just as a weather system is not fixed but changes from day to day.

The Current Divisions in America and Its Wealth

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Three days before the inauguration of Donald Trump, “Frontline” on PBS began a two-part program, “Divided States of America,” documenting how the polarization of American public opinion has contributed to both stagnation in Washington and widespread popular anger, on both the left and the right, against the traditional two-party system.

The Frontline show failed to address the major role played by money in aggravating this public division. For example, it followed many popular accounts in tracing the emergence of the tax-revolt Tea Party to the apparently spontaneous call on February 19, 2009, by CNBC reporter Rick Santelli in Chicago, for a “tea party,” in response to President Barack Obama’s expensive bailouts.[12]

However, this event (on the floor of the Chicago Mercantile Exchange, a deep state institution) was not only staged, it had been prepared for in advance. A domain name, chicagoteaparty.org, had been registered for it in 2008, before Obama had even been elected.[13] Jane Mayer has conclusively demonstrated the role in the funding groups behind the Tea Party played by the brothers Charles and David Koch, who in 2014 were two of the ten richest people on earth, worth a combined $32 billion as owners of the largest private oil company in America.[14]  (Today their wealth is estimated at $84 billion.)

More important, as Mayer pointed out,

the Tea Party was not “a new strain” in American politics. The scale was unusual, but history had shown that similar reactionary forces had attacked virtually every Democratic president since Franklin Roosevelt. Earlier business-funded right-wing movements, from the Liberty League [of the 1930s] to the John Birch Society to [Richard Mellon] Scaife’s [anti-Clinton] Arkansas Project, all had cast Democratic presidents as traitors, usurpers, and threats to the Constitution. The undeniable element of racial resentment that tinged many Tea Party rallies was also an old and disgracefully enduring story in American politics.[15]

The Kochs’ lavish funding of the Tea Party, along with anti-tax candidates and climate-change deniers, was only one more phase in what I described in 1996 as

an enduring struggle between “America Firsters” and “New World Order” globalists, pitting, through nearly all of this [20th] century, the industry-oriented (e.g. the National Association of Manufacturers) against the financial-oriented (e.g. the Council on Foreign Relations), two different sources of wealth.[16]

A decade later Trump has revived the slogan of “America First!”, and vowed to reconsider both NATO and multilateral trade. Both factions are still there today; but, as we shall see, both now have international connections.

American Politics and the Increase in Wealth Disparity

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Mayer’s helpful overview overlooks the alarming increase in wealth disparity since 1980 and especially in the last decade. Ten years ago, when I published The Road to 9/11, I noted that 225 billionaires owned as much as the bottom fifty percent of people in the world, and I repeated Kevin Phillips’ warning that

As the twenty-first century gets underway, the imbalance of wealth and democracy in the United States is unsustainable….  Either democracy must be renewed, with politics brought back to life, or wealth is likely to cement a new and less democratic regime— plutocracy by some other name.[17]

In 2010, only three years later, that indicator of disparity had risen up the pyramid from 225 billionaires to 43; and today the figure has shrunk still further to eight.[18]

As The New York Times reported in October 2015, just 158 families supplied half of the early money that had already poured into the 2016 campaign, and 138 of these families supported Republican candidates. Sixty-four of these 138 families made their fortunes in finance, mostly in hedge funds, private equity or venture capital. A further seventeen families were wealthy from energy, mostly oil and gas. What both these two groups were seeking was lower taxes and also deregulation: repeal of the Dodd-Frank Act reforming Wall Street, and (according to the Times) a lifting of the 40-year-old ban on export of US oil.[19]

Many were also “tied to networks of ideological donors who, on the left and the right alike, have sought to fundamentally reshape their own political parties” — on the one hand the twice-yearly anti-tax seminars hosted by the Kochs, and on the other “the Democracy Alliance, a network of liberal donors who have pushed Democrats to move aggressively on climate change legislation and progressive taxation.”[20]

Once again, a division in the American public was being fomented and funded by an old division within Big Money — roughly speaking, between those Trilateral Commission progressives, many flourishing from the new technologies of the global Internet, who wish the state to do more than at present about problems like wealth disparity, racial injustice and global warming, and those Heritage Foundation conservatives, many from finance and oil, who want it to do even less.

We see this ideological split even among the top eight US super billionaires in 2016, four of whom (Bill Gates, Jeff Bezos, Mark Zuckerberg, and Larry Ellison) have made their fortunes from the Internet and want the present US to progress more or less along its recent course. Warren Buffett (once number one, now number three) endorsed Hillary Clinton early on, “while calling for increased taxes on the country’s highest wage earners.”[21] Deeply dissatisfied with the status quo were numbers seven and eight, the Koch brothers, who “have fortunes largely drawn from fossil fuels,” and have “poured money into fighting solar.”[22]

Warren Buffett

Warren Buffett. Photo credit: Fortune Live Media / Flickr (CC BY-NC-ND 2.0)

The Kochs assembled a donor network of fellow mavericks, many of whom were distinguished by private ownership of their businesses, and many (Jane Mayer pointed out) “had serious past or ongoing legal problems.”[23] In early 2015 their organization revealed that it would spend $889 million leading up to the 2016 presidential contest. As USA Today reported, this unprecedented sum, “unrivaled for an outside organization, represents more than double the nearly $400 million the Republican National Committee (RNC) raised and spent during the 2012 presidential election cycle.”[24] This huge organized flow of outside funds has contributed greatly to the weakening of party discipline in Congress, especially among Republicans.

Throughout the campaign, the Kochs and Trump (whose chief backer was another maverick billionaire, Robert Mercer) were apparently at arm’s length from each other. Vanity Fair suggested in September that at that time the Kochs were “in direct opposition to the Mercers,” in a “civil war that threatens to tear the party apart” — even though, starting around 2011, the Mercers had been donating “at least $1 million a year to the Koch network.”[25]

Whatever the tensions, it was clear after the election that Trump in his transition team had “surrounded himself with people tied to the Kochs.”[26] Soon the Trump nominee for Education Secretary was Betsy DeVos, another major billionaire contributor to the Koch donor list. (Betsy’s brother Erik Prince, famous as the founder and owner of the notorious private army Blackwater, was quietly advising the Trump transition team on matters related to intelligence and defense.)[27]

And Trump’s CIA Director is Mike Pompeo, formerly a Koch-sponsored congressman “who was so closely entwined with the climate-change denying Koch brothers that he was known as the ‘congressman from Koch.”[28] (The new administration has reportedly instructed the Environmental Protection Agency to remove the climate change page from its website.)[29]

Since his election, Trump has attacked the U.S. intelligence agencies for leaking information, and reporters as being among “the most dishonest human beings on Earth.” But while attacking the Washington establishment, he is clearly reflecting the dissident big money faction of the deep state, no longer as marginal as it was in the era of the John Birch Society and later Goldwater.[30]

As the campaign and pre-inaugural preparations progressed, it became clearer that Trump, no stranger to the world of big money, had brought the old big money camp into his campaign, as well as the new. In January 2017 Trump nominated to be his SEC Chairman Jay Clayton, a Sullivan & Cromwell partner who in the past has represented Goldman Sachs and other big banks in Wall street superdeals.[31]

Clayton is the fourth former Goldman-related Trump nominee for the new administration, all of them chosen under the eyes of Trump’s chief strategist, Stephen K. Bannon, himself a former Goldman banker who moved on to become a Tea Party coordinator and executive director at the alt-right Breitbart News. (Bannon once promised to build “an insurgent, center-right populist movement that is virulently anti-establishment.”[32] It took only 10 days in the White House to make it clear that Bannon had “rapidly amassed power in the West Wing, eclipsing chief of staff Reince Priebus.”) [33]

Undoubtedly Trump entered politics as a maverick real estate investor and TV star, funding the early stages of his campaign himself. But as his campaign grew, he came to reach out more and more to Wall Street financing, notably from Robert Mercer, the co-CEO of hedge fund Renaissance Technologies,[34] Then Trump named as his campaign’s Finance Chairman Steve Mnuchin, formerly of Skull and Bones and Goldman Sachs.[35]

As many predicted, Mnuchin later became Trump’s nominee for Treasury Secretary, which could make him the third former Goldman executive to lead Treasury in the last four administrations, after Robert Rubin and Hank Paulson. In addition, Trump has named Gary Cohn, former president of Goldman Sachs, as his chief economic advisor and Director of the National Economic Council.[36]

In short, Trump did not challenge but preserved the status of what Jeffrey Sachs has called

the Wall Street-Washington complex, which has steered the financial system toward control by a few politically powerful Wall Street firms, notably Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley, and a handful of other financial firms.[37]

Meanwhile, just as Trump expanded his financial base to all elements of big money, so Wall Street, as it always does, ensured it had good connections to both of the final candidates. After Mnuchin joined the Trump campaign, Lloyd Blankfein, chief executive officer of Goldman Sachs announced in October 2016 his support of Hillary Clinton.[38]

All of this complexity calls for further reflection on the nature of the deep state.

Turkey and the International Deep State

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To survey the more serious accounts of the “deep state in the United States,” it is useful to begin with their summary in Wikipedia under this title: as a “state within a state, which [authors] suspect exerts influence and control over public policy, regardless of which political party controls the country’s democratic institutions.”

Citing five different authors, (including myself) Wikipedia expands this definition to include the military–industrial complex, intelligence community, Wall Street, plutocrats, “big oil,” the mainstream media, national security officials, and Silicon Valley.[39]

All five authors see two essential components to the deep state. On the one hand is big money. On the other are the extra-constitutional Washington Beltway agencies like CIA that Wall Street originally campaigned for and staffed, along with the government-oriented industries that these agencies and the Pentagon work with and outsource to.[40]

Besides myself, Philip Giraldi and Mike Lofgren have also recognized that “the term was actually coined in Turkey, and is said to be a system composed of high-level elements within the intelligence services, military, security, judiciary, and organized crime.”[41] A more precise definition is that of Hugh Roberts:

The notion of the deep state … originated in Turkey, where it connoted not merely the secretive apparatuses of the state such as the police and intelligence services but above all the shady nexus between them, certain politicians and organised crime.[42]

But I may be the only author showing the extent to which the Turkish deep state, when first exposed in 1996, both overlapped with the American deep state and revealed its dark underside.

The Turkish term “deep State” (deren devlet) was coined after the so-called Susurluk incident, a 1996 car crash whose victims included the deputy chief of the Istanbul Police Department, a Member of Parliament, and Abdullah Çatlı, an international heroin trafficker and killer recruited by the Turkish police for “special missions” and paid in heroin while he was officially being sought by the Turkish authorities for murder.[43]

We see in the Susurluk incident three features of the Turkish deep state, unmentioned by Lofgren, that not only resemble the American deep state but are actually a significant component of it (and still of major importance today).

The first is that it was partly international: Abdullah Çatlı was part of a death squad chiefly recruited from the ranks of the Turkish OHD (Ozel Harp Dairesi – Special Warfare Department). The OHD had originally been set up with US encouragement as the Turkish branch of NATO’s Operation Gladio, a stay-behind force in the event of a Warsaw Pact invasion. Diverted and renamed Counter-Guerrilla to suppress the Kurdish resistance movement, the OHD troops continued to be trained in the US and to use US counterinsurgency manuals.[44]

Abdullah Çatli, Turkey, Deep State

Photo credit: Adapted by WhoWhatWhy from Minestrone / Wikimedia, David Benbennick / Wikimedia and Abdullah Çatli / Twitter.

The second is that the international deep state connection revealed at Susurluk was partly criminal: the sanctioned para-state activities with Çatlı were financed by billions of dollars in profits from drug smuggling; just as the CIA in Laos and elsewhere utilized a protected drug traffic to finance its covert operations in Burma, Thailand, Laos, and Afghanistan.[45] Çatlı, a convicted drug trafficker with a special Turkish passport, was himself part of this post-Gladio international network:

Çatlı, according to Yalçın and Yurdakal, visited Miami in 1982 in the company of a known Gladio agent (and Italian neo-Nazi) and was considered to be “under the protection” of the CIA.[46]

(The Gladio agent was Stefano delle Chiaie, who had his own connections to state-sponsored terrorist activities in Italy, to the World Anti-Communist League or WACL, and more specifically to death squads working for the Operation Condor murder operation in Latin America, sponsored by the right-wing dictatorships in the region.[47] The CIA had its own shadowy connections to all three, as well as to Gladio.)

The third feature of the Susurluk event is that it was and remains a largely inscrutable intelligence-related event, or what in this book I call a “deep event,” like similar events in the United States, such as the John F. Kennedy assassination. Nearly all western accounts of the car crash overlook the claim that it was not an accident but an intended assassination.[48] Moreover the Turkish deep state was later suspected in the Turkish coup attempt of Ergenekon in 2007,[49] and its one-time parent, the US deep state, in the failed military coup of July 2016.[50] Both of these coup attempts reveal elements of what I mean by deep events.

Not just in Turkey, but also in the United States, respected authors have linked the deep state to what I call (pp. 98, 119) “structural deep events,” unsolved mysterious events that affect the political system of the country.[51] As I write, there have been a series of charges that, if substantiated, would seem to link Trump not only to an element of the American deep state, but also to an element of the Russian deep state.

References

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[1] Michael C. Bender and Damian Paletta, “Donald Trump Plans to Undo Dodd-Frank Law, Fiduciary Rule,” Wall Street Journal, February 3, 2017, https://www.wsj.com/articles/trump-moves-to-undo-dodd-frank-law-1486101602. Cf.

[2] R.G. Ratcliffe, “Obama’s final campaign speech of 2008,” Houston Chronicle, October 27, 2008, http://blog.chron.com/texaspolitics/2008/10/obamas-final-campaign-speech-of-2008/.

[3] Eugene Kiely, “Obama, “White House ‘Full of Wall Street Executives’?” Factcheck.org, March 1, 2012.

[4] Eric Lichtblau and Steven Lee Myers, “Investigating Donald Trump, F.B.I. Sees No Clear Link to Russia,” New York Times, October 31, 2016, https://www.nytimes.com/2016/11/01/us/politics/fbi-russia-election-donald-trump.html (FBI); “Cheney Firm Won $3.8bn Contracts from Government,” Observer, July 21, 2002, http://www.guardian.co.uk/world/2002/jul/21/globalisation.georgebush. See below.

[5] Anand Giridharadas, “Examining Who Runs the United States,” New York Times, September 15, 2015, https://www.nytimes.com/2015/09/15/us/examining-who-runs-the-united-states.html?_r=0. I believe the first to apply the Turkish term “deep state” (derin deret) to U.S. politics was the Swedish writer Ola Tunander (Peter Dale Scott, The Road to 9/11 [Berkeley: University of California Press, 2007], x, 244, 270, 384).

[6] Michael Covel, “The Deep State V. Trump,” Daily Reckoning, August 25, 2016, https://dailyreckoning.com/deep-state-v-trump/: “Donald Trump has the establishment scared out of their establishment minds.”

[7] Ryan Lizza, “Roger Stone Versus the ‘Deep State’”, New Yorker, January 20, 2017, http://www.newyorker.com/news/news-desk/roger-stone-versus-the-deep-state. Stone has been described as a “political provocateur” who “helped choreograph the… riot which shut down the Bush v. Gore recount in Miami-Dade County” (Jeffrey Toobin, “Bad Old Days,” New Yorker, May 2. 2016, http://www.newyorker.com/magazine/2016/05/02/the-political-provocateur-roger-stone-talks-trump. During the campaign, Stone and fellow provocateur Milo Yiannopoulos of Breitbart together promoted the divisive notion  “how the general election will almost certainly be hijacked by acts of voter fraud” — by Democrats (Ken Meyer, :Roger Stone Says There Will Be a ‘Bloodbath’ if Election is Stolen From Trump,” Medaite.com, August 2, 2016, http://www.mediaite.com/online/roger-stone-says-there-will-be-a-bloodbath-if-election-is-stolen-from-trump/. Their politics of division is shared by Steve Bannon, who “is so dominated by a desire to wage war and vanquish his enemy that he cannot think clearly about damage wrought by his destructive, polarizing approach” (Conor Friedersdorf, “The Radical Anti-Conservatism of Stephen Bannon,” Atlantic, August 25, 2016, http://www.theatlantic.com/politics/archive/2016/08/the-radical-anti-conservatism-of-stephen-bannon/496796/).

[8] Covel, “The Deep State V. Trump.” Cf. John W. Whitehead, “The Deep State: The Unelected Shadow Government Is Here to Stay,” Rutherford Institute, November 10, 2015, https://www.rutherford.org/publications_resources/john_whiteheads_commentary/the_deep_state_the_unelected_shadow_government_is_here_to_stay: “The Deep State…is comprised of unelected government bureaucrats, corporations, contractors, paper-pushers, and button-pushers who are actually calling the shots behind the scenes right now.”

[9] “Chris Hedges on How the ‘Deep State’ Will Influence the Trump Presidency,” Truthdig, Jan 17, 2017, http://www.truthdig.com/avbooth/item/chris_hedges_the_deep_state_will_influence_the_trump_presidency_20170117. In this camp are Glenn Greenwald, who equates the “deep state” with “the intelligence community,” and Eric Margolis, who equates it with “the massed national security apparatus” (Glenn Greenwald, “The Deep State Goes to War with President-Elect, Using Unverified Claims, as Democrats Cheer,” The Intercept, January 11, 2017, https://theintercept.com/2017/01/11/the-deep-state-goes-to-war-with-president-elect-using-unverified-claims-as-dems-cheer/; Eric Margolis, “Trump Versus the Deep State,” The Unz Review, January 13, 2017, http://www.unz.com/emargolis/trump-versus-the-deep-state/.

[10] Mike Lofgren, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government (New York: Viking, 2016); Philip Giraldi, “Deep State America,” The American Conservative, July 30, 2015, http://www.theamericanconservative.com/articles/deep-state-america/.

[11] Peter Dale Scott, The American Deep State (Lanham, MD: Rowman & Littlefield, 2015), 30. I later wrote in Dallas ’63: “In The American Deep State I devoted only a few lines to the oppositional faction of right-wing Texas oilmen and the John Birch Society, opposed to the relative internationalism of Wall Street. In this [book] we shall see that under Kennedy their opposition was so deeply embedded that America was, for a while, ruled by a dyadic deep state” (Peter Dale Scott, Dallas ’63: The First Deep State Revolt Against the White House [New York: Open Road Media, 2015], 191).

[12] “Divided States of America,” Part 1, Frontline, PBS, January 17, 2017. Cf. Jane Mayer, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (New York: Doubleday, 2015), 165-68.

[13] Rick Ames and Yasha Levine, “Exposing The Rightwing PR Machine: Is CNBC’s Rick Santelli Sucking Koch, The Exiled, February 27, 2009, http://exiledonline.com/exposing-the-familiar-rightwing-pr-machine-is-cnbcs-rick-santelli-sucking-koch/; Chris Douglas, “The Tax That Started the Tea Party,” FrumForum. September 3, 2010, http://www.frumforum.com/the-tax-that-started-the-tea-party/. Cf. Peter Dale Scott, “POEM: To the Tea-Party Patriots: A Berkeley Professor says Hello!,” GlobalResearch, November 2, 2010, http://www.globalresearch.ca/poem-to-the-tea-party-patriots-a-berkeley-professor-says-hello/21727; reprinted in Peter Dale Scott, Tilting Point (San Luis Obispo, CA : Word Palace Press, 2012), 42.

[14] Jane Mayer, “Covert Operations: The Billionaire Brothers Who Are Waging a War Against Obama,” New Yorker, August 30, 2010, http://www.newyorker.com/magazine/2010/08/30/covert-operations; Mayer, Dark Money, 167-68, 193. In 2014 the Koch brothers were tied for sixth place among the world’s wealthiest, with $40.7 billion each. Combined, their net worth is $81.4 billion, which was higher than the highest-ranking individual on the list — Microsoft founder Bill Gates, at $77.8 billion (Louis Jacobson, “Harry Reid says Koch brothers are richest family in the world,” Politifact, April 2, 2014, http://www.politifact.com/truth-o-meter/statements/2014/apr/02/harry-reid/harry-reid-says-koch-brothers-are-richest-family-w/). Chris Douglas observes, “Until the Bush tax cuts, the estate tax stood at 55%.  As a result of the tax cuts initiated by the Bush administration, by 2010, it was zero.  Unless Congress acts, it will return full-force to 55% in 2011. To understand the impact on the Koch family, consider that some reports place the wealth of the Koch brothers at $36 billion dollars [in 2010; four years later Forbes estimated it at $81 billion], their company second at times only to Cargill as the largest privately held company in America. To the Koch family, a 55% estate tax means they must contemplate a corporate re-organization, the result of which would conceptually be to go public and sell off 55% of their shares in order to pay the tax or, more likely, that they would donate the majority of shares to a charitable foundation.   Either way, the estate tax at 55% would entail a transformation of Koch Industries and a diversification of ownership, with ramifications for the family’s long term control” (Chris Douglas, “The Tax That Started the Tea Party”).

[15] Mayer, Dark Money, 167. Cf, Nella Van Dyke and David S. Meyer, eds., Understanding the Tea Party Movement (Burlington, VT: Ashgate Pub. Company, 2014), 100.

[16] Peter Dale Scott, “Bringing It All Together: The New Releases and How They Help Us Converge on the Heart of the Case,” The Fourth Decade, Vol. 4, #1, November, 1996; republished at http://www.assassinationweb.com/scotte.htm. Of the eleven businessmen at the 1958 founding meeting of the John Birch Society, many, including the founder Robert Welch, were former members of the National Association of Manufacturers (Terry Lautz, John Birch: A Life [New York: Oxford University Press, 2016]. 225). One was William J. Grede, who served as president of the National Association of Manufacturers in 1952. Still another was Fred Koch, father of Charles and David Koch (Jeff Nesbit, Poison Tea: How Big Oil and Big Tobacco Invented the Tea Party and Captured the GOP [New York: Thomas Dunne Books, 2016], 30; Van Dyke and Meyer, Understanding the Tea Party Movement, 100). Charles and David Koch also joined the John Birch Society.

[17] Kevin Phillips, Wealth and Democracy: A Political History of the American Rich (New York: Broadway Books, 2002). 422; quoted in Peter Dale Scott, The Road to 9/11 [Berkeley: University of California Press, 2007], 3, cf. 254.

[18] “World’s Eight Richest as Wealthy as Half Humanity, Oxfam Tells Davos.” Reuters, January 16, 2016, http://www.reuters.com/article/us-davos-meeting-inequality-idUSKBN150009.

[19] “From Fracking to Finance, a Torrent of Campaign Cash,” New York Times, October 10, 2015,

https://www.nytimes.com/2015/10/11/us/politics/wealthy-families-presidential-candidates.html#donors-list. Much of the petroleum wealth was probably also aimed at preventing climate change regulations.

[20] “From Fracking to Finance, a Torrent of Campaign Cash,” New York Times, October 10, 2015.

[21] Amy Chosick, “Warren Buffett Endorses Hillary Clinton and Calls for Higher Taxes on Wealthy,” New York Times, December 16, 2015, https://www.nytimes.com/politics/first-draft/2015/12/16/warren-buffett-endorses-hillary-clinton-and-calls-for-higher-taxes-on-wealthy/?_r=0.

[22] Sarah Jaffe, Necessary Trouble: Americans in Revolt (New York: Nation Books, 2016), 265. None of the eight endorsed Trump, who pointedly distanced himself from the Kochs during the campaign.

[23] Mayer, Dark Money, 17.

[24] Fredreka Schouten, “Koch brothers set $889 million budget for 2016, USA Today, January 27, 2015, http://www.usatoday.com/story/news/politics/2015/01/26/koch-brothers-network-announces-889-million-budget-for-next-two-years/22363809/.

[25] Abigail Tracy, “The Brewing Billionaire Feud at the Heart of the G.O.P.,” Vanity Fair, September 7, 2016, http://www.vanityfair.com/news/2016/09/robert-rebekah-mercer-charles-david-koch-republican-party.

[26] Kenneth P. Vogel and Eliana Johnson, “Trump’s Koch Administration,” Politico, November 28, 2016, http://www.politico.com/story/2016/11/trump-koch-brothers-231863

[27] Jeremy Scahill, “Notorious Mercenary Erik Prince Is Advising Trump from the Shadows,” The Intercept, January 17 2017, https://theintercept.com/2017/01/17/notorious-mercenary-erik-prince-is-advising-trump-from-the-shadows/: “In July [2016], Prince told Trump’s senior adviser and white supremacist Steve Bannon, at the time head of Breitbart News, that the Trump administration should recreate a version of the Phoenix Program, the CIA assassination ring that operated during the Vietnam War, to fight ISIS.”

[28] Mayer, Dark Money, 15, 276.

[29] Valerie Volcovici, “Trunp Administration Tells EPA To Cut Climate Page from Website: Sources,” Reuyers, January 25, 2017, http://mobile.reuters.com/article/idUSKBN15906G?feedType=RSS&feedName=politicsNews.

[30] On page 5 of this book, I refer to a formerly “minority element in our political economy [that now] finances and dominates both parties, and indeed is now also financing threats to both parties from the right, as well as dominating our international policy. As a result, liberal Republicans are as scarce in the Republican Party today as Goldwater Republicans were scarce in that party back in 1960.” Today I would no longer define this element as “the military-industrial complex,” but the trend has become even more clear.

[31] Matt Taibbi, ‘Trump Nominee Jay Clayton Will Be the Most Conflicted SEC Chair Ever,’ Rolling Stone, January 5, 2017, http://www.rollingstone.com/politics/features/trump-pick-jay-clayton-to-be-most-conflicted-sec-chair-ever-w459289. Clayton’s wife Gretchen is a wealth management advisor at Goldman Sachs.

[32] Conor Friedersdorf, “The Radical Anti-Conservatism of Stephen Bannon,” Atlantic, August 25, 2016.

[33] Josh Dawsey, Eliana Johnson and Annie Karni, “The man behind Trump? Still Steve Bannon,” Politico, January 29, 2017, http://www.politico.com/story/2017/01/donald-trump-steve-bannon-234347.

[34] “How One Family’s Deep Pockets Helped Reshape Donald Trump’s Campaign By Nicholas Confessore Aug. 18, 2016 http://www.nytimes.com/2016/08/19/us/politics/robert-mercer-donald-trump-donor.html?_r=0

[35] Bloomberg BusinessWeek, August 31, 2016, https://www.bloomberg.com/politics/articles/2016-08-31/steven-mnuchin-businessweek When Mnuchin was Financial Chairman of the Trump campaign, his counterpart at the RNC was Lew Eisenberg, his father’s old partner at Goldman Sachs.

[36] Pam Martens and Russ Martens, “Here’s How Goldman Sachs Became the Overlord of the Trump Administration,” Wall Street on Parade, January 9, 2017, http://wallstreetonparade.com/2017/01/heres-how-goldman-sachs-became-the-overlord-of-the-trump-administration/

[37] Jeffrey D. Sachs, The Price of Civilization: Reawakening American Virtue and Prosperity (New York: Random House, 2011), 117.

[38] Zeke Faux, “Goldman CEO Blankfein ‘Supportive’ of Clinton for Pragmatism,”

Bloomberg, October 22, 2016, https://www.bloomberg.com/politics/articles/2016-10-22/goldman-ceo-blankfein-supportive-of-clinton-for-pragmatism.

[39] “Deep state in the United States,” Wikipedia, https://en.wikipedia.org/wiki/Deep_state_in_the_United_States. The five authors are Philip Giraldi, Bill Moyers, David Talbot, Mike Lofgren, and myself.

[40] Scott, The American Deep State, 14-15, 30-35, etc.) The Pentagon, unmentioned by Wikipedia, is hard to classify. Although the Department of Defense is part of the official state and headed by a cabinet member, it contains within it the NSA, which simultaneously reports to the Director of National Intelligence. Other Pentagon agencies, such as DIA and JSOC, also deserve to be classified with the deep state.

[41] Mike Lofgren, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government (New York: Viking, 2016), 5. I see no further references in Lofgren’s book to organized crime; his notion of the deep state focuses primarily on the Beltway agencies.

[42] Hugh Roberts, The Hijackers.” London Review of Books, July 16, 2015, http://www.lrb.co.uk/v37/n14/hugh-roberts/the-hijackers, a review of Jean-Pierre Filiu, From Deep State to Islamic State: The Arab Counter-revolution and Its Jihadi Legacy (Oxford : Oxford University Press, [2015]).

[43] Jean-Louis Briquet; Gilles Favarel-Garrigues; Roger Leverdier, eds. Organized Crime and States: The Hidden Face of Politics (New York: Palgrave Macmillan, 2010). 43-44; Peter Dale Scott, American War Machine: Deep Politics, the CIA Global Drug Connection, and the Road to Afghanistan (Lanham, MD: Rowman & Littlefield Publishers, 2010), 19-20. Çatlı “is reckoned to have been one of the main perpetrators of underground operations carried out by the Turkish branch of the Gladio organisation and had played a key role in the bloody events of the period 1976-80 which paved the way for the military coup d’état of September 1980” (“Turkey’s pivotal role in the international drug trade, Le Monde diplomatique, July 1998).

[44] Desmond Fernandes and Iskender Ozden, “United States and NATO inspired ‘psychological warfare operations’ against the ‘Kurdish communist threat’ in Turkey”. Variant. 12, https://web.archive.org/web/20060614080445/http://www.variant.randomstate.org/12texts/Fernandes.html; Daniele Ganser, NATO’s Secret Armies: Operation Gladio and Terrorism in Western Europe (New York: Frank Cass, 2005), 241.

[45] Hakan Aslaneli and Zafer F. Yoruk, ‘Traffic Monster’ reveals state-mafia relations”. Hürriyet, November 7, 1996; Scott, American War Machine, 4-6, etc.

[46] Ryan Gingeras, Heroin, Organized Crime, and the Making of Modern Turkey (Oxford: Oxford University Press, 2014), 228; citing Soner Yalçın and Doğan Yurdakul, Reis: Gladio’num Türk Teriçisi (Istanbul: Doğan Kitapeilik, 2007), 152-56.

[47] Scott, American War Machine, 20; cf.p.30: In Italy “Stefano delle Chiaie was eventually accused of involvement in the Piazza Fontana and Bologna bombings as well as the Borghese coup.” The Condor Operation (about which I will say more) was responsible for the 1976 murder in Washington of former Chilean diplomat Orlando Letelier.

[48] HRFT Human Rights Foundation of Turkey Human Rights Report – TİHV, en.tihv.org.tr/wp-content/uploads/2015/…/Ra1998HumanRigthsReport.pdf, 39. In addition, no one has yet fully explained why one of the fake passports found in Çatlı’s possession was in the name “Mehmet Özbay”, an alias used fifteen years earlier by Mehmet Ali Ağca, the Turk who in 1081 attempted to kill Pope John Paul II (Peter Dale Scott, American War Machine: Deep Politics, the CIA Global Drug Connection, and the Road to Afghanistan [Lanham, MD: Rowman & Littlefield Publishers, 2010], 19; Ryan Gingeras, Heroin, Organized Crime, and the Making of Modern Turkey [Oxford: Oxford University Press, 2014], 228.

[49] Dexter Filkins. “The Deep State,” The New Yorker, March 12, 2012, http://www.newyorker.com/magazine/2012/03/12/the-deep-state: “Prosecutors maintain that Ergenekon is the deep state itself—not merely a cabal of reactionary officers within the military but a shadow government that aims at making Turkish democracy permanently unstable.”

[50] Tim Arango and Ceylan Yeginsu, “Turks Can Agree on One Thing: U.S. Was Behind Failed Coup,” New York Times, August 2, 2016, https://www.nytimes.com/2016/08/03/world/europe/turkey-coup-erdogan-fethullah-gulen-united-states.html?_r=0.

[51] On page 47 I speak of “a deep event, by which I mean an event predictably suppressed in the media and still not fully understandable.”

by Peter Dale Scott, February 2017

Kissinger…A Longtime Putin Confidant…Sidles Up To Trump!

 


Henry Kissinger has been promoting himself as a potential intermediary between a Trump White House and Russia.

AP Photo

America’s pre-eminent ex-diplomat

gets back in the mix.

Could he help broker a deal

with Russia?


 
Back in the 1990s, Henry Kissinger, the legendary former U.S. secretary of state-turned-global consultant, encountered an intriguing young Russian and proceeded to ask him a litany of questions about his background.

“I worked in intelligence,” Vladimir Putin finally told him, according to ‘First Person,’ a 2000 autobiography cobbled together from hours of interviews with the then-unfamiliar Russian leader.

To which Kissinger replied:

“All decent people got their start in intelligence. I did, too.”

As Vladimir Putin climbed the ranks in the Kremlin, eventually becoming the autocratic president he is today, he and Kissinger kept up a warm rapport even as the United States and Russia grew further apart. 

Kissinger is one of the few Americans to meet frequently with Putin, one former U.S. ambassador recently recalled – along with movie star Steven Seagal and ExxonMobil CEO Rex Tillerson, the likely next secretary of state. 

Now, as Donald Trump signals that he wants a more cooperative relationship with Moscow, the 93-year-old Kissinger is positioning himself as a potential intermediary:

meeting with the president-elect in private and flattering him in public.

Like Trump, Kissinger has also cast doubt on intelligence agencies’ conclusion that Russia sought to sway the election in Trump’s favor, telling a recent interviewer:

“They were hacking, but the use they allegedly made of this hacking eludes me.”

Some have expressed surprise that the urbane, cerebral former top diplomat would have any affinity for the brash, shoot-from-the-lip Trump. 

But seasoned Kissinger watchers say it’s vintage behavior for a foreign policy realist who has cozied up to all sorts of kings and presidents for decades.  And in fact, Trump may wind up an ideal vessel for Kissinger – the architect of detente with the Soviets in the 1970s – to realize his longstanding goal of warmer ties between the two Cold War adversaries.  For years, Kissinger has argued that promoting a greater balance of power between the U.S. and Russia would improve global stability. 

But skeptics fear this approach will sacrifice other values and reward bad behavior by the Kremlin, including,

  • its alleged election meddling

  • its invasion of Ukraine

  • its support for Syrian dictator Bashar Assad

There’s also the question of how Kissinger himself would personally benefit from a new reset with Russia. 

Aside from the reputational boost of having easy access to two major world leaders, the former secretary of state’s secretive consulting firm, Kissinger Associates, could get a bump in business.

“I think Kissinger is preparing a diplomatic offensive,” said Marcel H. Van Herpen, a Russia specialist and Putin critic who directs the Cicero Foundation, a Dutch think tank. 

“He’s a realist. The most important thing for him is international equilibrium, and there’s no talk of human rights or democracy.”

Trump aides did not offer a comment on the president-elect’s relationship with Kissinger, who served as secretary of state and national security adviser in the administrations of Richard Nixon and Gerald Ford. But sources familiar with the transition effort say the Manhattan real estate mogul is fascinated by Kissinger as well as other Republican elder statesmen, such as Robert Gates and Condoleezza Rice, to whom he has turned for advice on policy and staffing. 

Kissinger and Trump have chatted on multiple occasions, including during at least one face-to-face meeting since the Nov. 8 election. And Kissinger, to the surprise of many in the broader foreign policy establishment, has spoken admiringly – albeit carefully – about the Trump phenomenon. Even after Trump spoke directly with the president of Taiwan – a move that angered Beijing and went against the One China policy that Kissinger negotiated in the 1970s – the former secretary of state expressed confidence Trump would uphold U.S. diplomatic traditions with the Chinese. Associates of Kissinger also are in touch with others in the Trump orbit. 

One top Kissinger aide, Thomas Graham, is being floated among lower-level transition interlocutors as a potential ambassador to Russia, according to a source familiar with the conversations. Graham met with House Foreign Affairs Committee staffers on Capitol Hill earlier this month, accompanied by other Russia observers, according to four people familiar with the session. Graham also sought meetings in the Senate. Graham appeared to be trying to identify people who shared similar outlooks on Russia and had connections to the Trump transition, three of the people said. 

Kissinger also has praised Trump’s choice of Tillerson as the next secretary of state, dismissing worries that the ExxonMobil chief is too close to the Kremlin.

“He would be useless at the head of Exxon if he was not friendly with Russia… I don’t hear those concerns at all,” Kissinger said at an event in Manhattan. 

“Nobody can meet every single qualification for secretary of state. I think it’s a good appointment.”

Kissinger Associates doesn’t disclose its clients under U.S. lobbying laws. 

The firm once threatened to sue Congress to resist a subpoena for its client list. It has in the past advised American Express, Anheuser-Busch, Coca-Cola and Daewoo. But the firm does belong to the U.S.-Russia Business Council, a trade group that includes ExxonMobil, JPMorgan Chase and Pfizer. A person familiar with the Trump team’s national security planning warned against reading too much into the Trump-Kissinger relationship. 

The president-elect, the person said,

“admires the reputation and the gravitas but isn’t necessarily persuaded by the Kissingerian worldview.”

That may be true when it comes to China, a frequent subject of Trump’s ire, and the need to maintain a strong NATO, whose usefulness Trump has repeatedly questioned. But Trump’s desire for warmer ties with Russia has been one of the more consistent stances he’s taken, and he could find alignment with Kissinger. POLITICO’s attempts to reach Kissinger did not succeed this past week. 

But despite his unsavory reputation among human rights advocates – who recite a litany of moral offenses from Vietnam to Bangladesh – presidents of both political parties have sought Kissinger’s advice for the past 40 years, and he’s been eager to oblige. 

During the final years of the George W. Bush administration, as relations with Moscow were souring, Kissinger teamed up with Evgeny Primakov, the former Russian prime minister and head of the Russian Chamber of Commerce and Industry, to co-chair a working group focused on bilateral relations between the U.S. and Russia. Putin blessed the venture. According to Kissinger, Bush, too, hoped the initiative would yield positive results, even assembling members of his national security team to learn about its work in 2008. 

But the payoff was modest, at best:

Russia sent troops into the former Soviet state of Georgia in August 2008, angering the Bush administration, which imposed limited sanctions.

When Barack Obama took over the presidency from Bush, he sought Kissinger’s help on how to deal with Putin. 

A 2009 meeting between Kissinger and Putin helped lay the groundwork for a new arms-control pact as part of Obama’s effort to “reset” Russian relations. Kissinger remained involved in arms negotiations through 2010, according to then-Secretary of State Hillary Clinton’s emails released by the State Department. But ultimately that reset failed as well, for reasons that include Putin’s frustrations over U.S. support of NATO and European Union expansion, which he believed threatened Russian influence in countries such as Ukraine. 

In a February speech honoring Primakov, who died last year, Kissinger sketched out his view of the way U.S.-Russian relations should work.

“The long-term interests of both countries call for a world that transforms the contemporary turbulence and flux into a new equilibrium which is increasingly multi-polar and globalized,” he said. 

“Russia should be perceived as an essential element of any new global equilibrium, not primarily as a threat to the United States.”

“Ukraine needs to be embedded in the structure of European and international security architecture in such a way that it serves as a bridge between Russia and the West, rather than as an outpost of either side,” he said.

In Syria, he likewise called for the U.S. to cooperate with Russia, which has used indiscriminate air power to help Assad crush rebel forces.

“Compatible U.S.-Russian efforts coordinated with other major powers could create a pattern for peaceful solutions in the Middle East and perhaps elsewhere,” he advised at the time.

Steven Pifer, a former U.S. ambassador to Ukraine, noted that it’s not yet clear how far Trump will go to accommodate Russia. The president-elect’s pick for defense secretary is James Mattis, a retired Marine general who views Moscow as a major threat. 

And Trump, who prides himself on his deal-making skills, may ultimately conclude that Russia has little to offer.

“Does Trump get to a better relationship with Russia without getting something for it in terms of better behavior?” Pifer asked. 

“If we’re prepared to accept what they’re doing in Syria, Crimea, and Eastern Ukraine, we can have a better relationship, but we’ve sacrificed other interests and it’s not clear what we get for that.”

In an interview with CBS News that aired earlier this month, Kissinger spoke of both Trump and Putin in terms that suggested a sense of respect, if not necessarily awe. 

Trump, Kissinger said,

“has the possibility of going down in history as a very considerable president.”

Because of perceptions that Obama weakened America’s influence abroad,

“one could imagine that something remarkable and new emerges out of a Trump administration,” he said. “I’m not saying it will. I’m saying it’s an extraordinary opportunity.”

Putin, meanwhile, is a “character out of Dostoyevsky,” Kissinger said, a reference to the 19th-century author who chronicled the often bleak lives of Russians in novels such as “Crime and Punishment” and “The Idiot.”

“He is a man with a great sense of connection, an inward connection, to Russian history as he sees it,” Kissinger said of Putin.

The Kremlin took it as a compliment.

“Kissinger knows our country really well, he knows our writers and our philosophers so such comparisons from him are quite positive,” a spokesman for the Russian government said, adding that Kissinger “has deep knowledge, not superficial.”

 by Nahal Toosi and Isaac Arnsdorf , December 24, 2016, from Politico Website

2016…HOW TRUTH WAS DESTROYED…To Manipulate The Masses

“We’re an empire now,” Karl Rove nefariously asserted in 2004, “and when we act, we create our own reality. 

And while you’re studying that reality – judiciously, as you will – we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out.  

We’re history’s actors… and you, all of you, will be left to just study what we do.”

Karl Rove might have said that 12 years ago, but the words hauntingly describe our situation in 2016 – Oxford Dictionaries, incidentally, named “post-truth” the international word of the year – with facts seemingly relative, truth debatable, and a falsely-premised war on fake news, Orwell must be rolling in his grave.   In fact, given these telling circumstances, perhaps Oxford Dictionaries didn’t go far enough – this year epitomizes a new era of post-coherence.  

Rove and his ilk – the dynasties Bush and Clinton, reigning powers for nearly 30 years – must chuckle behind closed doors as Americans quarrel savagely over the authenticity of falsehoods and facts, alike.  

With ostensibly everything now up in the air, the U.S. power apparatus has inarguably ‘created a new reality’ – one in which doubt has been so instilled as to obstruct and thwart the dissemination of accurate, factual information. This purposeful manipulation of perception, in other words, does exactly what Rove and the aptly-termed “history’s actors” intend – it keeps the rest of us confused – and bitterly arguing over what’s actually going on. 

Online communication facilitated this madness exponentially – it’s doubtful such disorientation would have occurred decades ago, when social media didn’t have critical influence. 

Of course, this tumult and turbulence isn’t manufactured without reason:

it allows the surreptitious and sometimes flagrant distribution of propaganda favorable to the American political establishment to circulate largely unhindered.

But those aspects of post-coherence unintentionally also gave rise to a furious backlash – the Internet might facilitate confusion and propaganda, but it is, after all, a global library of information – and wary independent and alternative media outlets immediately tear apart false information published by collusive corporate media pressitutes. 

With all of this in mind, the following are just a smattering of many outrageous examples of how the Fake News narrative brought us post-truth, intentionally shaping the events of 2016 – and promises to continue the inanity far into the future. 

Perhaps the most laughable Fake News came to us courtesy of CNN’ss Chris Cuomo, who warned the planet amid ongoing publication by Wikileaks of documents deleterious to the credibility of the Democratic establishment to,

“remember, it’s illegal to possess these stolen documents. It’s different for the media. So everything you learn about this, you’re learning from us.”

Cuomo’s conspicuous ploy to limit the spread of the actual documents – and win CNN additional reader- and viewership – constituted a reckless foray into censorship of information. 

Of course, CNN didn’t proclaim the leaked emails verboten for nothing – the outlet bears the snarky moniker, Clinton News Network, as its parent company, Time Warner, donated over $400,000 to Hillary Clinton’s campaign – and was exposed by alternative media countless times for cutting off reporters who dared criticize its darling candidate or report on revealed corruption.  

Further, CNN’s pernicious claim came as the documents revealed the outlet and others colluding with the Clinton campaign to report news portraying Democrats in a favorable manner – of course, those who took Cuomo’s warning to heart and relied solely on the Clinton News Network would never know that pertinent detail.  

Other mainstream media outlets who coordinated with the Clinton camp struggled to accurately report the contents of the Wikileaks documents – when they bothered covering the revelations.  Corporate propaganda’s spin machine seemed to be on overdrive for the duration of the election cycle – and has reached the level of absurdity following Donald Trump’s win. Because, according to corporate media – who ignored the depth of corruption exposed by Wikileaks – the election of Trump was so anomalous, there had to be an explanation beyond the fact the American people didn’t find Hillary qualified for the job

 

Enter The Russians

Taking cues from the era of McCarthyism and leading the new Red Scare with a bullhorn is the once-illustrious Washington Post, who first posited, without any evidence sans statements from unnamed CIA officials, that the Intelligence Community had reached a consensus – Russian hackers had interfered in the election to install Trump.Famously in lockstep, the New York Times quickly parroted the same assertion as if it were steel truth – neither outlet, however, bothered consulting officials from the 16 other agencies comprising the U.S. Intelligence Community.  In actuality, no such consensus had been reached – not even inside the CIA. 

Shortly after the Post’s shameful scare piece was published, the FBI came forward to denounce the Russian hacking theory as “fuzzy” and “ambiguous” – showing the lack of cohesion amongst intelligence officials, as well as the rush to shirk blame for the lost election. 

Wikileaks, itself – the one organization with insider information – has vociferously and repeatedly denied their source hacked anything, is not Russian, and that the documents were leaked by an insider. Nonetheless, news of the report went viral and furthered current administration’s agenda to both paint Russia as a villain and Trump as having somehow stolen the election.  

Indeed, the utterly unproven Russian Hackers theory provided the impetus for President Obama to an embarrassing diplomatic meltdown this week, announcing the expulsion of 35 Russian diplomats, sanctions, and the shuttering of two compounds owned by Russia. 

While that move could have easily brought the two superpower nations yet closer to military conflict, Russian President Vladimir Putin allowed cooler heads to prevail, went against the fury of other officials, and announced there would be no diplomatic tit-for-tat – no United States diplomats would be expelled from Russia. Incidentally, the mainstream press jumped the gun again, publishing the statements of Russian officials claiming the country would be mirroring moves by the U.S. – before Putin announced Russia would not be stooping to such diplomatic pettiness. 

While these points show the unseemly power of misinformation and make the corporate media a soft target for ridicule, it’s imperative to understand these false and misleading news items amount to government propaganda – the more the public buys the preferred narrative, the easier it will be to shove unsavory actions, including war, down our throats. 

Labeling some 200 independent and alternative outlets as Russian propagandists and Fake News was another feat the Post underhandedly managed in 2016 – and, thanks to its efforts, Obama officially wrote into law, in essence, a Ministry of Propaganda to putatively combat foreign State disinformation.  Of course, considering the Post’s owner, Amazon CEO Jeff Bezos, has received $600 million in CIA funds, albeit ostensibly for a stand-alone project, this hardly comes as a shock.  With truth in the balance, 2016 seemed to be a year plucked straight from the pages of George Orwell‘s 1984 – perhaps lightly edited by Aldous Huxley

We don’t need censorship from Facebook’s neoliberal Fake News slayers or the U.S. Ministry of Truth – but in this new era of post-coherence, the masses fell for the trick, and now believe themselves incapable of discerning fact from fiction despite the still-accessible, voluminous information available on the Internet.  If the somnambulant masses were coherent enough to see through the ploy, freedom of speech and the press wouldn’t currently hang in the balance. 

An idiotic need to be spoon fed information could quash the institutions at the heart of our supposedly-free society. However, until the government acts more drastically, we still have independent media – whose integrity has a phenomenal track record of refusing to publish bogus information, or retracting any items later found to be mistaken. 

In the very near future – without hawk-like vigilance – dissenting opinion and reports accurately depicting corruption endemic in government may become a thing purely of the past…

by Claire Bernish,  January 01, 2017 from TheFreeThoughtProject Website

CASH IS…NO LONGER KING…THE PHASING OUT OF PHYSICAL MONEY HAS BEGUN!


 As long as cash is available to society, there will be a segment that will use it and avoid banks in the process. 

Technocracy cannot allow that, and so the destruction of cash is mandatory.

Source

 As physical currency around the world is increasingly phased out, the era where “cash is king” seems to be coming to an end. Countries like India and South Korea have chosen to limit access to physical money by law, and others are beginning to test digital blockchains for their central banks. 

The war on cash isn’t going to be waged overnight, and showdowns will continue in any country where citizens turn to alternatives like precious metals or decentralized crypto-currencies. Although this transition may feel like a natural progression into the digital age, the real motivation to go cashless is downright sinister. 

The unprecedented collusion between governments and central banks that occurred in 2008 led to bailouts, zero percent interest rates and quantitative easing on a scale never before seen in history. Those decisions, which were made under duress and in closed-door meetings, set the stage for this inevitable demise of paper money. Sacrificing the stability of national currencies has been used as a way prop up failing private institutions around the globe. By kicking the can down the road yet another time, bureaucrats and bankers sealed the fate of the financial system as we know it. 

A currency war has been declared, ensuring that the,

  • U.S. dollar

  • Euro

  • Yen,

…and many other state currencies are linked in a suicide pact. 

Printing money and endlessly expanding debt are policies that will erode the underlying value of every dollar in people’s wallets, as well as digital funds in their bank accounts. This new war operates in the shadows of the public’s ignorance, slowly undermining social and economic stability through inflation and other consequences of central control. As the Federal Reserve leads the rest of the world’s central banks down the rabbit hole, the vortex it’s creating will affect everyone in the globalized economy.  

Peter Schiff, president of Euro-Pacific Capital, has written several books on the state of the financial system. His focus is on the long-term consequences of years of government and central bank manipulation of fiat currencies:

“Never in the course of history has a country’s economy failed because its currency was too strong…  

The view that a weak currency is desirable is so absurd that it could only have been devised to serve the political agenda of those engineering the descent.   

And while I don’t blame policy makers from spinning self-serving fairy tales (that is their nature), I find extreme fault with those hypnotized members of the media and the financial establishment who have checked their reason at the door. 

A currency war is different from any other kind of conventional war in that the object is to kill oneself.  

The nation that succeeds in inflicting the most damage on its own citizens wins the war.”

If you want a glimpse 0f  how this story ends, all you have to do is look at Venezuela, where the government has destroyed the value of the Bolivar (and U.S. intervention has further exacerbated the problem).  Desperation has overcome the country, leading women to go as far as selling their own hair just to get by. While crime and murder rates have spiked to all-time highs, the most dangerous threat to Venezuelans has been extensive government planning.  The money they work for and save is now so valueless it’s weighed instead of counted. The stacks of bills have to be carried around in backpacks, and the scene is reminiscent of the hyperinflation Weimar Germany experienced in the 1920s. 

Few Western nations have ever experienced a currency crisis before, meaning many are blind to the inevitable consequences that come from the unending stimulus we’ve seen since 2008. In order to keep this kind of chaos from spreading like a contagion to the rest of the world, representatives are willing to do anything necessary, but this comes at a cost

Instead of having to worry about carrying around wheelbarrows full of money, the fear in a cashless society will likely stem from bank customers’ restricted access to funds. With no physical way for consumers to take possession of their wealth, the banking interests will decide how much is available. 

The level of trust most people still have in the current system is astonishing. Even after decades of incompetence, manipulation, and irresponsibility, the public still grasps to government and the established order like a child learning how to swim.  The responsibility that comes with independence has intimidated the entire population into leaving the decisions up to so-called  ‘experts.’ It just so happens that those trusted policymakers have an agenda to strip you and future generations of prosperity. 

Some of the few hopes in this war against centralization are peer-to-peer technologies like Bitcoin and Ethereum. These innovative platforms have the potential to open up markets that circumvent state-controlled Ponzi schemes. The future development of crypto-assets has massive potential, but being co-opted is a real dangerThe greatest threat to individual freedom is financial dependence, and as long as your wealth is under someone else’s control, it can never be completely secure. Unfortunately, private blockchains are becoming increasingly popular, creating trojan horses for those just learning about the technology (in contrast, Bitcoin’s transaction ledger is public). 

Without the decentralized aspect of a financial network, it is just a giant tracking database that can be easily compromised like any other. The World Economic Forum released a report on the future of financial infrastructure (The Future of Financial Infrastructure – An Ambitious Look at how Blockchain can Reshape Financial Services). 

Giancarlo Bruno, Head of Financial Services Industries at WEF stated:

“Rather than to stay at the margins of the finance industry, blockchain will become the beating heart of it.  

It will help build innovative solutions across the industry, becoming ever more integrated into the structure of financial services, as mainframes, messaging services, and electronic trading did before it.”

The list of countries who are exploring integrating blockchain technology into their central banking system is extensive. 

Just to name a few:

…and many others are in the process of researching and testing out options.  

For those who appreciate more tangible wealth, diversifying into hard assets like gold and silver is a great first step. It’s not about becoming a millionaire or getting rich quickly, but rather, using precious metals as vehicles for investment in the long-term. Regardless of what events unfold over the decades to come, the wealth preserved in physical form is more secure than any other asset. Forty years ago it was possible to save your money in the bank and accumulate interest over time, but that opportunity no longer exists.  Those who fail to adapt to this new financial twilight zone will likely find themselves living as slaves to debt for years.  

Control and confidence are two of the most important things in the system we live in. Once these digital spider webs have been put into place, the ability for an individual to maintain privacy or anonymity will all but disappear. Only through understanding the subversive actions being taken can people protect themselves from having to put their future in someone else’s hands. The cash that allows free transactions without tax burdens or state scrutiny won’t be around much longer. There will be many rationalizations for a cashless society in the years to come, but without fixing this broken financial system first, this will only ensure that despotism gains an even sturdier foothold.

by Shaun Bradley, December 08, 2016,  from TheAntiMedia Website

WHY GOVERNMENTS WANT A CENTRAL BANK ISSUED DIGITAL CURRENCY

rise-of-digital-currency

 

On January 20, 2016, People’s Bank of China (PBoC) released an announcement on its website about its digital currency conference. At the conference, the PBoC urged its digital currency team to speed up effort and release its own digital currency quickly. Similarly, Bank of England, Bank of Canada, and some other central banks also expressed similar intentions to or claimed that they had considered issuing their own digital currencies. Since its creation, Bitcoin and other digital currencies have inspired the issuance of many private-issued and denationalized digital currencies. Now, it looks like that the central bank-issued digital currency is also becoming a global trend.

Why do central banks, which already fully control the issuance of currencies, need to bother with its own digital currency?

Well, this question is both interesting and important. To answer it, we need first to understand some basics, the Digital Currency 101:

Unlike Internet banking and third-party payment services using traditional electronic payment tools to facilitate fiat money transmission, digital currencies represent a new class of technology. They are developed out of a number of brand new and groundbreaking technologies — they are not tools to transmit money; they are arguably money themselves. Among them, one particular kind utilizes modern cryptography, earning its name crypto-currency. Bitcoin is an example of this kind of digital currency. After its creation, the idea inspired and led to many similar systems. Some commercial banks and central banks also work on their own digital currencies. Depending on their issuers, we can divide all digital currencies into three categories:

1. Digital Currencies Issued by Non-Financial Institutions

In November, 2008, someone under the alias of Satoshi Nakamoto invented a new technology called Blockchain and for the first time introduced the concept of a peer-to-peer electronic cash system, also known as Bitcoin.1 On January 3, 2009, the code was released. Due to its peer-to-peer and electronic nature, digital currencies can be transferred directly between two individuals without a centralized clearance house. Thus, it is a fast, low-cost, and nationality-neutral payment system.

2. Commercial Banks-issued Digital Currency

Some large international financial institutions, attracted by digital currency for its low cost, high speed, and security, are also trying to utilize its underlying technology, known as Blockchain, as the basis to build their own proprietary digital currencies. Banks involved in such areas include UBS, Deutsche Bank, Santander, and BNY Mellon, some of the most prestigious banks worldwide. Their digital currencies are similar to the aforementioned ones, only they have different issuers. Especially worth noting is most financial institutions’ digital currencies are designed to meet their need for fast settlement, rather than to challenge the financial status quo by replacing the central bank-issued fiat money.

3. Central Bank-issued Digital Currency

Some central banks, such as PBoC and Bank of England, after having done some research on digital currency, also plan to issue their own central bank-issued digital currencies (CBDCs). Technologically, CBDC is similar to the aforementioned two, but due to its pedigree, it might have greater economic implications and this is exactly the outcome that PBoC intend by introducing CBDC.

There are at least three implications of CBDC, i.e., three reasons for CBDC to governments.

To Create a Cashless Society

Governments hate cash. This is to a great degree the reason that the governments want the central banks to issue their own digital currencies.

For government, although cash is the original form of its fiat money, it has some obvious shortcomings. When compared funds stored in financial institutions, cash is less controlled by the government. Once cash leaves the banks, it becomes hard to trace. The government can’t know the location of each bank note, who owns it, or even if it still exists. This made cash easy to be used for drug dealing, smuggling, tax evasion, money laundering, and even funding terrorist activities. Meanwhile, cash owned by individuals can also be the target of burglars and robbers.

What’s more important is that cash can undermine the effectiveness of the government’s negative interest policy. When the negative interest rates dropped to a unbearable level, savers would abandon the convenience and security of depositing money in banks — they may withdraw their money and store it at home in cash. This makes it hard to implement the negative interest rate policy.

This is the very reason why the European Central Bank decided to stop issuing the 500-euro note while Lawrence Summers, the former US Treasury Secretary, advocated abolishing the 100-dollar note — prior to it, the US already stopped issuing the 500-dollar note and larger ones in 1945.

However, as long as the public still have the ability to withdraw cash from banks, no matter how the government restricts the use of cash, there will still be a large amount of cash outside the government-controlled finance system. This is not something that the government wants to see. But, in a society where central bank-issued digital cash is fully adopted, CBDC can replace traditional form of money and achieve the central bank’s goal of removing cash. Once that comes true, the government can monitor its citizen’s personal financials down to every single transaction and invalidate ones that are deemed to be illegal. It also makes it impossible for people to withdraw cash and store it at home in response to negative interest rates. This will only serve to worsen the financial exploitation. Just as Joseph T. Salerno pointed out in his article “Why Government Hates Cash:

Now the reason given by our rulers for suppressing cash is to keep society safe from terrorists, tax evaders, money launderers, drug cartels, and other villains real or imagined. The actual aim of the flood of laws restricting or even prohibiting the use of cash is to force the public to make payments through the financial system. This enables governments to expand their ability to spy on and keep track of their citizens’ most private financial dealings, in order to milk their citizens of every last dollar of tax payments that they claim are due.

Steal the Spotlight from Bitcoin and Other Private-issued Digital Currencies

The current monetary system is unfair, riddled with flaws and built on shaky ground. Economists of the Austrian school, among others, have gone to great efforts to explain this. The birth of private digital currencies presented an opportunity to make a difference by reforming money and the financial systems. The governments, however, are inevitably threatened. They envy the attention that digital currencies have received. But most governments were reluctant to declare digital currencies as illegal since that would contradict their perceived stance of being supportive of technological innovation.

Thus, although there is no unified stance among different governments with respect to digital currencies, the difference among them is merely a matter of degrees — there is not a single government that has wholeheartedly embraced digital currencies. Those egomaniacs want to divert the public attention away from digital currencies by creating ones they can control themselves.

The outcome is that the government’s stances are often in conflict with their own: On the one hand, they try to restrict the development of digital currencies, on the other, they also actively study and develop their own digital currencies modeled on Bitcoin. Take China, for example. On December 5, 2013, the central bank stated, “In order to protect the public’s right to property and ensure RMB’s legal status as a legal tender and reduce anti-money laundering law, and maintain financial stability.” The PBoC worked with the Ministry of Industry and Information, China Banking Regulation Commission, China Securities Regulation Commission, and China Insurance Regulation Commission, and released a notice:

Although Bitcoin is often called “Money,” given it is not issued by any monetary authorities, they don’t have the status as a legal lender, thus is not a true currency. Judging by its nature, Bitcoin is a virtual good. It doesn’t have the same legal standing as currencies, and shouldn’t be allowed to be in circulation in the market like real currencies.

No financial institutions and payment institutions should use Bitcoins to price their products and services. They shouldn’t buy or sell Bitcoin or seek to insure any Bitcoin-related services or Bitcoin itself. They should not provide their clients with Bitcoin-related services, directly or indirectly.

But this doesn’t mean that the PBoC considers digital currency as completely worthless; on the contrary, at their 2016 digital currency conference, they admitted that: “…. We had established a dedicated research team starting in 2014, and it believes that “… exploring the central bank issuing digital currency has positive and real implications and fundamental historical meanings.”

Replacing the genuine by releasing a copycat — this is certainly not the first time that a government has done such a thing.

To Achieve a More Accurate Monetary Policy

Central bankers — a bunch of social engineers — have every confidence that they can regulate and control the economy by manipulating monetary policies. Every time their efforts fail, however, they try to scapegoat the market. For example, they would increase monetary supply as a way to give stimulus; however, the money meant to stimulate the real economy was often funneled into the financial market and used for purposes that contradict its original one by the “greedy” businessmen. In comparison, digital currencies can afford them better control of monetary policy. This is more than sending “money from the helicopter” to people’s wallets; given that these digital currencies are programmable; the government can even control exactly how to spend this new money using scripts.

For example, if the government plans to subsidize certain farms, say some corn farms, to support this sector of agriculture, they can directly add a certain amount of money to the wallets of some farms, for instance 100 million dollars and program this money to be sent to certain fertilizer merchants at a certain time, and that each can only spend maximum of 10 million dollars per year, and in this way, they can make sure that the farmers won’t squander the windfalls, and that this money won’t flow to other sectors, for instance, the stock market or real estate market.

Even though this kind of monetary policy is bound to fail, from the perspective of government officials, CBDC provides them a better tool. For them, with the help of the CBDC, they can plan and manage the economy better.

Conclusion

Although sharing some similar traits with Bitcoin and other free digital currencies, CBDC is in essence the opposite of what Bitcoin represents with the following three implications. (1) With central banks being the issuers of new digital currencies, the government may achieve its goal of building a cash-less society, and, for the general public, the financial exploitation they are subject to are likely to worsen. (2) CBDC will steal the spotlight of Bitcoin and therefore help governments to repress the digital currency revolution. (3) CBDC may be used as a tool for a more accurate monetary policy (although such effort is bound to fail in the long run). Confronting this upcoming huge threat, lovers of liberty should stay vigilant and work on countermeasures early.

BY Tyler Xiong Yue, 09-12-16.   Tyler Xiong Yue is a Master’s degree student studying under Jesús Huerta de Soto, and is a translator of many Mises Institute essays and books into Chinese.