Wednesday, March 20, 2013
Chemical weapons were used on civilians in Syria on Tuesday, Israel security sources confirmed. These sources did not, however, know whether it was Syrian President Bashar Assad's regime or the opposition forces fighting to topple him that used the weapons of mass destruction, after each party accused the other.
The US State Department earlier Tuesday said it had no reason to believe Syrian government charges that rebels had used chemical weapons in the country's civil war, but said it was still studying allegations from the opposition that Syrian armed forces had used the weapons.
Department spokeswoman Victoria Nuland called the charges an effort by Assad's government to discredit its opponents.
Nuland, portraying the Assad government as increasingly beleaguered, said Washington is "quite concerned" that it would resort to non-conventional weapons
Meanwhile, the White House on Tuesday said it was looking carefully at allegations that chemical weapons were used in Syria, but said it had no evidence to substantiate charges that the opposition had used such weapons.
"We are looking carefully at the information as it comes in," White House spokesman Jay Carney told reporters. "This is an issue that has been made very clear by the president to be of great concern to us."
Meanwhile, Britain's UN envoy said on Tuesday that reports of a chemical weapon attack in Syria had not yet been "fully verified" as the Russian Foreign Ministry accused Syrian rebels of using chemical weapons near the northern city of Aleppo.
Syria's government and rebels accused each other of launching the deadly chemical attack on Tuesday. If confirmed it would be the first use of such weapons in the two-year-old conflict.
"We have seen those reports, they haven't yet been fully verified," Britain's UN Ambassador Mark Lyall Grant told reporters on his way into a UN Security Council meeting on Afghanistan.
"But clearly if chemical weapons were used then that would be abhorrent and it would require a serious response from the international community," he said.
The Security Council has been deadlocked on Syria since 2011. Russia and China have refused to consider sanctions on President Bashar Assad's government, and have vetoed three resolutions condemning Assad's crackdown on opposition groups.
The conflict began as peaceful protests that turned violent when Assad tried to crush the revolt. The United Nations says more than 70,000 people have been killed and more than 1 million people have fled the violence.
Cyprus lawmakers may have rejected the bank account tax, but the truth is that the financial crisis in Cyprus is just getting started. Right now, the two largest banks in Cyprus are dangerously close to a meltdown. If they fail, depositors could end up losing virtually all of their money. You see, the banking system of Cyprus absolutely dwarfs the GDP of that small island nation. Cyprus is known all over the world as a major offshore tax haven, and wealthy Russians and wealthy Europeans have been pouring massive amounts of money into the banking system over the last several decades. Yes, those bank deposits are supposed to be insured, but the truth is that there is no way that the government of Cyprus could ever come up with enough money to cover the massive losses that we are potentially looking at. This is a case where the banking system of a nation has gotten so large that the national government is absolutely powerless to stop a collapse from happening. If those banks fail, depositors may end up getting 50 percent of their money or they may end up getting nothing. We just don't know how bad the damage is yet. And considering the fact that many of the largest corporations and many of the wealthiest individuals in Europe have huge mountains of cash stashed in Cyprus, the fallout from a banking collapse could potentially be absolutely catastrophic.
So Cyprus needs to come up with some money from somewhere in order to keep that from happening.
Basically, there are three options at this point...
1) Even though the bank account confiscation tax was voted down today, there is talk that it could come back in another form. This is really the only place inside of Cyprus where enough money can be raised to bail out the banks.
2) Cyprus could go back and beg the IMF and the EU for money, but the IMF and the EU have already said that they want depositors to share in the pain.
3) Cyprus could get the money that they need from the Russians. This will be discussed in more detail later.
A lot of people will see the headlines proclaiming that Cyprus has voted against the wealth tax and think that everything is going to be okay now, but that is very far from the truth.
The reality is that this is only the first move in a very complicated chess game. The problems for Cyprus are only just the beginning...
"This is not the end of the process, but instead kicks off a further round of negotiation with Moscow and Berlin," JPMorgan economist Alex White wrote in a research note. "The Cypriot authorities wanted to conduct the vote so that they could reaffirm the extent of their difficulties to the Europeans."
When the banks of Cyprus reopen in a few days, there is going to be a stampede of people trying to pull their money out of the banks.
In fact, this was starting to happen even before the "bank holiday" was declared. According to The Sun, bank insiders were tipping people off about what was going to happen in the days leading up to the crisis...
But Russian oligarchs and big investors emptied accounts in the days beforehand, prompting claims they were tipped off by bank insiders. A source told The Sun: “It leaked out. Bankers warned their best clients. Government officials warned their friends and relatives.“Billions disappeared from accounts in days, most from accounts held by Russians.”
And according to David Zervos, we could see billions more euros withdrawn from banks in Cyprus once they reopen. There will be mass panic as depositors scramble to reclaim their money before it can be taxed...
The die is cast. There is no going back for the Cypriots or the Eurozone leaders. As soon as the banks open in Cyprus there will be billions in withdrawals. The question of course is - "where will the money come from?". Well, if the parliament votes YES, then the Euros will have to come from the Eurosystem. But there is a glitch. The Cypriots have already borrowed 10b euro via the ELA and Target2. How can Mario just wire over 20 billion more (less the 10 to 15 percent haircut) for the Russians, and another 20 to 30 billion for the wealthy Greeks. What collateral will an economy with 20b in GDP post to get this cash? Unless Mario violates every collateral rule at the ECB, the Cypriot financial system will collapse even with a YES vote. Its a wonderful life - Cyprus style.
It may not even matter what Cyprus eventually decides to do about a "wealth tax". The bank run that is about to happen may be enough to bring down the banks of Cyprus all by itself.
And of course people all over southern Europe are watching developments in Cyprus very closely. As former British Chancellor of the Exchequer Alistair Darling recently noted, if depositors in southern Europe start getting nervous that their bank accounts will be targeted too, they will be likely to start pulling money out of the banks very rapidly...
"They have actually now said to people ‘We will come after your deposits, no matter how small your savings are’ and that seems to me to make it more likely that, if you are a saver in Spain or in Italy, for example, and you have just the sniff of the EU or the IMF coming your way, you will take your money out and you will get a run on the bank"
Cyprus could actually get out of this mess by turning to Russia, but the United States and Europe really do not want to see Russia gain so much control over that very strategic island nation.
So why would Russia get involved? Well, it has been estimated that Russians have approximately $31 billion stashed in banks in Cyprus. It is the favorite offshore banking destination for the Russian oligarchs. Dennis Gartman recently detailed why the tiny island nation is so appealing to the Russians...
Cyprus has been their own private Switzerland for many years. Legal and non-legal Russian cash has swamped the banking system in Cyprus since the early 90’s. The beauty of the island; the ease of admission too and exit from the island via boat or plane; the secrecy of the banking laws; the warm Mediterranean climate and the ease of which Cypriot authorities could be bribed and bought all worked to make Cyprus the center of Russian capital flight.
And right now the Russians are not happy at all that their money is being threatened.
In particular, the Russian mafia launders a lot of money in Cyprus. The Russian mafia is not about to let anyone steal their money, and they have an international reputation for being absolutely brutal. In the end, pressure from the mafia may have been one of the primary reasons why many Cyprus lawmakers voted against the bank account tax. As Dennis Gartman astutely noted, by voting against the wealth tax they may have literally been saving their own lives...
"One could only laugh as such a comment; of course Cyprus was complacent about laundering. To think otherwise was and is naïve. Ah, but now you’ve stolen Russia money... or soon shall depending upon the vote in the Cypriot parliament... and that is dangerous... very. One does not steal Russian mafia money and get away with it. There are fewer statements of fact that are more certain, more factual, more unyielding than this statement. Russian Mafia figures do not take well to being stolen from, and they take even less well to be made fools of. We see no reason to mince words at this point: People will be hurt over this decision; some shall be killed."
And the Russians definitely do not want to see the banking system of Cyprus collapse. In fact, proposals have been made that would provide the money necessary to keep it afloat. But of course that money would not come cheaply.
Some of the proposals that Russia has put forward were summarized by the Daily Mail...
But in a move that has raised eyebrows, the Russian energy giant Gazprom offered Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for exploration rights for natural gas on the island.Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening.It is also rumoured that the Kremlin is privately offering to help bail out Cyprus in exchange for the right to use a naval base in the Greek part of the island.
In addition, as I wrote about yesterday, some Russian investors have stepped forward and have offered to buy majority stakes in the two largest banks in Cyprus.
So why hasn't Cyprus accepted help from Russia yet? Well, it is a geopolitical thing. Cyprus is a part of the EU, and European officials do not want Russia to become the dominant influence in Cyprus.
But if the IMF and the EU are not going to step up and help Cyprus, the Russian offers will become more tempting with each passing day.
Meanwhile, the attempted attack on bank accounts in Cyprus is making people nervous all over Europe. For example, the following is whatGerman economist Peter Bofinger had to say about what the situation in Cyprus is doing to confidence in the European financial system...
Making small-scale savers pay is extremely dangerous. It will shake the trust of depositors across the Continent. Europe's citizens now have to fear for their money.
And if you don't think that this could ever happen anywhere else, you are just being delusional.
In fact, it is already happening. In fact, the Finance Minister of New Zealand is now proposing that depositors in his nation should be required to "take a haircut" if any banks in his nation fail...
The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat."
But surely there will never be any major banking problems in the United States, right?
Well, large numbers of Chase customers that logged into their accounts on Monday discovered that a "computer glitch" had reset all of their account balances to zero...
Chase bank experienced a problem Monday that had customers scrambling to figure out where their money went.JP Morgan Chase said it hadn’t been hacked but was having a problem “related to an internal issue” as customers found their accounts showing zero balances.Some customers shared their frustration on Twitter and showed screen shots of zero balances.
How would you feel if you suddenly discovered that you had no money in the bank?
Most Americans just assume that their money will always be there because their bank accounts are "guaranteed" by deposit insurance and by the full faith and credit of the federal government.
But that is exactly what the people of Cyprus thought too, and look how that turned out.
It would be hard to overstate how dangerous the situation in Cyprus is. Yes, their nation is very small but their banking system is absolutely huge.
If the banking system of Cyprus fails, it could be a "Lehman Brothers moment" for all of Europe. At this point, the entire European banking system is leveraged 26 to 1, and once European banks start to fail they could start falling like dominoes.
There is also a very strong possibility that Cyprus could be forced to leave the euro, and if that happens everyone will be wondering who will be next to leave the common currency.
So don't think for a second that the crisis in Cyprus is over. The banking meltdown is just getting started, and the consequences could end up being far more dramatic than any of us could possibly imagine.
Extensive preparations by Syrian army units for launching chemical weapons against rebel forces have been sighted in the northern town of Homs, Western intelligence agencies told DEBKAfile’s military sources Tuesday, March 19.
Damascus paved the way for resorting to unconventional weaponry with an accusation run by the state news agency SANA Tuesday that Syrian rebels had fired a rocket containing chemical substances in the Khan al-Assal area of rural Aleppo, allegedly killing 15 people, mostly civilians.
Rebels quickly denied the report and accused regime forces of “firing a chemical weapon on a long-range SCUD, after which 20 people died of asphyxia and poisoning.”
Neither of the accusations could immediately verified.
But a Reuters photographer said he had seen people come into two Aleppo hospitals with breathing problems after the attack. They claimed people were suffocating on the streets.
Western intelligence sources reckoned that for the Assad regime, Homs, the scene of fierce battles between government and rebel forces in recent days, is likely to be the first place where the Assad government resorts to chemical warfare. A rebel victory there would be a grave setback for the regime because it would sever the main highway linking the Syrian military forces fighting in the towns of Damascus, Latakia, Aleppo and Idlib.
Monday and Tuesday, therefore, heavy government reinforcements from the South and Damascus were piled onto the embattled town, along with large numbers of warplanes and attack helicopters, in an all-out effort to cut short the rebel advance.
DEBKAfile’s military sources report that the importance Assad attaches to carrying the day in Homs is represented by the elite units he has assembled in and around the city: Heavy armored forces of the 4th and 5th Republican Guard Divisions were imported from Damascus and the 18th and 19th Divisions are there too, issued in the last few hours with chemical warfare gear.
Syrian ruler Bashar Assad can on no account afford to be defeated in the key town of Homs just when US President Barack Obama is scheduled to arrive in the Middle East Wednesday. He will therefore use whatever it takes to prevent this happening, even chemical weapons if they are the only answer.
The allegation that the rebels have resorted to chemical warfare strongly points to an Assad ploy to go there himself and maintain it was only after the opposition went first.
The emergence of dread unconventional weapons on the Syrian battlefield during the US president’s stay in the region is bound to dominate his talks with its leaders. It may even have the effect of altering his schedule and affect his itinerary.
In late August, 2012, Obama warned Syria not to use chemical weapons in its battle against CIA backed and Saudi and Qatari funded and armed rebels.
“We cannot have a situation where chemical or biological weapons are falling into the hands of the wrong people,” Obama said during a press conference at the White House. “We have been very clear to the Assad regime — but also to other players on the ground — that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized.
“That would change my calculus; that would change my equation.”Syria recently told the United Nations it fears al-Qaeda and other extremist groups supported by the U.S. will be equipped with chemical weapons.
On Tuesday, Syria accused CIA sponsored al-Qaeda rebels of using chemical weapons in a missile attack on the village of Khan al-Assal near the city of Aleppo. Syrian Information MinisterOmran al-Zoubi said 16 people were killed and 86 wounded by the missiles reportedly containing “poisonous gases” fired from Nairab district.
Rebels blamed the Syrian government for the deadly attack. “Why would the Free Syrian Army bomb themselves with a chemical weapon?” asked an FSA mercenary.
Now that chemical weapons have appeared on the scene — regardless of which side actually used them — the United States and Israel have an excuse to escalate tensions inside Syria and confront Assad’s military directly under the weapons of mass destruction pretext.
After a marathon debate in which several of the loopier measures were shot down (and many astoundingly foolish things were said), Colorado finally managed to pass a couple of new gun control laws, which now await the willing signature of Governor John Hickenlooper, a Democrat. These new laws expand background checks, requiring gun owners to pay $10 for such a check when transferring firearms, and impose a 15-round limit on the capacity of magazines.
(And here I thought gun control zealots were convinced that 10 rounds was the limit for virtuous magazines. Or was it seven? How many bullets do you need to shoot a deer, again? I recall New York’s gun-grabbing governor, Andrew Cuomo, clearly stating that it was less than ten. Maybe they have really big deer out in Colorado.)
But even before the governor gets to sign the bill, Fox News reports that local sheriffs are announcing they won’t enforce the new laws. Weld County Sheriff John Cooke said “they’re feel-good, knee-jerk reactions that are unenforceable,” and they give citizens “a false sense of security.”
BEIJING, March 19 (RIA Novosti) – Russia and China will coordinate their reactions to US plans to boost its missile defense in the Asia-Pacific region, a senior Chinese diplomat said on Tuesday.
The remarks follow Washington’s recent announcement this it has shelved plans for a European-based missile shield in favor of boosting its defenses in Alaska, which would give it coverage from a potential North Korean attack.
Beijing and Moscow oppose the deployment of missile shields, arguing that they undermine their own military strategies.
“The matter of missile defense has to do with global strategic balance, and China and Russia have similar views on it,” Vice Minister of Foreign Affairs Cheng Guoping said in Beijing.
“Russia and the People’s Republic of China have been cooperating on the matter for years, and we will only be strengthening collaboration in this direction,” he said.
US efforts to bolster its homeland missile defense follow threats by North Korea last week to attack the United States with its long-range missiles.
The US military intends to deploy 14 additional interceptors in Alaska by 2017 to counter the threat and install a radar station in Japan for early tracking of North Korean missiles.
Russian ambassador to China, Sergei Razov, also urged Moscow’s partners to “adjust their defense efforts to real challenges and threats” and said that no nation’s security effort should pose a threat to others.
Neither Cheng nor Razov elaborated on their countries’ possible reaction to US plans.
Chinese Foreign Ministry spokesman Hong Lei earlier Monday said Washington’s adapted defense blueprint would “only intensify antagonism and not help to solve the problem.”
He also criticized “missile proliferation” in an apparent reference to North Korea’s December launch of a rocket to put a satellite into space that observers believe could serve as a precursor to Pyongyang developing the capability to launch long-range missiles.
Norther Korea carried out a nuclear test in February, prompting a new round of US-led international sanctions, which triggered the threats by North Korea to attack the United States.
Russia has for years vocally resisted US plans to deploy a missile shield in Eastern Europe, arguing that it would threaten the strategic parity between the two former Cold War foes.
MOSCOW, March 19 (RIA Novosti) – More than 70 aircraft and some 1,000 troops will be deployed in a series of tactical drills in preparation for a large-scale exercise next week in northwest Russia, military officials said on Tuesday.
Preparations for the exercise, codenamed Ladoga-2013, have begun in the Republic of Karelia, and the Leningrad, Smolensk and Tver regions with tactical drills by fighters, bombers and army aviation.
Aviation to be used includes MiG-31 Foxhound and Su-27 Flanker fighters, MiG-25RB Foxbat interceptors, Su-24M Fencer attack aircraft, Su24MR reconnaissance aircraft and Mi-8 Hip multirole helicopters and Mi-24 Hind attack helicopters.
Ladoga-2013 will start next week over Lake Ladoga in Karelia, which borders Finland, the Western Military District operation command said.