Sunday, June 11, 2017

EU wants to centralize its capital markets even further

EU Observer brings the new that EU wants to fast-track the capital markets union. The reason is Brexit that places the main capital market of the EU (London) outside its borders.

Some quotes:

The UK's exit from the EU makes a union of the 27 national capital markets more urgent, the European Commission said on Thursday (8 June).
"As we face the departure of the largest EU financial centre, we are committed to step-ping up our efforts to further strengthen and integrate the EU capital markets", said commission vice-president Valdis Dombrovskis, who is in charge of financial services.

Dombrovskis presented a mid-term review of the Capital Markets Union (CMU), a plan launched in 2015 to increase links between EU markets and develop financial tools in order to facilitate investments and boost the economy.
Most of the proposals presented so far deal with specific financial products, such as venture capital or insurances.

"The EU needs CMU today more than ever," said the review unveiled on Thursday. It insists that Brexit "reinforces the urgent need to further strengthen and integrate the EU capital market framework”.

With 751,000 financial sector employees and the industry's gross added value of £80.935 billion (around €93 billion), the City of London has been one of the main actors and beneficiaries of the CMU so far.

The City has been necessary to provide services for the rest of the EU, such as ensuring risk-management services and providing the necessary amount of liquid cash for transactions, notes the commission's review.

I would think that the Brexit is an argument for the opposite policy. Venture capital or insurance have been around for centuries. We don't need integration for that. What Brexit shows is that centralization of such an important sector of the economy puts us all at risk. We need a spread of risk, not putting all our bets on one pony.

Saturday, June 10, 2017

The Comey show: the FBI director and the pea

Yesterday was Comey's day at the Senate. I listened to a part of it but I was not impressed.

First of all there is that ridiculous anti-Russia hysteria - including senators who lie that we here in Europe are even more obsessed about it. We have trust in our elections. It is the Americans - who allow their oligarchs to buy elections - who are worried about manipulations.

Russiagate reminds me of Monicagate. In both cases the real facts are maybe a bit embarrassing but certainly not a big deal. There are only two reasons for this circus. One is that it keeps the president for a long time negative in the news. The other is the hope that the president will somewhere during this judicial circus make a misstep and then you can persecute him for obstruction of justice or something similar.

It seemed to me that Comey was playing "The Princess and the Pea" with Trump as the bully who hurt his tender judicial aura. My impression is that something rather different was playing in their interaction. Trump was annoyed that those endless Russia investigations made it impossible for him to have a sound foreign policy. Newspapers judged everything as possible evidence that he was favoring Russia and that made it hard to make decisions based on their merits. So Trump first asked Comey whether it was possible to end this circus. Comey was non-committal. But Trump - for all his defects - is a good judge of character: he has built a television career on it with his The Apprentice show. And Trump very likely concluded that Comey was a "showboat" who liked the spectacle and would keep the issue in the news as long as possible.

Who wouldn't have fired Comey if that was the conclusion?

Here is a critical article about Comey from 2013 - when he became FBI director. According to the article While Comey deserves credit for stopping an illegal spying program in dramatic fashion, he also approved or defended some of the worst abuses of the Bush administration during his time as deputy attorney general. Those included torture, warrantless wiretapping, and indefinite detention.

Friday, May 12, 2017

Was the Macron email leak a false flag?

When there is a political scandal one should always ask the question "Cui bono": who benefited? In the case of the Macron email leaks it most likely was Macron. The newspaper reports about the leaks basically said that nothing harmful could be found - and that Macron thus was clean. And it helped the Macron campaign to paint Le Pen as an agent of Putin. Of course there is always a possibility that the Russians "got sloppy" as the pro-Macron press wants us to believe, but there are a lot of red flags that point the other way:

- The (pro-)Russian press had been negative about Macron for months. So why were the leaks published at the last moment? Information needs time to sink in. Journalists and Le Pen supporters would need time to study the mails for interesting/harmful information. And if they found something Macron would need time to react: with leaks it is often the inadequate or lacking reaction that converts believers.

- The last emails in the leak are from 24 April. The leak was published on 5 May. So it seems like the data thief wasted eleven days. Even worse: the mails were published just before a no-election news period in the French media. As a consequence their influence on the election was very low. And French journalists had very little incentive to investigate the emails.

- Organisations like Wikileaks publish the information in trenches. This has two advantages: it keeps the leaks in the news and it offers the opportunity to stress different aspects at a different time. The Macron failed to do this.

- By now leaking has become a science and organizations like Wikileaks have shown us what works and what doesn't. Dumping a big amount of mails or other documents does not work: it causes a short stir and after that it is old news. Journalists don't have the time to find the real hot items and when they find something a week later it may be old news that someone else revealed before. So typically the trove is revealed in tranches and each tranche is accompanied by a press release that tells what emails to look for and what they tell. In contrast there was no press release accompanying the Macron leaks.

- We saw almost immediately news articles that there was nothing interesting to see and that there were fake mails between the real ones. One has to admire those superhuman journalists who managed to study 7 gigabytes of emails within a day and who even found time in the process to conclude that some of those mails were fake.

- Later on we saw news articles that the CIA had been monitoring the attack and that the French had prepared themselves by adding fake mails - what seems to be a common tactic in businesses. If the American secret services were so close to the fire they might as well have been a bit closer than they admit.

- Even after the mails were released I haven't seen one good article discussing their content. The claim that nothing harmful can be found sounds shallow to me. When a team of journalists digs through the emails they will find something interesting. It doesn't have to be harmful to Macron's campaign. But there might be information on how Macron saw his adversaries and what kind of tactics he used against them. Or how he intends to operate in the coming elections for the parliament. Either this information isn't there - what would suggest that the mails have been filtered - or the press has been rather sloppy.

- we hear the usual talk about shady Russian hacker organizations who did it and traces of Russian editing software - that point to modifications - in the leaks. But by now we know from Wikileaks that creating false traces is an accepted tactic within the US security services.

Dividing the mails in tranches and publishing each trench with a press release takes a lot of work. It may have been that the hacker didn't have those resources. There have already been suggestions that American neo-nazis were involved.

It seems to me that either the hackers were extremely incompetent or this was a false flag. Of course a combination is also possible.

Sunday, February 19, 2017

The departure of Flynn

Flynn didn't make much friends during his short term. He repeatedly lied on two issues (his talks with the Russian ambassador and the security clearance for his son) to Pence and others and it has been claimed that his management style was chaotic. The lie about his son was very likely the most harmful as it was such a a black and white issue and so sure to be found out.

But what has been very little discussed until now is the role of the security services. We do not know what exactly happened but I am afraid it happened the following way:
The security services had his conversations with the Russian ambassador on tape. They invited Flynn for a discussion about something general like his "Russian contacts". They did not tell him they had his conversations on tape. They did tell him that they knew about his contacts with the ambassador and they told him that that would have violated some very old law that forbids citizens to do diplomacy. They did not tell him nobody has ever been convicted on basis of that law and that prosecution on basis of it likely wouldn't hold. They didn't provide him time to rethink his conversation with the ambassador in the light of this information - that must have been new to Flynn. Neither did they tell him that lying to the FBI can be heavily punished. So they had an "interrogation" where they only asked what they already knew and where they deliberately brought Flynn in a position where many people would lie.

In my opinion this should have consequences - for all the intelligence officers involved. Intelligence officers are there to serve the government - not to set boobytraps for it.

Saturday, November 12, 2016

The mysterious Mosul offensive

It is now about a month ago that Iraq started its offensive to retake Mosul from ISIS - with the support of the US.

From the beginning it has appeared as a weird operation to me. There was just too much territory around Mosul that needed to be conquered first. And they weren't even close to surrounding the city. It looks to me as a politically motivated operation - most likely Obama wants to have this finished before he hands over power to Trump. He must be well aware that the fall of Mosul - and his initial passive reaction to it - are among the biggests errors of his heritage.

But while it may make political sense it doesn't make much military sense. As it is unlikely that the ISIS defenses will break down it means that increasingly exhausted troops may increasingly get stuck in ISIS defenses.

The normal logic of a military offensive is that you assemble a lot of troops and material at one of a few locations so that at that location your forces are clearly superior to those of your enemy. Then you overrun his defenses and look how far you can come. However, unless the enemy defenses totally collapse you will find after a couple of days that your numeric superiority has evaporated and that you are suffering increasingly heavy losses against a well entrenched enemy. It is then time to stop and resupply and to consider what would be the best location and tactic for the next attack.

It looks like in Mosul that rhythm has been broken by the pressure for military success. There seems to be no strategy at all. It is attacking on all fronts and keeping attacking. And yet Tel Afar on the supply line of ISIS to Syria is protected by Turkey. Rumors are that already 3500 anti-ISIS fighters died. ISIS members who flee towards Syria are left unharmed. Very little is done to bridge the gap between Sunnites and Shiites.

Compare this to what is happening in Aleppo. First the government surrounded East Aleppo. Then it took some time to conquer the North of that area, a mainly industrial area that was relatively easy to conquer. Then it mainly let the siege do its own work and focused on the area to the West of Aleppo while keeping the pressure up in the East with occasional attacks and threats.

It is generally expected that it is a matter of time before the rebels lose East Aleppo. For Mosul the scenario is less clear. If ISIS is driven out it may well be a matter of brute force with a lot of American involvement that will leave the city devastated. Unlike the Russians in Syria the US in Iraq seems unable to forge a broad alliance that can provide future stability.

Wednesday, September 21, 2016

7 Reasons why the US bombing of Syrian Army positions was no accident

Does anyone still believe that the bombing in Deir Ezzor was an accident? Let me list the indications that is was not:
- conflicting reports: some say that the area had been observed by the US for days. Others that the decision was made on the spot.
- the Pentagon is trying to deflect the attention with an investigation whether the targeted soldiers were "former prisoners turned into makeshift conscript soldiers". Of course this is completely irrelevant.
- ISIS was ready and attacked immediately after the bombing
- strategic importance: this was not just the killing of a few of the thousands of Syrian soldiers in the area. It was a very strategic attack that gave ISIS control over the mountains near the airport and that way makes it impossible for the Syrian army to use the airport for its supplies. It may well lead to the fall of Deir Ezzor to ISIS.
- the Pentagon had made it very clear that they didn't like the truce. This was the perfect way to sabotage it.
- it is the second US led attack on Syrian government positions in the East of Syria. Previously we saw the US had the Kurds attack government positions in Hasakah. Note also that the US did nothing when in May 2015 ISIS conquered Palmyra and according to reports considered it even a good development. Interestingly now too the US had its allies (Danes, Australians and Brits) doing the dirty work.
- If the US had really felt sorry about inadvertently helping ISIS it would acknowledged the damage that it had caused - now it suggested just to have killed some Syrian troops that it didn't like anyway -, it would have transferred the responsible commander, appointed some high ranking person to lead the investigation, involved at least one of the other countries that had participated in the bombing and made some other moves to make it clear that it really regretted what happened. We saw nothing of it. Other than a vague announcement of an investigation the US acted as if nothing had happened.
- And then there was the performance of Samantha Power, one of the leading neocons, at the United Nations. She didn't show any regret at all and was in full attack mode.
- the timing of the attack - one day before the Russian elections - may have been no coincidence.
- When Russia contacted its American contact person for monitoring the truce he initially wasn't there. Only on a second attempt did they succeed in contacting and was the air attack on Deir Ezzor cancelled - after nearly an hour. Here too, the Pentagon is in attack mode, calling the first Russian call incoherent and blaming that for that reason they weren't understood well. This doesn't show any regret or desire for improvement. It is a deliberate insult that can only harm the cooperation.
- And finally there is that attack on the aid convoy. We see the classical contradicting statements: first the US claimed that Syrian planes did it and later they shifted the accusations towards the Russians, claiming that the Syrian army was not advanced enough to have done this. Yet rebels claimed that barrel bombs had barrel bombs had been used - a specialty of the Syrian army. In fact the attack carries all the classical symptoms of a false flag incident: the Syrians and Russians had nothing to gain from it while for the US and the rebels it comes very convenient to detract the attention from the Deir Ezzor incident and to have one more reason to end the truce.

See this article: US strikes on Syrian troops: Report data contradicts 'mistake' claims:
The report, released by US Central Command on 29 November, shows that senior US Air Force officers at the Combined Air Operations Center (CAOC) at al-Udeid Airbase in Qatar, who were responsible for the decision to carry out the September airstrike at Deir Ezzor:
• misled the Russians about where the US intended to strike so Russia could not warn that it was targeting Syrian troops
• ignored information and intelligence analysis warning that the positions to be struck were Syrian government rather than Islamic State
• shifted abruptly from a deliberate targeting process to an immediate strike in violation of normal Air Force procedures
The Russians were informed that the targets were nine kilometres south of Deir Ezzor airfield: they were actually only three and six kilometres from that airfield, respectively, according to the summary of its findings.
Originally, the CAOC had initiated a process called “Deliberate Targeting”, which is used for fixed targets and requires extensive and time-consuming work to ensure the accuracy of the intelligence on the targets, according to the report. But that had been changed abruptly to “Dynamic Targeting”, which involves “fleeting targets” – those that are either moving or about to move - for which intelligence requirements are less stringent.
The authors of the report found that change to be improper, given that the sites being targeted were clearly identified as defensive positions and could not justify such a switch to a hastily prepared strike. But again, it offers no explanation as to why.

Thursday, September 08, 2016

What's wrong with "Wir schaffen das" [Merkel]

On 31 August 2015 Merkel for the first used her now (in)famous sentence "Wir schaffen das" when discussing the increase of refugees. In many circles it was greeted as a courageous and moral standing. I beg to disagree.

It is a well known principle that the best place for refugees is neighboring countries. Yet the UN is complaining that is receiving less and less money to support the Syrian refugees in Lebanon, Jordan and Turkey. And the EU has cut at least as much as the rest of the world. Money can't be the problem: The total the UN asks for is 4.5 Billion dollar but it receives only a fraction of that. Yet the EU is spending much more on receiving the refugees and on paying off Turkey.

The EU has a problem that a large part of the refugees are economic refugees. Even many Syrians are not fleeing the violence but the economic catastrophe that is caused by the violence. In such a situation an experienced politician like Merkel knows that although you may do your best to receive refugees in a decent way it is not wise to say anything that might be explained by would-be refugees as an encouragement. It is puzzling that she did it anyway.

Then there is Turkey. Turkey was at that moment already trying to blackmail the EU by flooding it with refugees.In that light encouraging refugees to come was puzzling. Unfortunately Merkel's behavior towards Erdogan would become even more puzzling. In the refugee agreement she insisted on giving Erdogan largely what he wanted. Strange - you should punish blackmailers, not rewards them. By giving Erdogan what he wanted - including a visa-free travel agreement - and by going to Istanbul and telling the press there that the refugee agreement had brought Turkey closer to an EU membership Merkel helped Erdogan to win the elections a few months later.

The refugees are fleeing for the war in Syria. Turkey plays an important part in that war as the insurgents are mainly supplied through its territory. For a long time Turkey actively prevented refugees from travelling further towards the EU - seeing them as a reservoir from which it could recruit more rebel fighters. It is not really clear why it suddenly changed its policies and opened the gates. One theory is that it wanted to put the EU under pressure to do more to support the uprising. Other theories point to the fact that the US is supporting Merkel's position and mention old theories that Merkel is a CIA asset. They point to America's military doctrine that wants to prevent that the rising of dominant countries on other continents - including Europe.

The EU has largely supported Turkey's and America's active support of the uprising. Yet this constitutes a severe violation of international law. Stopping that support would soon end the war and the refugee crisis. Yet this option is considered taboo.

Merkel's "Wir schaffen das" was also undemocratic. She didn't have any mandate from the German parliament when she opened the door with her statement. It was a solo action. And it is by now widely detested among the population. She doubled down when next she tried to force the other EU countries to open their doors for refugees too.

Tuesday, August 30, 2016

Pentagon believes ISIS is weakened. In their dreams...

The Pentagon believes that ISIS is weakened. They point to its rather easy loss of Manbij and Jarablus.

They are dreaming. ISIS didn't lose Jarablus. The Turkish army occupied it for them so that the Kurds can't touch it. The ties between Turkey and ISIS are old and there is no reason to believe that Erdogan's talk about fighting ISIS as an excuse for his invasion in Syria is anything else than lies. The "conquest" of Jarablus happened almost without a fight and recent reports show a lot of fighting against Kurds, but none against ISIS. So there is no reason at all that the "fall" of Jarablus weakened ISIS.

Also, if ISIS had experienced the Turkish invasion as a major threat one would have expected them to send troops to the north of Syria to fight the Turks. Yet it looks like the opposite is happening. ISIS is attacking the Kurds south of Manbij and it has also started a major offensive against the Syrian government in the Palmyra region.

The story of Manbij is a more complex one. Once upon a time ISIS fought tooth and nail to occupy Kobani. They were on a winning streak and they didn't want to lose their aura of invincibility. In the end they had to conclude that this was foolish: they sent scores of men into death without any chance of success. Since then they have given up cities rather easy when coming under pressure. In many cases - like Manbij, Ramadi and Fallujah - they cut an agreement with their opponents that gave them the opportunity to withdraw. I don't know about Palmyra, but I wouldn't be astonished if there had been some kind of agreement there too when ISIS lost control.

ISIS is following standard a insurgent strategy, as described by Mao and others. They occupy cities when they see a chance and they appreciate the propaganda benefits of such actions. But their roots are in the countryside from where they can attack when it suits them. They know better now than holding cities at all costs.

Friday, August 26, 2016

The US-Turkish "Save ISIS" operation

The Kurds must be banging their heads against the wall for their stupidity in attacking the Syrian Army in Hasakah. They fueled Turkish fears about a Kurdish state - and doing so gave the Turkish army an excuse to invade. At the same time they antagonised the Syrian Army - that otherwise might have done something to help them. And by attacking Syria's legal government they reduced the threshold for the Turkish army to violate Syrian sovereignty. Either they were really stupid or their adversaries seduced them in some very clever Machiavellian scheme to do some very stupid things. As the Kurds have said that they don't do anything without the consent of the US, that raises awkward questions about the role of the US here.

They might not have known the details, but the Kurds could have known they made a mistake. The time just isn't there for a Kurdish state with Turkey and Iran rabidly opposed and in a position to fight it. Not to mention that neither Iraq nor Syria is resigned to let its Kurds go and that in neither country the borders from such a Kurdish state are clear. So the smart thing for the Kurds is to get a good position for when negotiations will take place. And in the case of Syria keeping their liberal autonomy without the repression of Assad is probably the maximum that can be achieved for now. And even that only once the war is coming to an end.

Another issue is that there are much too much Arabs living in the north of Syria - specially in the middle where they constitute a wide majority of the population. Assuming that a Kurdish state will cover that whole territory is just not realistic. Not to mention that it alarms both Turkey and the local Arab population. So the smart thing would have been to keep quiet and claim that they were only building temporary structures and that only after the war there would be negotiations where a definitive solution would be decided - taking into account the wishes of the local Arab population. Even for Kurds with more radical ideals it would have been wise to adopt that position for tactical reasons.

After having conquered Manbij the Kurds were in a position to make life hard for ISIS. If they conquered Al Bab - what they declared to be their next goal - they would be close to the government held Kuweires airbase east of Aleppo. Connecting with them would cut the ISIS territory in two. That would cut their supply lines to Turkey - generally believed to be a supporter of ISIS. It looks like that prospect was too much both for Turkey and the US. So this is in essence about saving ISIS. And while the Turks attacked Jarabulus the Americans put heavy pressure on the Kurds to withdraw from Manbij. Reports about whether they are complying are contradicting.

That impression is strengthened with the first reports from the ground that there were almost no casualties: one rebel and zero Turkish soldiers died. Locals reported from Jarablus that ISIS fighters went to Turkey by car and came back with a different uniform.

The situation in South Syria - where ISIS maintains territories that can only be supplies via territories held by other rebel groups - provides little hope that the rebels that Turkey is sending in will do anything against ISIS.

Turkish public opinion generally is opposed to foreign adventures like this one. They fear getting stuck in swamp at the cost of the lives of many Turkish soldiers. ISIS could easily have played on those fears by making the Turkish entry deadly. It didn't. On the other hand we saw on the eve of the attack a bombing of a Kurdish wedding in south Turkey. This may well have been a false flag operation by the Turkish army to prepare the popular mood for the operation. Both the target - Kurds - and the conflicting information about this attack - Turkey later withdrew its initial claim that the attack had been made by a teenager - suggest so.

Initial reports from Turkey claim that 15000 troops are ready to participate and that the aim is to secure the border between Jabavulus and Marea (some 70 km). "We want to secure the border before moving south", according to a rebel. The first reports of clashes with Kurds from the SDF are there.

One puzzling question is the role of the Syrian government and Russia. Both reacted very slow and reticent. They certainly can't complain that the action surprised them as the preparations were clear. The head of the Turkish secret service Fidan has been in Damascus frequently recently and very likely discussed the issue. There may be a secret clause in old treaty that gives Turkey the right to invade to fight PKK. Moscow too knew about the attack before. Very likely both fell for the "Kurdish state" red herring. What Turkey is now implementing is something it asked for already three years ago when the Kurds were hardly visible. So although they may now have more reasons to point to Kurdish expansionism, I can't see that as the main reason for Turkey's invasion. Neither do I expect that Turkey will limit its actions to what serves that purpose.

In my opinion the Kurdish rise was mainly a threat to Turkey because it gave the PKK hope. However, for Syria it never was a serious threat. Yet the hysteria is widespread. There are now even reports about a new Arab anti-YPG group in Afrin.

Finally there is the US position. Some people have explained Biden's appeal to the Kurds to withdraw East of the Euphrates as a sign that the rift between Ankara and Washington is not real and may just have been theatre to build bridges towards Moscow. Some see even the coup as a theatre co-production between them. However, I tend to the view that it was real. I read some where that Biden was met at the airport by a low ranking official. My impression is that the Turks told the US that they would invade Syria and that they told that to the US as a matter of fact, that Biden went to Ankara to save what could be saved and that the Turks told him that the best the Kurds could do is to get out of the way and east of the Euphrates. Erdogan may even be blackmailing the Americans - for example by threatening to close Incirlik for them.

In the mean time Obama keeps talking about Raqqa. But conquering Raqqa is useless. The city is a symbol because it was the first big city conquered by ISIS. But conquering symbols is not a strategy. It is not impossible to get the city, but what then. It will be like Palmyra. It was conquered a long time ago by the Syrian army yet it stays vulnerable to attacks from ISIS. In the open desert one would need to conquer a perimeter of at least a hundred kilometer to be a bit safe. Unfortunately it looks like Obama isn't interested in a structural solution. He only wants a symbolic victory and the accompanying positive pr.