Tagged: ZeroHedge

Foxconn Cuts 50,000 Jobs Due To iPhone Sales Slowdown

In the latest indication that the slump in sales of Apple’s most recent batch of iPhones isn’t a transitory trend, Nikkei Asia Review on Friday reported that Foxconn, one of Apple’s biggest and most important iPhone suppliers, is cutting seasonal staff more swiftly than in previous years, a sign that it is bracing for weak sales in the months ahead as the industry suffers its worst downturn in 10 years.

Screenshot

Normally, the 50,000 contract workers who have been let go at Foxconn’s most important factory in Zhengzhou would have been kept around for a few more months, as the manufacturer gradually reduced its employee head count.

The report comes after Apple announced plans to cut iPhone production for the second time in two months.

Around 50,000 contract workers have been let go since October at Foxconn Technology Group’s most important iPhone factory at Zhengzhou, in China’s Henan Province, according to an industry source familiar with the situation. Normally, the contracts of these workers would be renewed every month from August until mid- to late January, when the workforce is traditionally scaled back for the slow iPhone production season.

The depth of the cuts isn’t deeper than in previous years, it’s just happening much earlier than expected, as many workers were asked to leave before year-end as expectations for holiday sales slumped.

The scale of the cuts is not necessarily deeper than previous years, it is simply significantly earlier, industry sources said. “It’s quite different this year to ask assembly line workers to leave before the year-end,” a source with knowledge of Foxconn’s reductions said.

Other important iPhone suppliers have let workers go much earlier than usual as they struggle with slower-than-expected demand for Apple’s iconic product. The California tech giant earlier this month shocked the market by warning of a slump in revenues at the end of 2018. This year is also shaping up to be difficult, with further declines expected in the smartphone market, while the ongoing U.S.-China trade war is taking a heavy toll.

Foxconn isn’t alone in its cutbacks: Other companies further down the supply chain are also cutting jobs.

Pegatron, Apple’s second-biggest iPhone assembler, began canceling monthly labor contracts in November. A source close to the company said its normal practice was to reduce the 200,000-strong head count by tens of thousands every month until reaching about 100,000 – the minimum required for daily operation, according to one source familiar with the situation. “And for [2018], it just happened sooner than in the past because of poor demand.”

Industry sources said early cutbacks were happening further down the supply chain as well. One key component supplier based in Shenzhen had asked 4,000 workers to take an extended “vacation” from October to March, a person with knowledge of the situation said. “The company has not actively laid off those workers yet. It will decide whether or not to lay them off after March 1,” the source said.

To be sure, Foxconn’s cutbacks stretch beyond its iPhone manufacturing units. It is also paring back the number of managers and consolidating business units as it aims to cut 100,000 permanent positions.

Meanwhile, Foxconn – formally Hon Hai Precision Industry – is in the middle of an aggressive cost-cutting program as it braces for a difficult 2019. In addition to letting contract workers go early, it is hoping to reduce expenses with an organizational restructuring, according to people close to the Taiwanese company. It has recently merged business units making Apple’s MacBooks and iPads with another division making laptops and desktops for Dell and Acer.

The result of the consolidation will be steep cuts to management jobs and back office support staff such as human resources, administration, accounting and finance, and utility support jobs. “Previously, each business unit had its own supporting staff, and by merging business divisions, Foxconn can slash some 50% of those supporting jobs and even condense managerial positions too,” a person familiar with the reshuffle told the Nikkei Asian Review.

The reorganization is part of Foxconn’s push to cut 100,000 jobs out of about 1.1 million by the end of 2018 across all of its affiliates and subsidiaries, as reported by Nikkei Asian Review in November. Foxconn aims to cut costs by some 20 billion yuan ($2.96 billion) in 2019 compared with 2018, according to an internal document dubbed the “1031 project” seen by Nikkei.

To be sure, Foxconn’s embrace of automation has been partly responsible for the reduction in its head count. But as smartphone sales slowed last year, Foxconn and other iPhone suppliers revealed steep declines in revenue, with Foxconn’s yoy revenue falling 8% in December compared with the same month last year.

But as Apple CEO Tim Cook has decided to stop breaking out iPhone sales and to place more emphasis on the company’s software and other product offerings should, investors (including the Oracle of Omaha himself) who are hoping for a return to $1 trillion market cap should probably hope that the company hurries up and launches its next-generation iPhone Air Pods. Or maybe – just maybe – cutting prices on its increasingly expensive flagship product.


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Norway Readies ‘Big Brother’ GPS-Based Taxation Per Mile-Driven

Via ArmstrongEconomics.com,

COMMENT: 

Hi,

The Norwegian Data Protection Authority is now arguing that GPS based taxation, for the amount of kilometers driven by car, can be done within 5-6 years!

Norwegians trust the government way too much, because they believe that this system will eliminate the need for road tax, fuel tax, toll roads and reduce the cost of car insurance.

No way will the tax be reduced! GPS based taxation is a governments dream! Who is to stop them from issuing parking fees or speeding tickets?

Norway also has a high number of electric cars, and an electric car is sold without any tax or VAT, has reduced road tax, free of reduced toll road passage and does not contribute to fuel taxation. With GPS active, the government can finally collect taxes from electric cars without the messy environmentalists meddling.

In the worst case, a corrupt government can use the system against its people to create implications, push the burden of proof over to a troublesome citizen, in court.

Norway may be a great country regards to statistics, but will be some kind of self-imposed totalitarianism if this nonsense continues. Stay away from Norway if you cherish your hard-earned cash!

And as always, thank you, Mr. Armstrong, for your service and enlightenment.

AA
Ex-social democrat

REPLY: 

The political-economic system post-World War II has been a socialist driven agenda. Vote for me and I will give you other people’s money.”

This system cannot be sustained when those in power have promised themselves pensions. As government workers retire, they need to be replaced. The growth rate of government has started to explode. Instead of looking at the problem objectively, they are simply looking from paycheck to paycheck on how to meet the next payroll. This leads them to become more and more aggressive in hunting things to tax. Any rational person would look at this economic model and see it leads to massive civil unrest.

They pretend that socialism is to help people, but they come first. As this gets far worse, nothing trickles down to the people.

Even former President Grover Cleveland, who was a Democrat, saw the insanity his party unleashed with the Silver Democrats. Taxing the rich does not present a solution. They will simply leave. The rich, through their investments, create jobs.

This proposal to use GPS to track movements for taxes will allow the government to end tolls, and thus reduce their own workforce and pension liabilities.

This has been the very idea behind E-Z Pass in the USA where you drive through tolls and are automatically charged.


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Tesla Lowers Q4 Profit Guidance, Unveils Plans To Cut 7% Of Work Force; Stock Slides

As Tesla’s much-larger (by sales and production volumes, at least) rivals unveil their rival electric-car models at the North American Auto Show, threatening Tesla’s sales and its standing in the market for EVs, the Wall Street Journal reported Friday that Tesla plans to cut 7% of its workforce, part of a cost-reduction effort aimed at selling the Model 3 (what was supposed to be a “mass market” vehicle) at a lower price.

Tesla

Musk announced the job cuts, the first since June, in a memo to employees. Musk is hoping to sell the Model 3 at $35,000. Late last year he debuted a “low-cost” Model 3 with fewer advanced features that debuted with a price tag of just $45,000).

“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months,” Chief Executive Elon Musk told employees in a memo reviewed by The Wall Street Journal. “Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company.”

They also follow a lowering of Tesla’s Q4 profit outlook, according to the Street (this comes after the company earned a surprise profit in Q3, albeit a paper profit that was contingent on the company using “every trick in the book”).

Tesla said it will post a GAAP-reported profit for the three months ending in December, but cautioned that number will be less than the $312 million it posted for the third quarter. It also said it would ramp up Model 3 production ahead of a scheduled reduction in U.S. tax credits on July 1.

The company’s shares were off 4% in premarket trade.


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Germany Reportedly Exploring Ban On Huawei Products

With the US launching a federal investigation into Huawei over alleged theft of intellectual property from US carrier T-Mobile, and US lawmakers once again weighing a ban on sales of US-made microchips to ZTE and Huawei over suspicions that both companies violated US sanctions on Iran, the US’s campaign to shut Huawei out of Western markets took yet another step forward on Thursday when the Wall Street Journal reported that Germany is considering a ban of Huawei products in the country’s 5G networks.

The effort, reported by WSJ and German newspaper Handelsblatt, is focusing on indirectly banning Huawei from telecom networks’ “core networks” – the essential functionality of a mobile network. And while the effort is focused on 5G, it could also apply to 3G and 4G networks.

The German official said raising security requirements would be the only legal way to de facto exclude Huawei from all crucial tenders in Germany as the country has no other legislation that would justify an outright ban.

Though it hasn’t determined exactly how it would go about enforcing the ban, Berlin is considering tightening security requirements for building 5G networks, the next-gen wireless technology for which China has established itself as a world leader. The tighter security requirements, which  would be enacted following a campaign by the US to convince its allies to ban Huawei products in local telecoms networks on national security grounds, would make it effectively impossible for companies to use Huawei equipment.

Huawei

If Berlin follows through, it would represent a major blow to Huawei. Germany is one of Huawei’s most important foreign markets. And until now, Berlin has been incredibly open to Huawei doing business in Germany. Huawei’s European headquarters are in the German city of Dusseldorf.

Germany has the largest economy in the region of Europe, Middle East and Africa, a market where Huawei receives the largest share of its revenue outside China. In 2017, Huawei earned 27% of its $92.6 billion in revenue from EMEA sales. Reports last months suggested that Germany’s cybersecurity service was exploring setting up labs that would allow it to vet any security threats from foreign telecoms companies.

Perhaps surprisingly, Germany’s business lobby opposes excluding Huawei from the German market.

Dieter Kempf, head of Germany’s powerful business lobby BDI said Thursday that no equipment vendor should be excluded from Germany’s 5G network as long as there is no proof against them.

“I think it would be completely misguided to insinuate a danger of any vendor, no matter what its name or origin, if this hasn’t been proven,” Mr. Kempf said when asked about efforts to ban Huawei from the network build out.

The report comes as Germany is preparing to host an auction for 5G spectrum licenses this spring. The auction will see the country’s telecommunications carriers bid for rights to host ultrafast 5G connections. Huawei is already a significant vendor, but Germany’s Deutsche Telekom has said it would review its purchasing strategy in light of recent security concerns.

Predictably, China wasn’t happy about the news, and a spokesperson for the Chinese government accused Berlin of “politicizing” 5G.

A Huawei spokesman in Europe said “Germany is a big and important market. The German government has so far had a very balanced position and has been able to resist outside pressures. It is up to German authorities to make their decisions and we will of course comply and respect any decision.”

“But politicization of the 5G issue is proceeding in several European countries,” the spokesman said. “Limiting access to certain market players means prices would go up and innovation would slow down.”

Notably, Germany’s review of Huawei’s potential for security breaches follows the arrest of two men in Poland – including a former Polish security agent and a Huawei executive and Chinese national – on espionage charges.


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Facebook Is Now Censoring Talk About Politics And Religion At Work

It’s not just social media users that are being censored, now its social media employees.

According to a new report by Business Insider, citing an internal company memo, Facebook is now telling its employees what they can, and can’t, talk about at work.

Business Insider reviewed an internal company memo where Facebook’s CTO claims to have put together “a set of ground rules for open and respectful communication at work, and a central moderation model.”

The memo states: “We’re keeping it simple with three main guidelines: Don’t insult, bully, or antagonize others. Don’t try to change someone’s politics or religion. Don’t break our rules about harassing speech and expression.

Facebook uses Workplace, an app that allows chat, for internal communication. Employees use it for work related projects, but also occasionally for small talk. The app is targeted as the main area where these new rules will apply.

The memo continues: “These guidelines apply to all work communications including Workplace, email, chat, tasks, posters, whiteboards, chalkboards, and face-to-face. Since Workplace is where most of these discussions happen, we are investing engineering resources there.”

Facebook has also made it easier for employees to report one another when somebody says something that “offends” someone else. The memo continued: 

“We are making it easier to report posts and comments, and those reports will go straight to a trained moderator who’ll moderate as needed. We’re also developing more tools to help proactively.”

We can’t help but wonder, “Who is training the moderator?”

Social media sites have been under fire for censorship over the past couple of years: many on the right claim they’re being targeted and stripped of their right to free speech, while those on the left are perpetually claiming that every statement they don’t agree with is “hate speech” and “bullying”. In fact, the censorship has gotten so prominent at times, it prompted the President to Tweet about it last summer. 

“Social Media is totally discriminating against Republican/Conservative voices. Speaking loudly and clearly for the Trump Administration, we won’t let that happen. They are closing down the opinions of many people on the RIGHT, while at the same time doing nothing to others,” Trump said back in August.

In response, Facebook launched a review of policies possibly impacting conservative voices and other communities in back in early 2018. 

Journalist Caitlin Johnstone, who last year survived Twitter’s attempt to suspend her Twitter account, described the suspension-spree, noting: “In a corporatist system, corporate censorship is state censorship.”


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Asylum Claims Spike 22 Percent In France, Plunge In Populist Countries

France saw a 22% spike in asylum applications in 2018, while countries led by populist governments such as Italy and Austria have seen claims plummet, according to Le Monde

According to the French Interior Ministry, there were 122,743 asylum applications in 2018, primarily from Afghanistan, Albania, Georgia, Guinea and Ivory Coast. Of those, 46,700 people were granted asylum by the French government – up 9% according to the French Office for the Protection of Refugees and Stateless Persons (Ofpra). Most of those granted asylum are from Afghanistan, Syria and Sudan. 

According to an October note published by Didier Leschi, the director-general of the French Office for Immigration and Integration (OFII), France has become the “most attractive” country for Afghan asylum seekers who have been denied asylum elsewhere. 

France becomes the country of second choice of those who have had their asylum application refused, sometimes successively in Sweden or Germany for example. This is particularly the case for Afghans who have noticed that the possibility of benefiting from refugee status is much greater in France than in Northern European or Germanic countries. On average, Afghans who arrive in Ile de France in particular have already seen two of them already refuse asylum in a European country. -Fondapol (translated)

According to BreitbartFrance’s acceptance rate for Afghans was 83% in 2017, while neighboring Germany’s rate was far lower at 44 percent. 

Spain saw more than double the number of migrants in 2018 over 2017, according to IOM data. 

Populist countries, meanwhile, have seen a marked decrease in mass immigration – falling around 80% in Italy, for example, where Interior Minister Matteo Salvini closed the country’s ports to migrant boats last June. The populist government has also passed several anti-immigrant laws. 

Several European countries last year rejected a United Nations mass migration pact in December, including Austria, Bulgaria, Hungary, the Czech Republic, Poland, Latvia, Romania and Italy. The global compact lays out 23 objectives to open up legal migration and discourage illegal border crossings. In its opposition of the deal, Hungary denounced the pact as a “serious mistake” that would lead to a fresh influx of migrants. 

Other populists to reject the pact include Brazil’s new conservative president, Jair Bolsonaro, who said migrants had made parts of France “unlivable.” 


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Varoufakis: Run Down The Brexit Clock

Authored by Yanis Varoufakis via Project Syndicate,

The terrifying prospect of a no-deal Brexit on March 29 remains in play after the British Parliament emphatically rejected Prime Minister Theresa May’s withdrawal agreement with the EU. Although it is tempting to reset the clock and give negotiations more time, that instinct must be resisted.

The overwhelming defeat that Britain’s Parliament inflicted upon Prime Minister Theresa May’s Brexit plan was fresh confirmation that there is no substitute for democracy. Members of Parliament deserve congratulations for keeping their cool in the face of a made-up deadline. That deadline is the reason why Brexit is proving so hard and potentially so damaging. To resolve Brexit, that artificial deadline must be removed altogether, not merely re-set.

Leaving the European Union is painful by design. The process any member state must follow to exit the EU is governed by Article 50 of the bloc’s Lisbon Treaty, which, ironically, was authored by a British diplomat keen to deter exits from the EU. That is why Article 50 sets a two-year negotiation period ending with an ominous deadline: If negotiations have not produced a divorce agreement within the prescribed period – March 29, 2019, in Britain’s case – the member state suddenly finds itself outside the EU, facing disproportionate hardships overnight.

This rule undermines meaningful negotiations. Negotiators focus on the end date and conclude that the other side has no incentive to reveal its hand before then. Whether the allotted negotiation period is two months, two years, or two decades, the result is the same: the stronger side (the European Commission in Brussels in this case) has an incentive to run down the clock and make no significant compromises before the eleventh hour.

Moreover, this realization affects the behavior of other key players: Tory government ministers opposed to their prime minister, the leader of the Labour opposition, Jeremy Corbyn, members of Labour’s front bench who are opposed to Corbyn, and the German and French governments. Every significant political actor in this game has an incentive to sit back and let the clock tick down to the bitter end.

With fewer than three months left, the prospect of Britain falling out of the EU without a deal is, understandably, terrifying. A natural response is to call for an extension of Article 50, to reset the clock and give negotiations more time. That instinct must be resisted.

Any resetting of the clock would simply extend the paralysis, not speed up convergence toward a good agreement. Giving May another three months, or even three years, would do nothing to create incentives to reveal hidden preferences or to drop fictitious red lines.

Indeed, the worst aspect of May’s deal, which Parliament emphatically and wisely rejected, was that it extended the transition process until 2022, with the UK committing to paying around $50 billion, and possibly more, to the EU in exchange for nothing more than unenforceable promises of some future mutually advantageous deal. Had Parliament voted in favor of May’s deal, it would have prolonged the current gridlock to a new cliff edge three years hence.

The only plausible reason for resetting the Article 50 clock is the aspiration to hold a second referendum on whether to rescind Brexit altogether. But, unlike the first referendum, which could be framed as a yes-no leave-stay question, there are now multiple options to consider: May’s deal, a softer Brexit keeping Britain within the EU’s single market, a no-deal Brexit, remaining in the EU altogether, and so forth. Agreeing on the precise form of preferential voting between these options is no easier than agreeing on Brexit in the first place.

To synthesize competing views into one coherent position, Britain needs more than a voting scheme: it needs a People’s Debate that the ticking clock makes impossible, even if re-set. The standstill and the phony negotiations will thus come to an end only if the made-up deadline is allowed to expire by a Parliament willing calmly to say “no” to unacceptable deals negotiated by May and the EU. Allowing the clock to run down is now a prerequisite for resolving the Brexit conundrum.

What will happen if the impasse continues until March 29, without a formal extension of the Article 50 period? The threat from Brussels is that the EU will shrug its shoulders and allow a disorderly Brexit, with substantial disruption to trade, transport, and so forth. But it is much more likely that German business, along with the French and Dutch governments, would be up in arms against such a turn, and demand that the European Commission use its powers indefinitely to suspend any disruption in Europe’s ports and airports while meaningful negotiations begin for the first time since 2016.

Once we are at, or close to March 29, heightened urgency will dissolve tactical procrastination. May’s deal will have bitten the dust, and Remainers will be closer to accepting that time is not on the side of a Brexit-annulling second referendum, perhaps turning their attention to the legitimate aim of a future referendum to re-join the EU.

At that point, government and opposition will recognize that only two coherent options remain for the immediate future. The first is Norway Plus, which would mean Britain would remain for an indeterminate period in the EU single market (like Norway), and also in a customs union with the EU. The second is an immediate full exit, with Britain trading under World Trade Organization rules while Northern Ireland remains within a customs union with the EU to avoid a hard border with the Republic of Ireland. Narrowing it down to two options will enable Parliament to choose.

Once MPs acknowledge that freedom of movement between the UK and the EU is a red herring, the most likely outcome is Norway Plus for an indeterminate, deadline-free period. Then and only then will Parliament and the people have the opportunity to debate the large-scale issues confronting Britain, not least the future of the UK-EU relationship.

Norway Plus would, of course, leave everyone somewhat dissatisfied. But, unlike May’s deal or a hasty second referendum, at least it would minimize the discontent that any large segment of Britain’s society might experience in the medium term. And, because minimizing the discontent, along with a deadline-free horizon, are prerequisites for the people’s debate that Britain deserves, the overwhelming defeat of May’s deal may well be remembered as a vindication of democracy.


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Turkish Parliament Grants Erdogan Emergency Powers To Combat Economic Disaster

In what could be the biggest threat yet to the independence of Turkey’s central bank…

SS

…the Turkish parliament on Wednesday endowed Turkish President Recep Tayyip Erdogan with untrammeled emergency authority to intervene when the country’s economy is under threat, Bloomberg reported.

Parliament voted late Wednesday to authorize Erdogan to take all the necessary measures in case of a “negative development” that could spread across the entire financial system. It also approved the formation of the Financial Stability and Development Committee that will work to coordinate efforts against risks to financial stability and security, according to the law, set to go into effect following the president’s approval.

According to the new law, “the president is authorized and responsible for implementation of all measures beyond the powers” of members of the Financial Stability and Development Committee, which was also created by the law, and will be overseen by Turkey’s Treasury and Finance ministries.

Per BBG, the measure is intended to strengthen Turkey’s defenses against another downturn, like the capital flight that sparked a more than 40% devaluation in the lira last year. Though the lira has recovered off its lows, anxieties remain about Turkey’s foreign-currency denominated debt, which is creating problems in Turkey’s corporate sector – particularly among construction firms.

CDS spreads still indicate that default risk remains a concern for investors in Turkish assets.

Turkey

Erdogan is notorious for slamming the central bank’s high interest rates, sometimes using threatening language.

More practically, the powers will allow Erdogan to impose financial stability ahead of upcoming municipal elections, as the president, who was granted sweeping new powers after a constitutional referendum nearly two years ago, seeks to further consolidate his power following the end of a post-coup-attempt state of emergency that saw Turkish authorities arrest tens of thousands of people on suspicions of supporting US-based cleric Fethullah Gulen. The Trump administration is reportedly considering extraditing Gulen, who is wanted on charges of treason in Turkey.


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Escobar: Talk Of Western intervention In The Black Sea Is Pure Fantasy

Authored by Pepe Escobar via The Asia Times,

Crimea is essential to Russia strategically and economically, but speculation over Ankara helping to boost the US presence in the Black Sea is far-fetched given Turkey’s energy deals with Moscow…

A power struggle over the Black Sea between Russia and the US plus NATO has the potential to develop as a seminal plot of the 21st century New Great Game – alongside the current jostling for re-positioning in the Eastern Mediterranean.

By now it’s established the US and NATO are stepping up military pressure from Poland to Romania and Bulgaria all the way to Ukraine and east of the Black Sea, which seems, at least for the moment, relatively peaceful, just as Crimea’s return to Russia starts to be regarded, in realpolitik terms, as a fait accompli.

After a recent series of conversations with top analysts from Istanbul to Moscow, it’s possible to identify the main trends ahead.

Just as independent Turkish analysts like Professor Hasan Unal are alarmed at Ankara’s isolation in the Eastern Mediterranean energy sphere by an alliance of Greece, Cyprus and Israel, Washington’s military buildup in both Romania and Bulgaria is also identified as posing a threat to Turkey.

It’s under this perspective that Ankara’s obstinance in establishing a security “corridor” in northern Syria, east of the Euphrates river, and free from the YPG Kurds, should be examined. It’s a matter of policing at least one sensitive border.

Still, in the chessboard from Syria and the Eastern Mediterranean to the Persian Gulf, Turkey and Crimea, the specter of “foreign intervention” setting fire to the Intermarium – from the Baltics to the Black Sea – simply refuses to die.

‘Russian lake’?

By the end of the last glacial era, around 20,000 years ago, the Black Sea – separated from the Mediterranean by an isthmus – was just a shallow lake, much smaller in size than it is today.

The legendary journey of Jason and the Argonauts, before the Trojan war, followed the Argo ship to the farther shore of Pontus Euxinus (the ‘Black Sea’) to recover the Golden Fleece – the cure for all evils – from its location in Colchis (currently in Georgia).

In Ancient Greece, steeped in mythology, the Black Sea was routinely depicted as the boundary between the known world and terra incognita. But then it was “discovered” – like America many centuries later – to the point where it was configured as a “string of pearls” of Greek trading colonies linked to the Mediterranean.

The Black Sea is more than strategic, it’s crucial geopolitically. There has been a constant drive in modern Russian history to be active across maritime trade routes through the strategic straits – the Dardanelles, the Bosphorus and Kerch in Crimea – to warmer waters further south.

As I observed early last month in Sevastopol, Crimea is now a seriously built fortress – incorporating S-400 and Iskander-M missiles – capable of ensuring total Russian primacy all across the eastern Black Sea.

A visit to Crimea reveals how its genes are Russian, not Ukrainian. A case can be made that the very concept of Ukraine is relatively spurious, propelled by the Austro-Hungarian empire at the end of the 19th century and especially before World War I to weaken Russia. Ukraine was part of Russia for 400 years, far longer than California and New Mexico have been part of the US.

Now compare the reconquest of Crimea by Russia, without firing a shot and validated by a democratic referendum, to the US “conquests” of Afghanistan, Iraq, Syria and Libya. Moreover, I saw Crimea being rebuilt and on the way to prosperity, complete with Tatars voting with their feet to return; compare it to Ukraine, which is an IMF basket case.

Crimea is essential to Russia not only from a geostrategic but also an economic point of view, as it solidifies the Black Sea as a virtual “Russian lake”.

It’s immaterial that Turkish strategists may vehemently disagree, as well as US Special Representative for Ukraine Kurt Volker who, trying to seduce Turkey, dreams about increasing the US presence in the Black Sea, “whether on a bilateral basis or under EU auspices.”

Under this context, the building of the Turk Stream pipeline should be read as Ankara’s sharp response to the rampant Russophobia in Brussels.

Ankara has, in tandem, consistently shown it won’t shelve the acquisition of Russian S-400 missile systems because of American pressure. This has nothing to do with pretentions of neo-Ottomanism; it’s about Turkey’s energy and security priorities. Ankara now seems more than ready to live with a powerful Russian presence across the Black Sea.

It all comes down to Montreux

Not by accident the comings and goings on NATO’s eastern flank was a key theme at last summer’s biennial Atlanticist summit. After all, Russia, in the wake of reincorporating Crimea, denied access over the eastern Black Sea.

NATO, though, is a large mixed bag of geopolitical agendas. So, in the end, there’s no cohesive strategy to deal with the Black Sea, apart from a vague, rhetorical “support for Ukraine” and also vague exhortations for Turkey to assume its responsibilities.

But because Ankara’s priorities are in fact the Eastern Mediterranean and the Turkish-Syrian border, east of the Euphrates river, there’s no realistic horizon for NATO to come up with permanent Black Sea patrols disguised as a “freedom of navigation” scheme – as much as Kiev may beg for it.

What does remain very much in place is the guarantee of freedom of navigation in the Dardanelles and Bosphorus straits controlled by Turkey, as sanctioned by the 1936 Montreux Convention.

The key vector, once again, is that the Black Sea links Europe with the Caucasus and allows Russia trade access to southern warm waters. We always need to go back to Catherine the Great, who incorporated Crimea into the empire in the 18th century after half a millennium of Tatar and then Ottoman rule, and then ordered the construction of a huge naval base for the Black Sea fleet.

By now some facts on the ground are more than established.

Next year the Black Sea fleet will be upgraded with an array of anti-ship missiles; protected by S-400 Triumf surface-to-air missile systems; and supported by a new “permanent deployment” of Sukhoi SU-27s and SU-30s.

Far-fetched scenarios of the Turkish navy fighting the Russian Black Sea fleet will continue to be peddled by misinformed think tanks, oblivious to the inevitability of the Russia-Turkey energy partnership. Without Turkey, NATO is a cripple in the Black Sea region.

Intriguing developments such as a Viking Silk Road across the Intermarium won’t alter the fact that Poland, the Baltics and Romania will continue to clamor for “more NATO” in their areas to fight “Russian aggression”.

And it will be up to a new government in Kiev after the upcoming March elections to realize that any provocation designed to drag NATO into a Kerch Strait entanglement is doomed to failure.

Ancient Greek sailors had a deep fear of the Black Sea’s howling winds. As it now stands, call it the calm before a (Black Sea) storm.


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Escobar: Talk Of Western intervention In The Black Sea Is Pure Fantasy

Authored by Pepe Escobar via The Asia Times,

Crimea is essential to Russia strategically and economically, but speculation over Ankara helping to boost the US presence in the Black Sea is far-fetched given Turkey’s energy deals with Moscow…

A power struggle over the Black Sea between Russia and the US plus NATO has the potential to develop as a seminal plot of the 21st century New Great Game – alongside the current jostling for re-positioning in the Eastern Mediterranean.

By now it’s established the US and NATO are stepping up military pressure from Poland to Romania and Bulgaria all the way to Ukraine and east of the Black Sea, which seems, at least for the moment, relatively peaceful, just as Crimea’s return to Russia starts to be regarded, in realpolitik terms, as a fait accompli.

After a recent series of conversations with top analysts from Istanbul to Moscow, it’s possible to identify the main trends ahead.

Just as independent Turkish analysts like Professor Hasan Unal are alarmed at Ankara’s isolation in the Eastern Mediterranean energy sphere by an alliance of Greece, Cyprus and Israel, Washington’s military buildup in both Romania and Bulgaria is also identified as posing a threat to Turkey.

It’s under this perspective that Ankara’s obstinance in establishing a security “corridor” in northern Syria, east of the Euphrates river, and free from the YPG Kurds, should be examined. It’s a matter of policing at least one sensitive border.

Still, in the chessboard from Syria and the Eastern Mediterranean to the Persian Gulf, Turkey and Crimea, the specter of “foreign intervention” setting fire to the Intermarium – from the Baltics to the Black Sea – simply refuses to die.

‘Russian lake’?

By the end of the last glacial era, around 20,000 years ago, the Black Sea – separated from the Mediterranean by an isthmus – was just a shallow lake, much smaller in size than it is today.

The legendary journey of Jason and the Argonauts, before the Trojan war, followed the Argo ship to the farther shore of Pontus Euxinus (the ‘Black Sea’) to recover the Golden Fleece – the cure for all evils – from its location in Colchis (currently in Georgia).

In Ancient Greece, steeped in mythology, the Black Sea was routinely depicted as the boundary between the known world and terra incognita. But then it was “discovered” – like America many centuries later – to the point where it was configured as a “string of pearls” of Greek trading colonies linked to the Mediterranean.

The Black Sea is more than strategic, it’s crucial geopolitically. There has been a constant drive in modern Russian history to be active across maritime trade routes through the strategic straits – the Dardanelles, the Bosphorus and Kerch in Crimea – to warmer waters further south.

As I observed early last month in Sevastopol, Crimea is now a seriously built fortress – incorporating S-400 and Iskander-M missiles – capable of ensuring total Russian primacy all across the eastern Black Sea.

A visit to Crimea reveals how its genes are Russian, not Ukrainian. A case can be made that the very concept of Ukraine is relatively spurious, propelled by the Austro-Hungarian empire at the end of the 19th century and especially before World War I to weaken Russia. Ukraine was part of Russia for 400 years, far longer than California and New Mexico have been part of the US.

Now compare the reconquest of Crimea by Russia, without firing a shot and validated by a democratic referendum, to the US “conquests” of Afghanistan, Iraq, Syria and Libya. Moreover, I saw Crimea being rebuilt and on the way to prosperity, complete with Tatars voting with their feet to return; compare it to Ukraine, which is an IMF basket case.

Crimea is essential to Russia not only from a geostrategic but also an economic point of view, as it solidifies the Black Sea as a virtual “Russian lake”.

It’s immaterial that Turkish strategists may vehemently disagree, as well as US Special Representative for Ukraine Kurt Volker who, trying to seduce Turkey, dreams about increasing the US presence in the Black Sea, “whether on a bilateral basis or under EU auspices.”

Under this context, the building of the Turk Stream pipeline should be read as Ankara’s sharp response to the rampant Russophobia in Brussels.

Ankara has, in tandem, consistently shown it won’t shelve the acquisition of Russian S-400 missile systems because of American pressure. This has nothing to do with pretentions of neo-Ottomanism; it’s about Turkey’s energy and security priorities. Ankara now seems more than ready to live with a powerful Russian presence across the Black Sea.

It all comes down to Montreux

Not by accident the comings and goings on NATO’s eastern flank was a key theme at last summer’s biennial Atlanticist summit. After all, Russia, in the wake of reincorporating Crimea, denied access over the eastern Black Sea.

NATO, though, is a large mixed bag of geopolitical agendas. So, in the end, there’s no cohesive strategy to deal with the Black Sea, apart from a vague, rhetorical “support for Ukraine” and also vague exhortations for Turkey to assume its responsibilities.

But because Ankara’s priorities are in fact the Eastern Mediterranean and the Turkish-Syrian border, east of the Euphrates river, there’s no realistic horizon for NATO to come up with permanent Black Sea patrols disguised as a “freedom of navigation” scheme – as much as Kiev may beg for it.

What does remain very much in place is the guarantee of freedom of navigation in the Dardanelles and Bosphorus straits controlled by Turkey, as sanctioned by the 1936 Montreux Convention.

The key vector, once again, is that the Black Sea links Europe with the Caucasus and allows Russia trade access to southern warm waters. We always need to go back to Catherine the Great, who incorporated Crimea into the empire in the 18th century after half a millennium of Tatar and then Ottoman rule, and then ordered the construction of a huge naval base for the Black Sea fleet.

By now some facts on the ground are more than established.

Next year the Black Sea fleet will be upgraded with an array of anti-ship missiles; protected by S-400 Triumf surface-to-air missile systems; and supported by a new “permanent deployment” of Sukhoi SU-27s and SU-30s.

Far-fetched scenarios of the Turkish navy fighting the Russian Black Sea fleet will continue to be peddled by misinformed think tanks, oblivious to the inevitability of the Russia-Turkey energy partnership. Without Turkey, NATO is a cripple in the Black Sea region.

Intriguing developments such as a Viking Silk Road across the Intermarium won’t alter the fact that Poland, the Baltics and Romania will continue to clamor for “more NATO” in their areas to fight “Russian aggression”.

And it will be up to a new government in Kiev after the upcoming March elections to realize that any provocation designed to drag NATO into a Kerch Strait entanglement is doomed to failure.

Ancient Greek sailors had a deep fear of the Black Sea’s howling winds. As it now stands, call it the calm before a (Black Sea) storm.


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