Red Flag Over the Atlantic

China is angling to take over a U.S. airbase in the Azores.

On June 27, a plane carrying Wen Jiabao made a “technical” stop on the island of Terceira, in the Azores. Following an official greeting by Alamo Meneses, the regional secretary of environment of the sea, the Chinese premier spent four hours touring the remote Portuguese outpost in the middle of the Atlantic Ocean.

Wen’s Terceira walkabout, which followed a four-nation visit to South America, largely escaped notice at the time, but alarm bells should have immediately gone off in Washington and in European capitals. For one thing, Wen’s last official stop on the trip was Santiago, the capital of Chile. Flights from Chile to China normally cross the Pacific, not the Atlantic, so there was no reason for his plane to be near the Azores. Moreover, those who visit the Azores generally favor other islands in the out-of-the-way chain. Continue reading

China Threatens to Pull Pin on Global Economic Hand Grenade

A senior adviser to the Chinese government has called for an economic attack on Japan’s bond market to crash the yen and drive the country into submission, reported the Telegraph on September 18.

The threat comes as Japan and China vie over ownership of the Senkaku group of islands located between the two nations.

Jin Baisong, who holds a position at a branch of China’s Commerce Ministry, noted that China has become Japan’s most important creditor. China should use its $230 billion of Japanese bonds “in the most effective manner” and ignite a budgetary debt bomb in its eastern neighbor, he said.

He also indicated that China should starve Japan of rare earth elements. China supplies around 95 percent of the world’s rare earth metals, which are used in many hi-tech applications including military machinery. “It’s clear that China can deal a heavy blow to the Japanese economy without hurting itself too much,” he said.

Jin’s threats may be directed at Tokyo, but America should take note because they could just as easily be aimed at the Red, White and Blue—and maybe they are.

Under President Obama, America has publicized its Pacific Maritime strategy as the cornerstone of its defense policy. Under this reorientation of American power, America is working to string together the various smaller Pacific nations into an economic and military alignment against China. In this context, America has often referred to its ally Japan and its many islands as its “unsinkable aircraft carrier” in the region. Japan is America’s most important Asian ally.

If America does not strongly back Japan, it risks having its Pacific strategy revealed as an empty shell. If China can force Japan to back down, it will be a huge signal for other Southeast Asian nations to submit to China. Japan’s only other choice would be rearmament. To this point, Japan has opted for a small military in exchange for American support. If U.S. support is ever seen as unreliable, Japan will be forced to re-militarize. A rearmed Japan will be much more independent and less America-centric in its policies.

Yet America has to be very careful in its dealings with China too. America conducts 2½ times more trade with China than it does with Japan. The U.S. federal government has also borrowed a whopping $1.3 trillion from China (and Hong Kong). China also owns another half trillion or so in other U.S. dollar debt assets.

China has its fingers on the pin of a much bigger hand grenade.

And there is no doubt that China considers America’s debt as a weapon to be used too. Back in 2007, Xia Bin, a cabinet-rank minister, stated that China’s foreign reserves should be employed as a “bargaining chip” in trade talks with the U.S. That same year, as China and America hammered out a trade deal, He Fan, an official at the Chinese Academy of Social Sciences, went even further, warning that China could obliterate the greenback if it so desired. “China has accumulated a large sum of U.S. dollars. Such a big sum … contributes a great deal to maintaining the position of the dollar as a reserve currency,” he said. If China’s central bank is forced to dump its U.S. currency, it “might lead to a mass depreciation of the dollar,” he said. China’s state media describes China’s huge dollar holdings as a weapon. In the past, it has referred to America’s debt pile as China’s “nuclear option,” indicating Beijing could easily trigger a dollar meltdown of massive proportions if it needed to.

America faces some tough choices. Watch to see how its massive debt leads to a weakness that will alienate its allies. America is about to lose a lot more influence within the Asia Pacific. Whether China drives Japan into submission, or causes Japan to seek military independence from Washington, America risks being effectively driven back to the beaches of Darwin and Pearl Harbor.

China has got its fingers on a global economic hand grenade, and things may be about to get ugly.

Full article: China Threatens to Pull Pin on Global Economic Hand Grenade (The Trumpet)

Russian Warships Arrive at U.S. Pearl Harbor for Joint Drills

A firing drill before the firing drill. Who were the intended targets as they were sailing towards Pearl Harbor, exactly? From an arm of the Soviet state-owned (KGB) press:

A group of Russia’s Pacific Fleet warships has arrived at the U.S. Pearl Harbor naval base to take part in the Rim of the Pacific international drills, a fleet spokesman said on Saturday.

During their long voyage from Vladivostok to Pearl Harbor, the warships’ crews held several firing drills, successfully destroying all the targets,” First-Rank Captain Roman Martov said.

The naval task group comprising the Admiral Panteleyev destroyer, the tanker Boris Butoma and the Fotiy Krylov salvage tug sailed off Vladivostok in the Russian Far East on June 13 to head for the U.S. Hawaiian Islands where the RIMPAC-2012 large-scale international naval exercises will be held.

The active phase of the drills will take place from July 11 through August 2 to involve 45 warships and support vessels from 22 countries, and also 100 combat aircraft and over 20,000 marines.

The Russian navy sailors will for the first time take part in the international naval maneuvers that have been held since 1971.

Full article: Russian Warships Arrive at U.S. Pearl Harbor for Joint Drills (RIA Novosti)